People's Bank Of China

Putting what China has just done in very simple context: China announces an increase in its gold holdings of over 58% (June and July)... and then it devalues its currency by nearly 5% in one week. Even the most brainwashed Keynesians should be able to see what is going on here by now.

• China central bank tries to soothe global markets, says no reason for yuan to fall further (Reuters)
• Huge blasts at Chinese port kill 44, with hundreds injured (Reuters)
• China efforts to slow yuan fall hoist Europe shares, bond yields (Reuters)
• Greek Economy Unexpectedly Surged Before Capital Controls (BBG)
• Joe Biden Is Sounding Out Allies About a 2016 Bid (WSJ)
• U.K. Tries to Kick-Start Shale Gas With Planning Speedup (BBG)

Although the headline number suggests that credit demand in China was robust in July, the "expansion" was entirely attributable to Beijing's mammoth equity plunge protection effort. As for the real economy, well, the picture isn't pretty.

There is much stunned confusion among Wall Street's "best and brightest" following China's historic Yuan devaluation overnight which was predicted by exactly zero of said best and brightest, just like nobody expected the SNB to give up its own peg to the EUR in January.

• China Rattles Markets With Yuan Devaluation (BBG)
• China Move Sparks Wave of Yuan Selling (WSJ)
• China's devaluation raises currency war fear as Greece strikes deal (Reuters)
• Protests return to Ferguson streets, state of emergency declared (Reuters)
• Heavily armed 'Oath Keepers' inject new unease to riot-hit Ferguson (Reuters)
• Greece Secures Bailout Deal After All-Night Talks in Athens (BBG)
• U.S. Identifies Insider Trading Ring With Ukraine Hackers (BBG)

Almost exactly seven months ago, on January 15, the Swiss National Bank shocked the world when it admitted defeat in a long-standing war to keep the Swiss Franc artificially weak, and after a desperate 3 year-long gamble, which included loading up the SNB's balance sheet with enough EUR-denominated garbage to almost equal the Swiss GDP, it finally gave up and on one cold, shocking January morning the EURCHF imploded, crushing countless carry-trade surfers. Fast forward to the morning of August 11 when in a virtually identical stunner, the PBOC itself admitted defeat in the currency battle, only unlike the SNB, the Chinese central bank had struggled to keep the Yuan propped up, at the cost of nearly $1 billion in daily foreign reserve outflows, which as this website noted first months ago, also included the dumping of a record amount of US government treasurys. 

Overnight something unexpected happened: Sheng Songcheng, the director of the statistics division of the People's Bank of China (PBOC), was quoted by the National Business Daily on Saturday whereby he essentially admitted China had been lying about not only its local debt exposure but the level of NPLs across the economy.  The punchline: Sheng warned about the risks of local government debt, saying that 2 trillion yuan in bond swaps may not be able to fully cover maturing debt, according to the report. What he really said, as paraphrased by Bloomberg, is that "local govt's tended to not report all their debts when audited in June 2013, thus the 2 trillion yuan debt swap plan arranged this year may not cover all debts due, Sheng cited as saying."

Oops.

• Gold claws back ground, European assets lose Greek tarnish (Reuters)
• Greece's Euro Exit Back on the Agenda Next Year, Economists Say (BBG)
• Greece submits bill needed to start rescue talks (Reuters)
• Wall Street Lenders Growing Impatient With U.S. Shale Revolution (BBG)
• Overtime Rules Send Bosses Scrambling (WSJ)
• As Markets Swing, Beijing Steadies Yuan (WSJ)
• Tennessee rampage suspect went to Qatar in 2014 (Reuters)
• Kathryn Dominguez to Be Nominated for Fed Governor (WSJ)

For those curious what it looks like when a centrally-planned market devolves into complete chaotic hell despite the relentless intervention of the local authorities and central planners, look no further than the chart below...

Less than two weeks after Bank of China became the first Chinese bank to join the list of participants in the London gold auction, The Shanghai Gold Exchange confirms that a yuan-denominated gold fix will be in place by the end of 2015.

Chaos reigns, with contradictory headlines pushing and pulling futures in any one direction, only for the next headline to undo the previous one. And only headline scanning frontrunning algos have any chance of trading any of this...

While China is rather proud of the fact that it hasn't yet implemented outright QE, Beijing has now put in place a bewildering hodge-podge of hastily construed easing measures that can't seem to get out of their own way.

• Europe shares set for worst week of 2015 (Reuters)
• Jobs Report Not Likely to Trigger June Rate Hike (Hilsenrath)
• U.S. jobs market seen firming despite lackluster growth (Reuters)
• Gross Says Bond Rout Scary as Hell Even Without Bear Market (BBG)
• Apple Is the New Pimco, and Tim Cook Is the New King of Bonds (BBG), which ZH said in 2013
• In 'year of Apple Pay', many top retailers remain skeptical (Reuters)
• OPEC Nations Signal Few Prospects for Oil-Production Change (BBG)
• China regulator says amending rules on margin trading, short selling  (Reuters)

• China’s Record Capital Outflows Spark Financial Stability Fears (FT)
• U.K. Inflation Falls Below Zero for First Time Since 1960 (BBG)
• Islamic State Solidifies Foothold in Libya to Expand Reach (WSJ)
• Judge sentences 11 Afghan police over lynching of woman in Kabul (Reuters)
• The $18 Trillion Global Economic Boost If Everything Went Right (BBG)
• Eurozone Prices Confirmed Flat Year-on-Year in April, Core Inflation Inches Higher (Reuters)
• Greek Finances to Stagger On Longer Than You Think (BBG)
• Athens sees EU deal soon, Greeks' approval of government stance dwindles (Reuters)