After a lukewarm start by the Chinese "market", which had dropped for the past 6 out of 7 days despite ever escalating measures by Beijing to manipulate stocks higher, finally the Shanghai Composite reacted favorably to Chinese micromanagement of stock prices and closed 3.7% higher as Chinese regulators stepped up their latest measures by adjusting rules on short-selling in order to reduce trading frequency and price volatility, resulting in several large brokerages suspending short sell operations. At this pace only buy orders will soon be legal which just may send the farce of what was once a "market" limit up.
Things are unfolding in textbook fashion for another major global financial crisis in the months ahead, and yet most people refuse to see what is happening. In their blind optimism, they want to believe that things will somehow be different this time. Well, the coming months will definitely reveal who was right and who was wrong. The following are 11 red flag events that just happened as we enter the pivotal month of August 2015...
Moments ago energy titan Exxon Mobile, which not too long ago was bigger than AAPL by market cap, and is now roughly half the size of the phone maker, reported earnings which were, in a word, a bloodbath.
In a repeat of Thursday's action, Chinese stocks which had opened about 1% lower, remained underwater for most of the session before attempting a feeble bounce which took the Shanghai Composite fractionally into the green, before the now traditional last hour action which this time failed to maintain the upward momentum and the last day of the month saw a surge in volume which dragged the market to its lows before closing roughly where it opened, -1.13% lower. This caps the worst month for Chinese stocks since since August 2009, as the government struggles to rekindle investor interest amid a $3.5 trillion rout, one which has sent the Shanghai market lower by 15% - the biggest loss among 93 global benchmark gauges tracked by Bloomberg.
- Second-quarter GDP seen rebounding on consumer spending, housing (Reuters)
- China Stocks Fall as Traders Puzzle Over Sudden Late-Day Swings (BBG)
- European 'alliance of national liberation fronts' emerges to avenge Greek defeat (Telegraph)
- Thomas Cook warns on earnings over Greece (MW)
- Largest Greek toy seller Jumbo warns of hit from capital controls (Kathimerini)
- Chevron and Exxon Get the Plaudits, but Some Smaller Drillers Faring Well (WSJ)
- Schäuble outlines plan to limit European Commission powers (FT)
- UBS Deal Shows Clinton’s Complicated Ties (WSJ)
Last week was a complete dead zone for US macro, however with the peak of Q2 earnings season there was more than enough commotion for everyone. This week US macro starts to pick up again, with Durable Goods on Monday, followed by Case Shiller, Q2 GDP, the Chicago PMI, various consumer confidence indices, and of course, the July FOMC meeting on Wednesday.
It all started in China, where as we noted previously, the Shanghai Composite plunged by 8.5% in closing hour, suffering its biggest one day drop since February 2007 and the second biggest in history. The Hang Seng, while spared the worst of the drubbing, was also down 3.1%. There were numerous theories about the risk off catalyst, including fears the PPT was gradually being withdrawn, a decline in industrial profits, as well as an influx in IPOs which drained liquidity from the market. At the same time, Nikkei 225 (-0.95%) and ASX 200 (-0.16%) traded in negative territory underpinned by softness in commodity prices.
Despite all her proclamations of new fairness doctrines, false promises of her truthfulness, and exclamations of 'everyday Americanism' Hillary Rodham Clinton is seeing her favorability ratings collapse. As populist as she dares to be, in the face of her donating captors, it appears the everyday American just isn't buying it as Gallup reports just 43% Americans view her favorably (down from 66% just a few years ago) while none other than Bernie Sanders is bounding up the popularity ladder, rising from 12% to 24% favorability in recent weeks.
Straight-forward discussion of next week's economic data and events, and why it is important for the dollar.
The pantsuit revolutionary is at it again. Once again demonstrating her populist chops by employing the services of lobbyists to bundle millions in campaign funds. It’s no wonder opinion polls on her have been plunging as of late.
The real reason why retail investors weren't impacted by the NYSE's halt is a hard truth... to retail investors, the NYSE is always dark
Where Do Retail Investor Orders Go? The simple answer: to the highest contracted bidder. Stock "wholesalers" or internalizers like Citadel or Knight pay retail brokers lots of cash to execute retail trades, essentially creating a "third market". Why? Because in a high frequency trading world, where stock prices have never been more fuzzy to the end user, but crystal clear to those that spend enormous sums on colocation and PhD employees, it's never been easier to print money (not unlike Bernie Madoff's scheme in the 90's). But that is the subject of a much, much longer story. Someone should write a book.
California's gasoline price premium to the rest of the nation is the highest on record, according to Bloomberg data. This, as OilPrice's Andy Tully notes, is in large part because an Exxon Mobil Corp. refinery in Torrance has been out of commission since an explosion there in February, and the state’s environmental regulations are hampering the company’s efforts to quickly get it back to full production. This situation is not expected to improve by year-end.
We love reading quotes from Hussman in 2000 and 2007. The air is getting pretty thin up here. A stock market driven by Google, Apple, Netflix and a few other tech darlings with no earnings does not make a market. Time is running out for the bulls. The same morons on CNBC ridiculed and scorned his facts then and they scorn and ridicule him now. Do we trust Jim Cramer and Steve Liesman or John Hussman? Guess.
The coming few months will prove challenging for the sector, and some small and medium U.S. producers may start missing their debt repayments or even file for bankruptcy. Quicksilver Resources and American Eagle Energy are two of the six U.S. based companies that have filed for bankruptcy in 2015 so far. Sabine Oil and Gas Corp. is the latest, and the biggest, U.S. producer to file for bankruptcy so far. Even mergers and acquisitions have slowed down considerably for the U.S. oil and gas industry in 2015. If the present trend persists, companies will have no choice but to cut their workforces even further to remain competitive and reduce their rising overheads. If oil prices remain in the range of $50 per barrel for longer than expected, even big operators such as Exxon Mobil, Chevron and ConocoPhillips (who have so far not made any major layoffs) could start downsizing their workforce.
What happened in the China stock market is the latest culmination of the slippery slope of governmental and central bank intervention in financial markets.....