The utilization of the Chinese market as both policy tool and 'wealth' creator - as The Fed has done with the S&P 500 - remains less than the PBOC would like. It appears the Chinese prefer their 'risk' in Baccarat and real estate and don't trust those stock markets shisters... so the government is doing something about it. While American investors have to worry about high-frequency traders front-running them; in China, it's a low-frequency trade called "rat trading" where fund managers use personal accounts to buy shares cheaply, then sell them at a profit after purchases from the funds they manage have boosted their value. China’s securities regulator has decided enough is enough and has stepped up its probe into insider trading, taking on “rat traders” in an attempt to restore confidence in the country’s stock market.
Stocks at record highs... Unemployment rates at multi-year lows... magical job creation 'impressive'... President Obama has a lot to proclaim "mission accomplished" over - except its all fallacious (as Wal-Mart's CEO recently explained). Of course, this will all be solved if everyone was paid 'fairly' at least $15/hour despite the greatest irony of Obama's inequality fight is that "his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough."
Long-duration Treasuries continue to look attractive; a view that Scotiabank's Guy Haselmann has unwaveringly maintained for the past six months for a variety of diverse reasons. Of all of the various reasons, private pension demand is the most interesting and compelling (and the least understood). The bottom line is that PBGC rule changes will cause persistent and incremental demand over time that overwhelms net visible secondary market supply. Concerns about funding status will trump the private defined benefit plan manager’s fiduciary desire to ‘maximize return per unit of risk’. There are other factors, but the point is that Treasuries as a relative asset class looks attractive.
"US lending to businesses is reaching record levels but banks are privately warning that the activity should not be seen as evidence of an economic recovery." And the stunner: "Much of the corporate lending is going to fund payouts to shareholders, finance acquisitions and fuel the domestic energy boom, bankers say, rather than to support companies’ organic growth."
FDIC: “the largest positive contribution to the year-over-year change in earnings came from reduced loan-loss provisions..."
For all those upwardly mobile middle class Americans (amazing they still exist under the current central planning regime which takes from the middle class and gives to the ultra rich and uber poor) who are eager to buy a better house, and suddenly find themselves priced out due to an ongoing surge in the prices of ultra-luxury segment, here is what you need to know: blame China.
Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality. What you can take away from this is the opposite of what the presstitute media would have you believe. For the most part economists have turned a blind eye. Economists serve the globalists. It pays them well. The corruption in present-day America is total. No one serves truth and liberty. America has left us. We now have the tyranny of the Orwellian state that rules, not by the ballot box and Constitution, but by force and propaganda.
- Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar (BBG), as reported first by Zero Hedge
- As Food Prices Rise, Fed Keeps a Watchful Eye (WSJ)
- Yellen’s Economy Echoes Arthur Burns More Than Greenspan (BBG)
- Draghi’s $1.4 Trillion Shot: Silver Bullet or Misfire? (BBG)
- Israel's Netanyahu phones father of murdered Palestinian teen (Reuters)
- Ukraine says forces will press forward after taking rebel stronghold (Reuters)
- Goldman Sachs Brings Forward Rate Forecast as Treasuries Drop (BBG)... you mean rise?
- Super typhoon takes aim at Japan (Reuters)
- Kidnapped Nigerian girls 'escape from Boko Haram abductors' (Independent)
- Merkel says U.S. spying allegations are serious (Reuters)
All around Asia, PMIs are tumbling... except for China's government-sponsored Manufacturing PMI. This week saw Aussie Services PMI (linked significantly to China) tumbled to 2014 lows, Japan's PMI drop, and China's own Services PMI disappoint and fade to 2-month lows. So where is all this exuberance coming from in China's manufacturing industry (despite a 8-month in a row drop in employment)? We don't know; but the fact that China coal prices just hit a record low hardly supports the smog-choking industry of China being at 7-month highs... Hard data vs soft surveys? You decide.
The biggest problem with the epic Central Bank rig of the last five years is that propping up a bankrupt financial system by printing money only works for so long.
The most dangerous organization is the now French led IMF with Christine Lagarde at the helm, which has presented a concept report in which 'debt cuts for over-indebted states are uncompromising' and are to be performed more effectively in the future by defaulting on retirement accounts held in life insurance, mutual funds and other types of pension schemes, or arbitrarily extending debt perpetually so you cannot redeem. Yes you read correctly, The new IMF paper describes in great detail exactly how to now allow the private sector, which has invested in government bonds, will be expropriated to pay for the national debts of the socialist governments. This far-reaching plan for the expropriation of savers, investors and retirees clearly shows the reality of socialism.
For once the ADP was actually spot on: in June the US economy added 288K nonfarm payrolls, far above the 215K expected, and above the upward revised 224K from June. Further, May jobs were revised from 282K to 204K. This was the fifth consecutive month of job gains over 200K. The unemployment rate tumbled to 6.1%, well below the 6.3% expected. The brth/death adjustment added 121K jobs, compared to 205K previously, and a total of 452K so far in 2014.
You know it's bad when... Property developers in two of China’s weakest housing markets are offering to buy back homes in the future above the purchase price in a desperate effort to boost sales as demand slumps. As one analyst understatedly notes, "obviously they’re relatively cash-thirsty," but are under massive pressure not to reduce prices for fear of the signal it would send (that losses were possible). This 'fear' is echoed loudly by the CEO of Komatsu (the world’s second biggest maker of building and mining equipment) who saw said sales in China are falling more steeply than anticipated (20% below expectations) and warned "the impact of China is big."
The smart money had a goal, which it now reached via the “multiplier effect.”
- Ceasefire over, Ukraine forces attack rebel positions (Reuters)
- No Good Iraq Options for Obama as Russia, Iran Jump In (BBG)
- Japan’s Cabinet Agrees to Allow Military to Help Defend Allies (BBG)
- Obama says to reform immigration on his own, bypassing Congress (Reuters)
- South Stream Pipeline Project in Bulgaria Is Delayed (NYT)
- Foreign Banks Still in the Dark About Missing Metals in China (WSJ)
- Quelle indignity: several bankers at French bank BNP Paribas will face demotions and cuts to their pay and bonuses (FT)
- Symantec Warns of Hacker Threat Against Energy Companies (BBG)
- Shrinking Office Spaces Slow Recovery (WSJ)
- Rand Paul Slams ‘Fat Cats’ With Hedge Fund in Top Donors (BBG)