• Phoenix Capital...
    07/02/2015 - 11:09
    This process has already begun in Europe. It will be spreading elsewhere in the months to come. Smart investors are preparing now BEFORE it hits so they are in a position to profit from it...

Monetary Policy

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Chinese Government "Losing Control": Stocks Are Collapsing, Hitting New Bear Market Lows





As one local reporter put it, despite being told not to say anything negative, "the government appeared to have lost its ability to manage the market." Chinese stocks are down 4-5% at the open, pressing new cycle lows with Shenzhen and CHINEXT now down 25% from last week. As The South China Morning Post reports, many investors said the government was at least partly to blame for the collapse because it encouraged them to go into the market - for months, state-owned media have issued daily commentaries to encourage people to load up on shares.

 
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Shale Drillers About To Be "Zero Hedged" As Loss Protection Expires





Hedges accounted for 15% of Q1 revenue for nearly half of North American E&P companies, Bloomberg reports. "Now the safety net is going away."

 
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Your Last Minute Payrolls Preview: What Wall Street Expects





While we showed what the all important Goldman jobs preview looks like, here is a quick snapshot of what consensus expects will be reported in 15 minutes:

  • US Change in Nonfarm Payrolls (Jun) M/M Exp. 233K (Low 160K, High 290K), Prev. 280K, Apr. 221K
  • US Unemployment Rate (Jun) M/M Exp. 5.4% (Low 5.3%, High 5.5%), Prev. 5.5%, Apr. 5.4%
  • US Average Hourly Earnings (Jun) M/M Exp. 0.2% (Low 0.1%, High 0.3%), Prev. 0.3%, Apr. 0.1%
 
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With Sweden's QE Officially Broken, The Riksbank Doubles Down: Lowers Rates Even More Negative; Boosts QE





Overnight the Riksbank confirmed that it neither learns from its own mistakes, nor reads BIS reports when at 9:30 CET, it shocked central bank watcher all of whom were expecting no rate change from the bank, and announced it is not only engaging in yet another rate cut, taking the key rate even further into record NIRP territory, from -0.25% to -0.35% but adding insult to broken QE injury, it would expand its QE by a further SEK 45 billion starting in September. The reason? Sweden is realizing it is losing the currency war (to a great extent due to its failed QE which is pushing bond yields higher and with it, its currency) and it needs to soak up even more collateral... which can barely be found.

 
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China Crash Accelerates, Drags Composite Under 4000; US Futures Flat Ahead Of Nonfarm Payrolls





If it was Greece's intention to crush the Chinese stock market instead of Europe's, well - it succeeded.  Because despite the PBOC and politburo throwing everything but QE at the stock market, China stocks closed down sharply on Thursday after another wild trading day as investors shrugged off regulators' intensified efforts to put a floor under the sliding market, by cutting trading fees and easing margin rules, which has now crashed 25% in about two weeks wiping out $2.5 trillion of the peak $10 trillion in Chinese stock market cap as of June 14. This ultimately resulted with the Shanghai Composite closing under 4000 for the first time since April.

 
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Manhattan Apartment Prices Soar To Record On Billionaire Bid





In the latest example of the soaring cost of living in America, Manhattan apartment prices just hit a record, with average sale prices soaring 11% to an astounding $1.87 million in Q2, the highest in the quarter or so century of record keeping.

 
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Market Wrap: Greek "Capitulation" Optimism Sends Global Risk Higher After China Re-crashes





So much going on that by the time an article is prepared, everything has changed and it has to be scarpped. But, in any event, here is an attempt to summarize all that has happened in another turbulent overnight session.

 
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Fed Examines Wealth Redistribution Program; Decides It's Not Worth It





After seven long years of aggressively defending a monetary policy regime that's served to exacerbate the divide between the haves and the have-nots, the Fed looks at whether "the legend of Robin Hood" offers any helpful pointers about how to reignite America's economic growth engine. Spoiler alert: the Fed doesn't think "taking from the rich to give to the poor" would be very productive.

 
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Greece Becomes First Developed Country To Default To The IMF





*IMF SAYS GREECE FAILED TO MAKE PAYMENT DUE TUESDAY
*IMF BOARD INFORMED THAT GREECE IS NOW IN ARREARS

 
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This Insane Debt Chart Explains Why Chinese QE Is Inevitable





Because the central government is ultimately responsible for guaranteeing local government debt, and because yields on the new muni bonds are so close to those on treasurys, the newly issued local government bonds are really just treasury bonds, meaning that, in essence, the supply of Chinese government bonds is set to jump by CNY2 trillion in the coming months. If all of the local government debt ends up being refinanced, the end result will be the equivalent on CNY20 trillion in additional treasury supply.

 
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SocGen Says "Raise Cash" As Volatility, Turbulence Ahead





The unanticipated recent Greek political news flow and consequent market stress are addressed in our portfolio construction by the resilience we built into higher volatility scenarios and unexpected sources of turbulence. Indeed, the risk is not so much Greece but the structural illiquidity of the market which will exacerbate any moves up or down which should be part of the equation.

 
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"Of What Use Is A Gun With No Bullets?", BIS Says Central Banks Defenseless Against Coming Crisis





Risk-taking in financial markets has gone on for too long. And the illusion that markets will remain liquid under stress has been too pervasive. But the likelihood of turbulence will increase further if current extraordinary conditions are spun out. The more one stretches an elastic band, the more violently it snaps back. Restoring more normal conditions will also be essential for facing the next recession, which will no doubt materialise at some point. Of what use is a gun with no bullets left?

 
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Russia Promises "Economic And Military" Aid To Syria As US Refloats Assad "Chemcial Weapons" Trial Balloon





The Syrian "chemical weapons" narrative is back and with it is the confirmaton that Russia will not leave the US dictate middle eastern borders unilaterally. Syria's foreign minister said on a visit to Moscow on Monday that top ally Russia had promised to send political, economic and military aid to his country. "I got a promise of aid to Syria - politically, economically and militarily," Walid al-Moualem said at a televised news conference in Moscow after meeting Russian President Vladimir Putin.

 
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The Test Of Central Bank Omnipotence May Be Upon Us





Over the last few months the financial media has not only turned deaf ears to the drama, (out of boredom) they have also blindly discounted any contagion effects as “isolated” at best – relative periphery contagion at worst. In other words: Any and all problems can be contained, mitigated, or solved by none other than your friendly neighborhood Central Bank. After all, if you listen to the so-called “smart crowd” these bankers have powers even Zeus would envy. So why worry about a little turmoil at the foot of Olympus? In any hero-worship endeavor one thing must remain constant or it all falls apart. Those that worship can never witness any event regardless of how minor: that the gods are not all that they portend to be. In other words: Allow just one moment of truth to be witnessed showing frailty instead of omnipotence – and the whole ruse falls regardless of the size and strength of the monuments and temples built to honor. For they will be abandoned: sometimes slowly, at others - all at once.

 
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