Archive - Sep 8, 2015

One can only hope they will continue to remain “behind schedule”. Haven’t these hapless planners done enough damage yet?

The People’s Bank of China (PBOC) added another 15.98 tonnes of gold in August – at the same time its foreign exchange reserves fell a whopping $94 billion. 

While we wait for Greece to pick a side between the US and Russia by either allowing Moscow to use its airspace on the way to supplying Assad at Latakia or else snubbing the Kremlin and jeopardizing a potentially lucrative gas deal, at least one country has been quick to make a decision.

Update: *MOSCOW EXCHANGE PREPARING TO RESUME TRADING W/BACKUP EQUIPMENT

It appears the 'virus' of broken markets has spread...

*MOSCOW EXCHANGE SAYS TRADING HALTED IN ALL MKTS, CHECKING ON REASONS FOR GLITCH

Yet another 'glitch' strikes yet another crucial convergence point of technology and business. Wil The Russians blame the Chinese? Or The Americans?

We all know the global economy is slowing, so why would stocks soar from here? The basic answer is simple: The Fed has no choice, because this game is now for all the marbles.

"Strength is to be sold into... How far down do we expect this bear market to run? Our answer is that we can imagine that the S&P might make its way all the way down toward 1600 which would simply take the market back to the trend line going back all the way to the “generational” lows in ’09. That would be nearly a 25% correction from the highs made earlier this year... We remain here at TGL modestly net short of the market generally and we’ve no intention of changing that focus other than to become a bit shorter still as time and market conditions demand."

So much for exiting the market. According to Goldman's estimates, China spent CNY600 billion propping up the stock market in the month of August alone. Meanwhile, MNI reports that in the wake of the yuan devaluation, SAFE began "'urging' [companies to] actively take measures to limit foreign exchange purchase for advance payment under imports... and postpone forex purchases." 

• Sure, why not: China Rebounds as Trade Data Disappoints (BBG)
• Oh, that's why: China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says (BBG)
• Can't make this up: German finmin says must avoid reliance on debt, cenbank stimulus (Reuters)
• Stocks rise after contrasting China, Germany trade data (Reuters)
• Euro zone second-quarter GDP revised up as Italy grows faster (Reuters)
• Brent oil rises on European, Chinese data; oversupply weighs (Reuters)
• Corporate Prosecution Deals Headed for a Legal Test (WSJ)

The last time we looked at Chinese stocks, just a few hours ago, they were on pace to close back under 3000, following the latest collapse in trade, where in August exports dropped 5.5% (last -8.3%) while imports tumbled -13.8% in dollar terms (worse than the -8.1% prior). As the Reuters chart below shows, this was the 10th month in a row of declines and the worst stretch since the 2008 crisis, confirming China will need far more currency devaluation to stabilize the trade pain. And then Chinese authorities intervened with gusto, waiting until the start of the afternoon session, at which point a massive buying orgy ensued, and pushed the SHCOMP from down more than 2% to close at the day highs, up some 2.9%!

Over the past year, some have asked - is there any labor-related chart that matters any more? The answer: a resounding yes, only it is none of the conventional charts that algos and sometimes humans look at. The one chart that matters more than ever,has little to nothing to do with the Fed's monetary policy, but everything to do with the November 2016 presidential elections in which the topic of immigration, both legal and illegal, is shaping up to be the most rancorous, contentious and divisive.