Forget Shanghai and its roaring stock market, there's a new centre for speculative excess in China. Nothing says sustainable capital formation like a stock index that trades at a valuation of 67.2 times earnings, is up 166% in the last year and whose components regularly see 500% rallies (and recently epic collapses). Welcome to Shenzhen.
- U.S. vows to continue patrols after China warns spy plane (Reuters)
- Bank of Japan Chief Cheers On Tokyo’s Surging Stocks (WSJ)
- Merkel Stamps Out Optimism on Greece After Tsipras Talks (BBG)
- Greece sees reforms deal with lenders in next 10 days (Reuters)
- Why Greece’s Syriza party is not sticking to the script on an IMF deal (Channel4)
- Why Does Putin Care Who Runs a Tiny Balkan Nation? Gas Pipelines (BBG)
- U.S. Stock-Index Futures Are Little Changed Before Yellen Speech (BBG)
- German Business Confidence Declines as Risks Cloud Outlook (BBG)
"China... across the board... is preparing for something big in currency markets... The world has an unease about the dollar system... former President Hu of China said 'the dollar is a product of the past'."
It appears the frauds, falsehoods, and f##king fallacies are all being exposed at the same time. While we have noted three companies that have collapsed in the last week - destroying their billionaire owners' wealth in the process - it appears the Chinese capital destruction virus has spread to Germany. Joyou AG - a Chinese affiliate of German bathroom manufacturer Grohe - has collapsed from record highs a week ago to 0, pending bankruptcy, after admitting balance sheet manipulation.
Yesterday China's richest man, Li Hejun, lost more than half his fortune when his solar company stock suddenly crashed over 50%. Overnight it happened again, and Hong Kong’s securities regulator, warned other investors to exercise "extreme caution," as Hong Kong's best-performing stocks this year are crashing in a serial, tulip-like manner. And another billionaire was promptly wiped out: Pan Sutong started the day engorged with wealth after his companies Goldin Financial and Goldin Properties had risen 300% this year. By the close he had lost 60% of his wealth!
- Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor ‘Meh’ (BBG)
- The E-Mail That Helped Catch Barclays: ‘ISDAfix Is Manipulated’ (BBG)
- CFTC Said Preparing ISDAfix Probe Talks in Weeks: Credit Markets (BBG)
- Islamic State takes control of Syria's Palmyra in westward advance (Reuters)
- Tensions High as Greece Gets Smallest Aid Rise Yet (BBG)
- The Rise of the $50,000 Rental (BBG)
- U.S. says South China Sea reclamations stoke instability (Reuters)
- First Hanergy Now Goldin: Hong Kong Stocks Drop Like Stones (BBG)
Li Hejun began the day as either China’s second-richest man according to Forbes, or richest, according to the Hurun Report and Le Figaro, with a fortune worth more than $30 billion. By 11am, his net worth was amazingly cut by half, and he was almost $14 billion "poorer" as shares in Li’s flagship Hanergy Thin Film plunged by 47% in Hong Kong before trading was suspended - due to Li's absence at the company's annual meeting.
- Clinton aides sometimes blocked release of documents requested under public-records law (WSJ)
- House Benghazi panel subpoenas former Clinton White House aide (Reuters)
- Cash Crunch, for Many, Is a Monthly Woe (WSJ)
- Doubts over Greece add to euro's ECB-driven frailty (Reuters)
- For Many American States, It's Like the Recession Never Ended (BBG)
- Japan debt plan needs BOJ to keep rates low for years (Reuters)
- Euro Continues to Fall; European Bonds, Stocks Broadly Steady (WSJ)
- Los Angeles gives preliminary approval to $15 minimum wage (Reuters)
London’s property market is still hell bent on going crazy as if it has overeaten and become over inflated yet again.
New research shows that European banks are as likely to fail today as they were preceding the global economic crash 7 years ago. Bail-ins are now the rule.
As the economic calendar slowly picks up following the NFP lull, we are looking at a busy week both globally and in the US, where an army of Fed speakers culminates with a Yellen speech on Friday at 1pm in Rhode Island.
Central bank liquidity lines like those the Fed used to bailout the world seven years ago have become a fixture of the post crisis financial system. Since 2009, China has essentially blanketed the globe with yuan liquidity lines, inking swap agreements with nearly three dozen countries with the primary goal of increasing the degree to which the renminbi is used in international trade.
Was that it for the "reflation" aka Bund-rout trade? One look at German bonds this morning and the sharp, panic selloffs seen in recent days are completely gone making one wonder if the ECB is done selling Bunds the CTAs who were riding the momentum train have all been squeezed out of their long positions and now the trend back to -0.20% can resume only to be followed by another abrupt 6-sigma move as the ECB once again sells inventory to buy itself more monetization runway. As a reminder, the ECB has to buy debt until September 2016 and it won't be able to if the 30-Year Bund is at -0.20% in a few months (or weeks).
It has gotten to where just the lack of a rout in Bunds or any other government issue is enough to activate the "bullish" outside stop hunting algo, which is probably why ES has jumped overnight in another illiquid, newsless session. Curiously, Bunds shave not sold off even though the EUR has jumped sharply by almost 100 pips overnight to a 3 month high also on no news (with some amusing acrobatics by the USDJPY alongside) traditionally a bearish indicator for the Dax and thus the S&P. Perhaps the algos are just late, or maybe the "weak dollar is good for stocks" thesis has been activated, but in any event this morning's ramp higher in the ES will continue until all upside stops are hunted down by Virtu and crushed mercilessly.
"Mark Dearlove, a Barclays Plc executive who was involved in the manipulation of the London interbank offered rate, was named as the U.K. lender’s head of markets for Asia-Pacific," Bloomberg reported earlier today, proving once again that not only do those involved in rigging, fixing, and otherwise manipulating every benchmark rate and market on the planet not go to prison, they in fact get promoted.