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Chinese Stocks Slide Again, Copper Tumbles To 6 Year Low; Greek Market Crashes After One Month Trading Halt
If China had hoped it would root out intervention by eliminating Citadel's rigging algos, and unleash a buying spree it was wrong: the Shanghai Composite opened negative, and never managed to cross into the green, despite the usual last hour push higher, ending down -1.1% and down for 6 of the past 7 days.
Worse, the high-beta Chinext tumbled 8% from Friday's late day highs upon opening. Surprisingly, this happened even as China's final Caixin/Markit manufacturing PMI tumbled to 47.8, the lowest since July 2013 as reported previously, a collapse which normally would have been very bullish for stocks as it guarantees even more PBOC intervention. The trouble is that with the PBOC losing the market's faith, not to mention control, bad economic news are becoming even worse news for stocks.
Adding commodity insult to stock injury, earlier today copper plunged to a fresh 6 year low, and like crude, is back in its second bear market of the past year.
#Commodities Watch: #Copper Heads into Bear Market after Metal Hits 6-Year Low http://t.co/zNhsG5Q8Yi via @business pic.twitter.com/RnnWDGT0v2
— Javier Blas (@JavierBlas2) August 3, 2015
Elsewhere in Asia equities fell with Chinese bourses at the forefront in the wake of disappointing Chinese Official and Caixin Mfg PMI readings. Hang Seng (-0.9%) traded in negative territory as the poor data increased concerns over China's growth with a PBoC official adding that downward economic pressures are 'not small' and further revealing China had fabricated its local government debt numbers. Nikkei 225 (-0.4%) and ASX 200 (-0.4%) fell, as mining and energy names felt the effects of weak commodity prices. JGBs were flat having initially opening higher following the gains seen in USTs, however later pared gains amid a mild bounce back in Japanese equities.
The real action, however, was not in Asia but in Europe, and specifically Greece, where the stock market finally reopened after a 1+ month "capital control" hiatus. Granted, numerous conditions still remained, such as no short selling, and extensive limitations to just what could be sold, but despite the attempt to micro manage the reopening, the result was not pretty, with stocks crashing 23% at the open and staging barely a rebound trading -17% as of this moment, even as banks promptly traded down to the -30% limit as the realization that an equity-eviscerating recapitalization (or bail-in) is now inevitable.
Worse, just as the Greek stock market reopened, the Greek Markit data and at 30.2, down from 46.9 the month before, the best reaction anyone could muster to this complete shutdown in the Greek economy was laughter. The chart below hardly needs commentary...
... but here is some anyway from Phil Smith, Economist at Markit:
“Manufacturing output collapsed in July as the debt crisis came to a head. Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity.
“Demand was hit amid the heightened uncertainty surrounding Greece’s future, leading both total new business and exports to contract sharply, and it remains to be seen how long it takes these to recover.”
“Although manufacturing represents only a small proportion of Greece’s total productive output, the sheer magnitude of the downturn sends a worrying signal for the health of the economy as a whole.”
Don't expect a quick rebound: Greek economic sentiment likewise tumbled, however it could be worse: unlike the unprecedented collapse in the PMI, this was only at a 3 year low:

The Greek pain was largely confined just to one country as European equities (Euro Stoxx: +0.2%) were bolstered during the European morning as a consequence of the better than expected PMI's , while also benefiting from stock specific news, with earnings today generally better than expected, with , with HSBC (+0.6%) trading higher after their earnings.
fixed income markets have seen tight price action in Europe with volumes starting the week in light fashion, while the Greek spread is tighter against its German counterparts on their reopening. Of note, seasonally we are entering the most bullish month of the year for bonds. Treasury Futures have been up 14 of the last 15 Augusts, and have averaged a 1.14% gain over the last 20 years . Interestingly, the curve continues to flatten, as 12-month yields hits a six-year high and 30-year yields touched a two-month low last week.
In FX, the week has kicked off with Manufacturing PM's from around Europe and the UK, with the data generally better than expected (Eurozone Manufacturing PMI 52.4 vs. Exp. 52.2, UK Manufacturing PMI 51.9 vs. Exp. 51.5). However price action has been fairly muted, with both EUR and GBP down under 10 pips throughout the majority of the session against the USD, which trades flat on the day (USD-Index 0.0%).
