Carnage - everywhere. A surging EUR - as CNH carry traders unwind en masse - has led to an unwind across most risky assets in Europe. This week saw EuroStoxx 600 - the broad index - crash almost 6%, its biggest drop since September 2011. Perhaps most stunningly, Germany's DAX was the biggest loser - collapsing 7.4% on the week. European bonds are are also seeing risk increase dramatically with Portugal and Italy worst (aside from Greece's blowout). Europe's VIX topped 30 this week, as US VIX surges.
Members of Syriza's Left Coalition, led by Panagiotis Lafazanis who once plotted to storm the Greek mint, seize the country’s reserves, and arrest central bank governor Yannis Stournaras, have broken away and formed their own political party which they say will support Grexit and stand firm in the face of German "blackmail."
- No End in Sight for Oil Glut (WSJ)
- Dozens of Clinton emails were classified from the start, U.S. rules suggest (Reuters)
- China August Manufacturing Activity Hits Lowest Level Since 2009 (WSJ)
- German Manufacturing Strengthens as Economy Shifts Up a Gear (BBG)
- Israel responds to rocket attack with protest and air strikes (FT)
- ASX carnage: 2015 fast becoming a year to forget (Canberra Times)
- Hong Kong Stocks Enter Bear Market After Falling From April Peak (BBG)
Perhaps the biggest surprise about the overnight Chinese stock rout is which followed the lowest manufacturing PMI since March 2009, is that it happened despite repeat sellside pleas for a PBOC RRR cut as soon as this weekend: usually that alone would have been sufficient to push the market back into the green, and it almost worked when in the afternoon session stocks rebounded after dropping as much as 4.7% below the "hard" floor of 3500, but then a second bout of selling just before the close took Chinese stocks right back to the lows with the Shanghai Composite closing at 3,507, down 4.3% on the day, having wiped out the entire 18% rebound from July 8 when the PBOC first threatened both sellers and shorters with arrest.
News That Matters...
It’s getting downright hazardous out there, and not just because the robo-machines were slamming the “sell” key today. The real danger comes from the loose assemblage of official institutions which claim to be running the world.
Update: GREEK PM TO HAND IN RESIGNATION TO PRESIDENT LATER ON THURSDAY -GOVT OFFICIALS
"Greek state broadcaster ERT is reporting that the embattled prime minister will announce the vote later today. The PM has been meeting with government officials this afternoon and could resign from office having called the vote. September 13 and 20 have been touted as possible dates."
- Crude prices fall towards $40 on global glut (Reuters)
- China Central Bank Injects Most Funds Since February as Money Rates Increase (BBG)
- Divided Fed Puts Yellen on Hot Seat (Hilsenrath)
- So Long September: Bond Traders Defer Their Date With the Fed (BBG)
- More Foods Boast Non-GMO Labels—Even Those Without GMO Varieties (WSJ)
- UN to let Iran inspect alleged nuke work site (AP)
- IAEA says access to Iran's Parchin military site meets demands (Reuters)
- Time to End Quarterly Reports, Law Firm Says (WSJ)
Dazed And Confused: Futures Tumble Below 200 DMA, Oil Near $40, Soaring Treasurys Signal Deflationary DelugeSubmitted by Tyler Durden on 08/20/2015 07:00 -0400
It is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although it's all just goalseeking guesswork) but overnight S&P futures followed yesterday's unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three.
Last year, when alternative economic analysts were warning that the commodities crush and oil crash just after the taper of QE3 were blaring signals for a downshift in all other financial indicators, the general response in the mainstream was that we were overreacting and paranoid and that the commodities jolt was temporary. Perhaps the fact needs repeating that it’s not paranoia if they are really out to get you. Only a short time later, it is truly amazing how the rhetoric from the mainstream economic yes-men is changing. So now that the mainstream is willing to report on clear economic dangers, what happens next?
But Not There Yet...
Having waited for over a year for the Ukraine civil war/conflict to be relegated to back page status, if that, Putin has finally given the green light, and as Xinhua reports, leaders of the self-proclaimed "Donetsk People's Republic" are planning to hold a referendum on seceding from Ukraine and joining Russia, the Donetsk-based Ostrov news agency reported Wednesday.
With the confused FOMC still stuck on the fence of raising rates (or not), here are ten reasons why they won't.. and a caveat in case we're wrong...
FOMC Minutes Leaked Early After Embargo Broken, Fed Warns Risk To GDP Forecast "Tilted To The Downside"Submitted by Tyler Durden on 08/19/2015 13:41 -0400
Seconds ago, someone accidentally (we hope) pulled a Janet Yellen as the following just came across the wires
FOMC MINUTES: MEMB 'GENERALLY AGREED' MORE INFO NEEDED TO HIKE
FOMC MINUTES: NO TIP TOWARDS SEPT LIFTOFF, DOESN'T RULE IT OUT
But the bottom line is that the Fed just admitted things are going from bad to worse: "The risks to the forecast for real GDP and inflation were seen as tilted to the downside." The question now is what comes first: QE4 or the first rate hike in nearly a decade.
Druckenmiller’s fund recently bought $300 million worth of SPDR Gold Trust (GLD), an ETF that tracks the price of gold. It’s a huge bet, even for a big-time trader like Druckenmiller. He put 20% of his fund’s money into this trade, and it’s his largest position.