Henderson

The Notorious 120% LTV Mortgage Is Back

With China desperate to reflate its once-burst housing bubble (as every other bubble including stocks, bonds, and yes - even rebar - has burst) and with no regulators to oversee the insanity in the local housing market, it means that the infamous 120% LTV mortgage has finally resurfaced. As SCMP reports, Sun Hung Kai Properties Ltd., Hong Kong’s largest developer surprised the market on Wednesday by offering an unprecedented home loan worth as much as 120% of the flat value without the need to submit income proof in order to woo buyers for its new project in Yuen Long.

"The Whole Shebang Is Broke" - The Only Thing That's Growing Is Debt

Despite what the media try to tell you, as do the close to 100% manipulated economic data emanating from various -tightly controlled- sources, the economy is not growing, and it hasn’t for years; the only thing that grows is debt. And you can’t borrow growth. The single best thing to do for all of us not in positions of politico/economic power is to recognize the irreversible collapse of the system. Simply put, the whole shebang is broke.

These Are The Bonds The ECB Is Now Buying

Today is a historic day for the corporate bond market: with the launch of the ECB's CSPP, Mario Draghi is now directly buying European investment grade non-financial bonds. This means that no longer will European corporate bonds trade based on their fundamentals, but purely on expectations of frontrunning future ECB purchases, such as the following...

Brexit Bets Surge At Bookies Despite Cable Strength

Cable has strengthened notably in the last week or so as Cameron and Osborne unleashed phase 2 of "project fear" and 'some' Brexit polls suggested market fears of a 'leave' decision were overblown. However, the broad polls still show the decision is too close to call, which is why the news from Ladbrokes - Britain's largest bookmaker - that they have seen a sudden surge in Brexit bets in the last few days. Interestingly, sterling has started to leak lower today...

FBI May "Leak" Clinton Email Probe If DOJ Blocking Continues

The feud between the FBI and the Department of Justice over whether or not to proceed with charges against Hillary Clinton in the ongoing email investigation just took an unexpected turn: "an anonymous and unauthorized release of FBI investigative materials could result if officials at the agency believed prosecution of Clinton was stymied for political reasons,"said Chuck Grassley.

Frontrunning: April 5

  • Panama Papers: Biggest Banks Are Top Users of Offshore Services (WSJ)
  • Panama Papers probes opened, China limits access to news on leaks (Reuters)
  • Credit Suisse CEO Distances Bank From ‘Panama Papers’ (WSJ)
  • Fed's Evans says market more pessimistic on U.S. rate hikes (Reuters)
  • IMF's Lagarde Says Risks to Weak Global Recovery Are Increasing (BBG)

US Equity Futures Suddenly Fall Off A Cliff As Europe Slides, Oil Tumbles, EM Currencies Turmoil

It was a relatively calm overnight session in which European stocks wobbled modestly, Japan was up, China was down following its weakest fixing since 2011 as the PBOC continues to aggressively devalue since the SDR inclusion (stoking concerns capital outflows are once again surging), EM stocks stocks were weak and the dollar was unchanged ahead of today's retail sales data and next week's Fed meeting, and then suddenly everything snapped.

Hong Kong Housing Bubble Suffers Spectacular Collapse As Sales Plunge 42% To Record Low

Hong Kong's once-upon-a-time raging housing bubble just got its last rites after November home sales sank to a record low as an imminent interest rate in the US this month scared away prospective buyers. According to Land Registry data, reported by SCMP, November saw 2,826 registered residential transactions, down 14.4% from October and 41.7% less than in November last year. This was the lowest print in the history of the series.

Frontrunning: August 24

  • Deutsche Bank Says Rout ‘Very Serious’ as Growth Outlook Dims (BBG)
  • Great fall of China sinks world stocks, dollar tumbles (Reuters)
  • Global Stocks Fall Sharply Amid Concerns About the Chinese Economy (WSJ)
  • Stock Rout Spreads Through Europe After China Plunge (BBG)
  • China stocks give up year's gains as 'national team' stays on bench (Reuters)
  • The Fed Is Looking at a Very Different Dollar Than Wall Street (BBG)
  • French train gunman 'dumbfounded' by terrorist tag (Reuters)

Summarizing The "Black Monday" Carnage So Far

We warned on Friday, after last week's China rout, that the market is getting ahead of itself with its expectation of a RRR-cut by China as large as 100 bps. "The risk is that there isn't one." We were spot on, because not only was there no RRR cut, but Chinese stocks plunged, with the composite tumbling as much a 9% at one point, the most since 1996 when it dropped 9.4% in a single session. The session, as profile overnight was brutal, with about 2000 stocks trading by the -10% limit down, and other markets not doing any better: CSI 300 -8.8%, ChiNext -8.1%, Shenzhen Composite -7.7%. This was the biggest Chinese rout since 2007.

Frontrunning: August 7

  • July job gains may favor September interest rate rise (Reuters)
  • It's all about Trump at raucous Republican debate (Reuters)
  • The 5 Most Important Takeaways From the First Debate of 2016 (BBG)
  • Republican presidential candidate Carly Fiorina wins the Web (Reuters)
  • Hedge Fund Losses From Commodity Slump Sparking Investor Exodus (BBG)
  • Winners and losers from the first Republican presidential debate (WaPo)
  • Bush turns in workmanlike debate performance, but will it be enough? (Reuters)

Are The EU And Asia Turning A Blind Eye To Russian Sanctions?

We previously questioned whether western sanctions imposed on Russia were being regularly breached by E.U. and Asian companies, noting that sanctions only work if all countries unite behind them. Now, only one year after being imposed, the sanctions are eroding as it seems that government and business policies are pulling in opposite directions. A U.S. State Dept. representative may have let the truth slip out recently when he noted, "if you tell us you’re going [to break a sanction], we’ll probably order you not to, but if you go and don’t tell us, we’ll probably do nothing."