Elsewhere the aforementioned lower than expected Chinese PMIs has weighed on AUD/USD to see the pair trade below the 0.7300 handle, while USD/CAD broke above the 1.3100 level to trade at its highest level in 10yrs amid CAD weakness after the commodity currency fell in sympathy with AUD and as a consequence of the ongoing commodity weakness.
Commodities have continued their recent decline this week with both the metals and energy markets experiencing weakness so far. As such, Brent Sep15 futures reside in close proximity to the USD 51.00 handle having earlier touched USD 50.85 , its lowest level since January, while gold remains firmly below the USD 1,100/oz handle amid fears of a China slow down and concerns around a Fed rate hike.
Overall, the story from last week remains the same: crashing commodity demand, sliding Chinese stocks, Europe treading water and ignoring what may still be Greek contagion for the broader economy, with the biggest wildcard now Friday's US nonfarm payrolls report, which will either be a superstart and send 10Y yield soaring yet again, or confirm the record low ECI print last week and steamroll over the latest batch of Treasury shorts.
In summary: European stocks rise for fifth day while U.S. equity index futures decline with oil, gold. Asian stocks decline. Greek stocks on ASE Index paring losses after 23% drop in early trading; for list of halted Greek stocks, click here. European bourses outperforming include Netherlands, Spain, Germany. Yields on most euro-zone 10-yr notes fall; Italian yields rise. U.S. Markit U.S. manufacturing PMI, ISM manufacturing, construction spending, vehicle sales, personal income, personal spending due later.
Market Wrap
- S&P 500 futures down 0.1% to 2096.5
- Stoxx 600 up 0.4% to 398.1
- US 10Yr yield up 3bps to 2.21%
- German 10Yr yield up 3bps to 0.67%
- MSCI Asia Pacific down 0.8% to 141
- Gold spot down 0.2% to $1093.9/oz
- 15 out of 19 Stoxx 600 sectors rise; food, telecomms outperform; basic resources, autos underperform
Eurostoxx 50 +0.3%, FTSE 100 -0.2%, CAC 40 +0.1%, DAX +0.3%, IBEX +0.4%, FTSEMIB +0.2%, SMI +0.4% - Asian stocks fall with the CSI 300 outperforming and the Shenzhen Composite underperforming; MSCI Asia Pacific down 0.8% to 141
- Nikkei 225 down 0.2%, Hang Seng down 0.9%, Kospi down 1.1%, Shanghai Composite down 1.1%, ASX down 0.3%, Sensex up 0.4%
- German Carmakers to Buy Nokia’s HERE Maps for $3.1b
- Euro down 0.16% to $1.0966
- Dollar Index up 0.06% to 97.4
- Italian 10Yr yield down 1bps to 1.77%
- Spanish 10Yr yield up 9bps to 1.94%
- French 10Yr yield up 2bps to 0.96%
- S&P GSCI Index down 1.4% to 373.1
- Brent Futures down 2.2% to $51.1/bbl, WTI Futures down 1.7% to $46.3/bbl
- LME 3m Copper down 1.4% to $5158/MT
- LME 3m Nickel down 2.9% to $10725/MT
- Wheat futures down 0.9% to 494.8 USd/bu
Bulletin headline Summary from Bloomberg and RanSquawk:
- European equities were bolstered during the European morning as a consequence of the better than expected Manufacturing PMIs
- Today saw the Athens Stock Exchange open for the first time and immediately fell to around 20% in line with expectations
- Today sees US Personal Income, Real Personal Spending, Construction Spending and ISM Manufacturing as well as comments expected from Fed's Powell
- Treasuries ease before reports on personal income and spending; rose Friday after 2Q ECI increased at slowest pace on record, curbing expectations Fed will begin raising rates in September.
