Hong Kong

• Virginia TV journalists killed by suspect with 'powder keg' of anger (Reuters)
• Policeman shot to death and three women stabbed, one fatally, in Louisiana (Reuters)
• China Intervened Today to Shore Up Stocks Ahead of Military Parade (Reuters)
• Margin Calls Bite Investors, Banks (WSJ)
• "Computer glitch" is preventing dozens of mutual funds, ETFs from promptly pricing their securities (WSJ)
• Oil prices rise more than 4 percent as equities rally (Reuters)
• Oil Industry Needs Half a Trillion Dollars to Endure Price Slump (BBG)

The night began much like any other morning in Asia - with pure comedy gold from Japanese leadership with BOJ's Kuroda saying he is "not concerned about currency wars, there is no currency war," adding that he has "no plans for further easing." That coincided with a drift lower in Japanese stocks from the US close - but mots of Asian stock markets were green buoyed by America's victory against malicious sellers for the first time in a week. Meanwhile, in China, margin debt drops to a 7-month lows (but is still up 133% YoY). But as rumor-mongers face death squads and any broker caught not buying with both hands and feet faces prison, it is no surprise that Chinese stocks are higher in the pre-open (A50 +5%, CSI +2.7%) but large corporate bond issues are being canceled willy nilly even as China devalues Yuan to fresh 4-year lows (6.4085) and adds CNY150bn liquidity.

Not satisfied with having arrested a reporter and a prominent investment banker, China is also looking into alleged improprieties at CSRC, the regulator which runs the CSF equity plunge protection team. Meanwhile, CSRC is conducting its own investigations into multiple brokers. 

Google delivers its verdict...

• Global Stocks Struggle to Shrug Off China Fears (WSJ)
• Brief Respite Ends for European Stocks Amid Renewed Retreat (BBG)
• Stock futures rise after China injects $21.8 billion (Reuters)
• China turmoil needn't rattle BOJ, yen rise not a worry: Abe adviser (Reuters)
• Stock-Market Tumult Exposes Flaws in Modern Markets (WSJ)
• Dollar gains as stocks recover, lessens safe-haven bid for yen (Reuters)

Because no discussion of global dollar pegs and entrenched FX regimes would be complete without mentioning the Hong Kong dollar...

"China halts intervention in stock market so far this week as policy makers debate merits of an unprecedented government campaign to prop up share prices and what to do next, according to people familiar with situation. Some leaders support argument that stock market is too small relative to broader economy to cause crisis, says one of the people, who asked not to be identified as deliberations are private Leaders also believe intervention is too costly, person says."

Yesterday's market tumble finally brought the S&P and Nasdaq alongside the Dow Jones into correction territory, send the broader index down 11% from its highs, even as a vast majority of S&P constituents already preceded the index and are either in correction or in bear market territory. And yet, following today's latest central bank intervention, this time in the long overdue Chinese interest rate cut (which will hardly have a lasting impact on either the economy or stock markets), the S&P correction may may prove to be short lived: S&P is poised to open about 4% higher, delivering the latest "Bullard" moment to the S&P, this time courtesy of China. Still, the question remains: was that it for the long overdue correction, and what comes next.

The dual policy rate cut is a desperate attempt to i) free up liquidity, and ii) shore up confidence in the stock market. We suspect the effects may be short lived on both accounts because after all, aggressive easing only fuels further depreciation necessitating further liquidity-sapping FX interventions in a vicious loop, and loose monetary policy likely won’t be much comfort to China’s 90 million retail investors who now, more than ever before, are virtually guaranteed to sell any rip they can get in a desperate attempt to claw back their life savings which they naively poured into stocks back in April and May.

The Carnage continues in China (and across AsiaPac) as Japan propagandizes and China throws more kitchen sinks at the market to stop the malicious sellers...

• 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)

The following story is guaranteed to make you sick. Once again, we’re shown that following trillions in taxpayer funded bailouts and backstops, TBTF Wall Street banks immediately went ahead and focused all their attention obtaining loopholes in order to transfer risk and make billions upon billions of dollars in the financial matrix, as opposed to adding any benefit whatsoever to society.

"I have learnt from history that it is very hard working out what the trigger is. In 2008, it was the collapse of Lehman Brothers that triggered a credit crunch. Now it could be a major event in Turkey or a default of the Brazilian oil company Petrobras or some event in Malaysia. But if I have to pick one I would say it is Turkey introducing capital controls. Such controls will mean that Turkey will not pay back principals amounting to 400 Bio. $ and the interests on it." - Russell Napier

• 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)

Hong Kong's Hang Seng index is now down over 21% from the highs, having fallen over 9% in the last week, and Taiwan's TAIEX is down over 20% from April highs, joining Chinese stocks, both joining Chinese stocks in official bear markets. Japanese markets are down over 6% in the last few days (which Amari simply brushes off, blaming the global selloff stemming from China), a JGB trading volumes slump to a record low. Tensions in Korea are not helping. With all eyes on China's flash PMI (though why we are not sure since PBOC is already full liquidity-tard with CNY350bn this week alone), The PBOC fixed Yuan at 6.3864, up from yesterday's biggest strengthening in 3 months to 6.3915 (the biggest 2 day strengthening since April), and margin debt fell for the 3rd day. Gold is surging in the Asia session, near $1160.