Archive - Aug 26, 2015

Following The Dow's recent 'death cross' - when the 50-day moving average drops below the 200-day - it fell 2000 points. So will AAPL triggering its own 'death cross' warrant "no brainer" buying-the-dip or will investors remember what happened in 2012...

This time, it really is different. It's "Structural", not "Cyclical". It's actually a very big difference, and banking will never be the same.

This is what we said on Friday afternoon when we reported that someone was aggressively bidding VIX 50 Sept calls: "what would be far scarier is if whoever is suddenly offering a nickel for the VIX Sept 50 calls actually knows something.  Because if he "does", that would suggest a market move 'Straight out of Lehman.'" Fast forward to Monday, when we had a market move that was, drumroll, straight out of Lehman indeed, and shockingly, the VIX 50 calls, which were bought when the VIX was trading at half that value, were briefly in the money!

Take your pick - here's three good reasons to engineer a "crash" that benefits the few at the expense of the many.

Durable Goods Orders rose a better than expected 2.0% in July (but that is notably slower than the 4.1% revised growth in June). Non-defense Capital Goods growth remains stagnant as core capex orders have now been in deceline 6 straiught months year-over-year. Furthermore, on a non-seasonally-adjusted basis, YoY Durable Goods New Orders collapsed 20.4% - the worse level since the financial crisis as last year's Boeing orders outlier washes out of the numbers... but even ex-Transports the numbers remain recessionary-ugly.

It seemed like finally China's relentless and increasingly futile attempts to have a green stock close would work: interest rate cuts, liquidity injections, direct stock interventions, even threats on the Prime Minister's head, and just to make certain moments before the close news very deliberately broke that government funds are buying large financial stocks, especially state-owned banks, to support the index, in the latest clear signs of government support, the Shanghai Composite seemed on pace to end an unprecedented series of consecutive tumbles which have dragged the composite down nearly 1000 points, or 25% in one week, and then... red close, with the SHCOMP down 1.3% to 2927, and a stunned China watching in horror as the central bank and government lose control, and everything they throws at the biggest market bubble of 2015 does absolutely nothing.

As the USD levitates along with Treasury yields, so Precious Metals are coming under significant pressure once again...

Gold has a place in high-net worth individuals portfolios as an insurance policy against systemic risk in the banking system, says Carmignac fund manager Michael Hulme.

Following the most recent Chinese market rout, Deutsche's Jim Reid updates a chart he used back in early June comparing the Shanghai Composite recent performance with that of the NASDAQ back in 1999-2000.

• Global Stocks Struggle to Shrug Off China Fears (WSJ)
• Brief Respite Ends for European Stocks Amid Renewed Retreat (BBG)
• Stock futures rise after China injects $21.8 billion (Reuters)
• China turmoil needn't rattle BOJ, yen rise not a worry: Abe adviser (Reuters)
• Stock-Market Tumult Exposes Flaws in Modern Markets (WSJ)
• Dollar gains as stocks recover, lessens safe-haven bid for yen (Reuters)

"Greece’s state insurance funds are resorting to external loans to cover their needs as fears grow that the measures of the third bailout will not be enough to cover the rest of 2015’s liquidity needs."