- Caixin/Markit’s China PMI came in at 47.8, less than forecast; followed a reading of 50 for the official Purchasing Managers’ Index on Saturday, compared with analysts’ projections for 50.1
- The Shanghai Stock Exchange said on its microblog Monday that two trading accounts got verbal warnings for a “large amount of sell orders affecting security prices or volume”
- The bourse said the trading was “abnormal,” but didn’t give any details on the two accounts or indicate whether any laws were broken
- Greek stocks fell by as much as 23% as the market reopened after five weeks to the most savage wave of selling in decades, underlining a crisis that’s crippled the economy and pushed the country’s euro membership to the brink
- Obama will today finalize measures that force states and utilities to use less coal and more wind power, solar and natural gas; the plan is estimated to cost $8.4b and is among the most complex in agency history
- There’s been no respite in the commodity rout that’s seen prices tumble to a 13-year low -- and that’s sending the currencies of nations that rely on exporting resources toward their worst year since the financial crisis
- Sovereign 10Y bond yields mostly higher. Asian stocks fall, European stocks gain, U.S. equity- index futures retreat. Crude oil, copper and gold lower
US Event Calendar
- 8:30am: Personal Income, June, est. 0.3% (prior 0.5%)
- Personal Spending, June, est. 0.2% (prior 0.9%)
- Real Personal Spending, June, est. 0% (prior 0.6%)
- PCE Deflator m/m, est. 0.2% (prior 0.3%)
- PCE Deflator y/y, June, est 0.2% (prior 0.2%)
- PCE Core m/m, June, est. 0.1% (prior 0.1%)
- PCE Core y/y, June, est. 1.2% (prior 1.2%)
- 9:45am: Markit US Manufacturing PMI, July final, est. 53.8 (prior 53.8)
- 10:00am: Construction Spending m/m, June, est. 0.6% (prior 0.8%)
- 10:00am: ISM Manufacturing, July, est. 53.5 (prior 53.5)
- ISM Prices Paid, July, est. 49.5 (prior 49.5)
DB's Jim Reid completes the overnight event wrap
With liquidity structurally lower in this cycle anyway, we could do without any big surprises. The main hurdle on this front this week could be US payrolls on Friday where we all have to make a judgement as to whether the report shows "SOME" improvement in the labour market. We still think its a big gamble to raise rates with the global data as it is and commodities and China/EM in a state of flux. Having said this if we get two decent payroll reports in the next 5 weeks then the trigger could very easily be pulled. As you'll see in the week ahead there's a lot of other data out this week but it will all reach a crescendo on Friday.
The heavy data week has started with the final reading of China's Caixin manufacturing index falling short of the flash reading. The final read came in at 47.8 versus the flash of 48.2 and market expectations of 48.3. Accordingly to Bloomberg this marks the fifth consecutive month of contraction and puts the reading at its lowest since July 2013. This clearly does little to reverse what seems to be a broadening worry of Chinese economic slowdown which is also having a considerable impact on growth commodities. As we show in our July recap below it certainly has been a woeful month for these proxies.
As for markets, Asian investors are reacting negatively to the bad China print. In China, the Shanghai and Shenzhen bourses are down 2.4% and 2.9% respectively as we go to print (let’s see where they end the day!). Away from China, equity benchmarks in HK (-1.0%), Korea (-1.1%) and Japan (-0.4%) are also down as we write. Credit spreads are little changed in Asia while Oil markets are touch softer overnight. US Treasuries are about 2-3bp higher to 2.20% in 10yr yields to retrace some of the 8bp rally we saw on Friday.
The bond rally on Friday was helped by the data as the latest wage numbers in the US were soft. The US employment cost index in Q2 rose +0.2% qoq, its smallest increase since data started in 1982 and also fell short of +0.6% qoq expected by the market. Our economists noted that this brings annual labour cost inflation back to 2.0% yoy – which was where it stood a year ago.
Data aside it was also a rather soft finish for US equities on Friday. The S&P 500 fell -0.23% not helped by some weaker energy sector earnings. A Baker Hughes report which noted that the number of US oil rigs count rose for its second consecutive week also did not help. Brent and WTI closed -2.0% and -1.4% lower, respectively. Brent and WTI were some of the worst performers in July (more below) and this capped a bad month. The downturn in commodity prices seems to be also affecting appetite for capex. Per the FT, S&P now expects that global capex will fall more than 10% this year and decline further in 2016 largely driven by belt tightening measures by commodity related sectors.
