Update: So much for the "no more intervention" - CHINA SAID TO ORDER BROKERAGES TO BOOST STOCK MARKET SUPPORT
A busy weekend in Asia was dominated by mayhem in Malaysia, and witch-huntery in China. Chinese authorities began a wide-scale crackdown on rumor-mongerers, arrested journalists, and even detained a regulator for insider trading, as they lifted loan caps on the banking system at the same as withdrawing (verbally) support for the stock market. China strengthen the Yuan fix by 0.15% to 6.3893 - this is the biggest 2-day strengthening of the Yuan fix since Nov 2014. Then just to rub some more salt in the wounds, Goldman cut China growth expectations to 6.4% and 6.1% respectively for the next 2 years. Chinese stocks are opening modestly lower (SHCOMP -3.3%).
Dollar recovered from the exaggerated panic at the start of last week. Outlook is still constructive. Here is an overview of the technical condition of currencies, bonds, oil , and S&P 500.
"Policymakers responded to the financial crisis with easy monetary policy and low interest rates. The critics — including us — argued against 'solving a debt crisis with more debt.' Put differently, we said that QE was necessary, but not sufficient for a recovery. We are now coming to the moment of reckoning: central bankers look naked, and markets have nothing else to believe in."
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.
Precisely 24 hours ago, in an attempt to pre-empt the panic-selling open, the NYSE invoked the little used Rule 48, which was to be expected: the Nasdaq 100 has just tumbled limit down and the S&P and DJIA would follow shortly. Today, however, it is unclear just why the NYSE decided to once again invoke Rule 48 as futures are set to open about 3-4% higher, and yet that is precisely what the NYSE did. As a reminder, what this means is that mandatory opening indications are not required, which in theory should make it easier to open stocks.
Gold appears to have once again anticipated the crisis and is acting like a safe haven in recent days - just at the moment when western investors need a safe haven and wealth preservation most.
The status quo must be maintained...
NYSE granting "triple width opening quote relief in all option classes for August 24, 2015", Invokes Rule 48
The last time this was invoked was in Jan 2015 (during the blizzard), in June 2012 (amid a dramatic drop in pre-open futures) and in Sept 2011 amid the chaotic 400-point swings in The Dow. Funny they do not use this "Rule" when futures indicate massive upside opens?
Steep losses in the dollar, stocks and commodities, for sure, but does it really signal a systemic crisis?
OPEC next gathers December 4 in Vienna, just over a year since Saudi Oil Minister Ali Al-Naimi announced at the previous OPEC winter meeting the Saudi decision to let the oil market determine oil prices rather than to continue Saudi Arabia’s role of guarantor of $100+/bbl oil. Despite the intense financial and economic pain this decision has inflicted on Saudi Arabia, its fellow OPEC members, and other oil producers, the Saudis have given no indication they plan to alter course. Given the Saudi decision’s positive impact on their and their Gulf Arab allies’ relative position within OPEC and its negative impact on OPEC outsiders, it is possible, perhaps even likely, the Saudis will face an OPEC outsider revolt at the December 4 OPEC meeting.. with three possible outcomes - Reconociliation, Separation, or Divorce.
Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis.
Near-term dollar outlook, with some views on oil, Treasuries and S&P 500 thrown in for extra measure.
The week's weakness started with the surprise yuan devaluation, but the moves in everythingfrom crude oil to U.S. government debt signal that investors and traders are telling the Fed to hold off for now. Will U.S. policymakers listen? Make no mistake: the Fed marches to its own data-dependent drum. These indicators will only tell you if the central bank has the right tempo to support markets.
Fat-Finger, Flash-Crash, or Forced Liquidation... either way, something broke in the Italian bond futures market...
For the last three weeks, gold has experienced something that has never happened before - hedge funds aggregate net position has been short for the first time in history. However, as Dana Lyons notes, this week saw another 'historic' shift in gold positioning as commercial hedgers shifted to the least hedged since 2001... so the 'fast' money is chasing momentum and the 'smart' money is lifting hedges into them.
The demise of the dollar has been greatly exaggerated. Here is how I see the near-term outlook.