A quick recap of the current earnings season now. Over 330 US companies have reported so far and the trend is more or less similar to what we’ve been observing in the past. 74% of them have beaten EPS estimates but only 50% have beaten revenue forecasts. The trend is more balanced in Europe with about 63% and 65% of those that have reported so far beating EPS and revenue consensus, respectively.
Staying with Europe, today marks the reopening of the Athens stock exchange after a five week suspension while bailout talks continue. Local traders will be able to buy stocks, bonds, derivatives, and warrants under certain conditions. International investors won’t be restricted as long as they were active in the markets before markets were closed in June (Bloomberg). So it will be interesting to watch today.
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Yet, BTFATH.
Yeah, that Brass Monkey, that funky junkie.
WTI about to penetrate the lows of the Great Depression part Deux.
Diversity is a codeword for White genocide
Diversity is a code word for white self immolation.
They are whispering in our ears that we are guilty of unspeakable crimes, our success and prosperity as proof, and therefore should retreat and submit. Abandon our wealth and all that created it. Prostrate ourselves before them and beg for their mercy and forgiveness. The crime in this is NOT that they ask it or even manipulate us to achieve it, but that our own people are enabling it for a piece of the profits in wealth and power.
Soros in his youth comes to mind.
Socialism (as well as communism) can not "rise up" the masses. All it can do is denigrate everyone to the lowest common denominator.
The people dont know what to blame for this moentary disaster, now its diversity. The root of this problem is centralized debt as universal monetary unit.
"...today marks the reopening of the Athens stock exchange after a five week suspension while bailout talks continue. Local traders will be able to buy stocks, bonds, derivatives, and warrants under certain conditions. International investors won’t be restricted as long as they were active in the markets before markets were closed in June (Bloomberg). So it will be interesting to watch today. "
behold the EU and the eurozone "logic" that escapes most articles and comments, here
it does, generally speaking, prevent the discrimination of the "european" versus the "local"
it does not, generally speaking, prevent the discrimination of the "local" versus the "european" (or even extra-european). because it can't
what is going to be written in a few years about re-opening a national stock market again... while restricting Greek access to it?
we are witnessing a Greek government discriminating against Greek citizens and companies
think about it
Holding them down while they are raped.
Nice going Tsipras... Brandishing like a Central America bush commando would have made more sense.
Your young people have nothing left to lose but YOU.
double agent, hmmm, life could get very interesting for this chap!
Double not spy agent, we protest.
Politics is either incompetant or completely corrupted, there is no more middle ground!
All governments see as their primary threat, their own citizens. Like parents who see their own children as deficient while outwardly over protective of them, leaders witness the ignorance and stupidity of their "subjects", and impose what they perceive as their "better judgment" over them.
What most fail to recognize is that generally freedom primarily infers our right to perish by our own hands. What is desired today is freedom without consequence, something, the primary thing, that is not sustainable. Elites see us as a cash crop of lemmings desperately seeking self destruction in mass, and they are equally desperately trying to figure out how to keep us as a viable asset class until such time as our self destruction can generate acceptable returns.
Did they close the market so that puts expire before reopening?
If China had hoped it would root out intervention by eliminating Citadel's rigging algos, and unleash a buying spree it was wrong
Maybe the Chinese have not discovered all the Fed's proxies working to destabilize the market in China. Maybe they should look closely at the trading of all the big US banks in China.
Economic wars, real or imaginary, seem to be ramping up. Tensions in the South China Sea keep increasing. Real military wars cannot be too far behind.
Has to be next year latest before the strategic advantage switches decisively to east.
I'm sire the Chinese do know, and are just biding time for the best moment to respond.
If they are rebuffed on the SDR, it will be a trigger.
Or maybe the stocks are just overvalued and the retail peeps knew it was a get-rich-quick bubble... irony is lost on some people...
Its both.
Or maybe the stocks are just overvalued
Official: China stock crash is U.S. economic warfareLast month’s stock market crash in China was without any doubt an economic war against China covertly waged by the United States, with the direct objective of subverting the ruling Communist Party, according to the most powerful leader of China’s massive state-owned corporate enterprises.
And anybody who doesn’t believe such a thing is definitely a traitor to the Chinese nation ready to betray the Chinese Communist Party, insisted Lin Zuoming, who made those claims in a July 17 interview with China Aviation News. The interview was subsequently carried by most of China’s major news outlets.
Mr. Lin’s words should not be taken lightly as they reflect an official Chinese view of the stock market woes. Mr. Lin is a member of the Communist Party’s Central Committee and president and CEO of China’s largest aerospace and defense conglomerate, the Aviation Industry Corporation of China. AVIC, which makes virtually all of China’s military aircraft from the J-series aircraft to Zhi-series attack helicopters, is the equivalent of Boeing, Lockheed Martin and Northrop Grumman all rolled into one.
http://www.washingtontimes.com/news/2015/jul/23/inside-china-official-ch...
Wasn't he the same chinaman that they soon caught doing the unspeakable act of selling his shares?
Bad shit only happens to other people.
Nothing to worry about.
Noo, but karma as a bitch is going to come home to roost soon.
But how are we to continue to fly into the face of stupidity if we are to believe it holds consequence for us?
BTFD?
Lets all just focus on building a life that relies on something for nothing, on trading worthless paper to the greater fool, a fool that none of us believe WE are. To keep this delusion afloat we must disparage true productivity as stupid in the same way as we honor those who see counter cultural sexual deviancies as "progress".
Our defeat always comes at our own hands. We are continually being pushed towards voluntary suicide, either by our direct action OR inaction or omission.
Let us all glorify the performers at the circus while we look on in disgust at those erecting the tents.
Starting by preping, I know, easier said than done because there are so many way to interpret what and when to start preping. I go with enough food and heat for 80 or 90 days, since no place is as safe as home i would bank my money there and hold out until the corps arrive, if you survive the sudden aging disease, just reregister and go about your remaining days. nobody said life would be fair, but if it is to be unfair, let it be unfair for all rather than those below the 99% level. Peace, love and good wiill to you and yours by the way.
Fairness would be equal consequence, which has never happened in the history of the world. Life is and always has been "unfair". So many seem to be willing to burn the planet down for fairness, something that has never existed. Every ideology is "funded" by some concept of how to Guarantee fairness or justice, only to find millions ground to dust by its wheels.
But it is our nature.
We should wish peace and love to everyone, especially our enemies as it is the only thing that might save us.
Dr Copper has the prognosis, and it's not looking good....
I told him he was nothing, but he simply would believe it, well now he knows.
deflation folks.
Yes, this could push a few secondary silver miners over the edge. No doubt there will be a tsunami of paper silver heading our way at the very time physical supply starts to dry up. Something's got to snap sooner or later.
and serious overcapcity worldwide, take your pick. but surely don't pick the stuff that you or i need to stay alive, that is inflating. i'll trade one big screen for a side of beef, plez...
Isn't deflation usually followed by hyperinflation in a big crash? Deflation is like the drawback on the continental shelf before the hyperinflation tidal wave hits.
If the political decision to print is takenTherefore hyperinflation is a political event
rather than monetary.
Just keep your powder, well you know.
"Eat your peas! There are starving people in China!"
Time and events will show that it will have been imprudent of Europe to humiliate Greece to the point of devastating whatever strength was left in her already embattled economy.
Schauble and Germany may be triumphant in the way they have cornered and made Greece submit, but he who digs graves for others more often than not falls into it himself.
Insert miracle here.
Citadel destroyed the CONfidence. That was all that was needed.
Sing along, folks.....
https://youtu.be/d-diB65scQU
Brazil's Money Losing Commodity Production is in Big Trouble, as is Country:
http://winteractionables.com/?p=23496
At least the Greek market is allowed to go down 17%.
Our own would have been halted for the 'glitch' or 'technical issues' well before that.