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Futures Stumble Out Of The Gate, Slide 0.6% On Lack Of Chinese RRR Cut: What Happens Next?
On Friday, ahead of the closing stock rout, we forecast that the biggest risk for anyone staying long over the weekend was a disappointment out of China, where the sellside had gotten so excited that a 50-100bps RRR cut was imminent, that the lack of one would surely send futures sliding.
As noted earlier, everyone is expecting a 50-100 bps RRR cut this weekend. The risk is there isn't one http://t.co/oU5t45ERWw
— zerohedge (@zerohedge) August 21, 2015
Sure enough, as we noted earlier today, much to everyone's surprise and disappointment, the PBOC did nothing (for reasons we speculated upon earlier).
Which bring us to this evening's S&P futures, which opened for trading minutes ago, and as expected gapped by over 0.6% after the Chinese disappointment, down 19 points to 1952 and looking quite heavy as several key support level as in the crosshairs.
The key carry driver for all US equity action, the USDJPY, is not looking too healthy either and just hit its lowest level since July 8 as the Yen is soaring on carry trade unwinds:
To be sure, the real action in tonight's illiquid market will not be in US futures, at least not until Europe opens, but in China, where it will be up to the "National Team" to prevent a massive rout now that the PBOC has told stocks they are on their own for the time being..
Also keep an eye on crude: after an initial gap lower the black gold is trying to stabilize the drop. Perhaps it is waiting for Gartman to confirm he is still long before crashing below $40.
So what happens next? It's clearly anyone's guess so here courtesy of Bloomberg is a selection of quite a few guesses including some pundits, most of whom predicted smooth sailing until year end, who suddenly and very dramatically changing their tune.
- “It’s going to be pretty deep. ... We’re in the camp that this is not yet a big move. It’s scary, and those last two day trends look ugly.” -- Doug Ramsey, CIO at Leuthold Weeden Capital Management, who sees losses in S&P 500 reaching 20%
- “When Europe and China eclipse the U.S. we chug along, but when they’re in a down market, that’s when the U.S. really dominates. ... From a quality perspective, all the boxes are checked off in the U.S. and that becomes more important to investors again.” -- Savita Subramanian, equity strategist at Bank of America, who cites optimism about the biggest U.S. cos.
- “There is a relatively more ominous slowdown going on in emerging markets -- and that’s what the trade is all about right now.” -- Gina C. Martin Adams, equity strategist at Wells Fargo Securities, told New York Times
- “These are names that people look at -- if they can run their business well, then the economy is doing well. ... So when Apple misses and sells off hard, it’s bolstering that fact that we don’t have an equity market to trust.” --Larry Weiss, head of U.S. trading at Instinet in New York, speaking about the most popular U.S shares
- “People are saying, ’I want out.’ ... It is difficult to see the bottom with all these depreciating currencies.” -- Ricardo Adrogue, emerging-markets-debt investor at Babson Capital, told New York Times
- “People are saying ‘I told you so,’ but that warning has been in place too long—you would have had to be a superhero to know what would happen.” -- Katie Stockton, chief technical strategist at BTIG, commenting on narrow leadership in the bull market to WSJ
- “Hopefully, Asian governments don’t panic from the current market turmoil and resort to knee-jerk decisions. ... Competitive currency devaluations can become a zero-sum game if all countries resort to it.” -- Sandy Mehta, CEO of Hong Kong-based Value Investment Principals
- “There’s no way the U.S. is going to remain an island with so much turmoil going on around the rest of the world.” -- Paul Zemsky, head of multi-asset strategies at Voya Investment Management
- “If at the beginning of the year, you told anyone that theFed would be 50/50 about raising rates at their next meeting and the 10-year yield was approaching 2%, they would think you were nuts.” -- Antonin Cronin, a Treasury bond trader at Société Générale, told WSJ
- “You have to talk about the Fed and the absence of any trigger-style warnings. ... That’s a critical reason why everything gets interpreted as supporting the Fed’s caution, and that’s in direct contrast to the thinking we had just last week.” -- Jim Vogel, head of interest-rate strategy at FTN Financial in Memphis, Tennessee
- “A nasty storm is probable, not just possible [in countries like Brazil and South Africa]. ... But I do not anticipate a crisis or even very tense moments in Asia. The main reason is that the Asian Crisis of 1997 already cleansed Asia’s financial system and Asia’s resilience ought to be higher.” -- Stephen Jen, co-founder of SLJ Macro Partners
Bottom line: not looking good for the BTFDers but don't count your chickens, or dead bulls, just yet - if Gartman suddenly turns bearish, or is stopped out of his crude long in 15 more cents, a mass bear slaughter is about to be unleashed...
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What happens next? We grab our ankles, that's what.
Grab some popcorn and hug your pet rock(s) ... unless they are subermerged.
Jeeesh! Ya'd all think some people was spooked or startin' ta panic.
Cramer says everything's OK and Krugman says take 2 titanium coins and see me in the morning.
assholes
And all of that, my friend, is why we physical gold owners sleep better at night.
Krugman: Make mine platinum!
EDIT: For drinkers in America, here is an item for you:
http://www.marketwatch.com/story/americans-are-drinking-bourbon----not-v...
Bourbon, for "that kind of a day". Glad I'm done widat.
I trust the Gartman thing is strictly business, not personal.
Heh heh heh.
Interesting chart re the S&P 500 for the past five years:
http://finviz.com/futures_charts.ashx?t=ES&p=w1
The start of a "Yikes"...?
We get a flush, shorts cover which leads to stabilization. China loses its mind, then we get capitulation or momentum gap rallies to hunt the complacent bears. Strap in.
BTW boys & girls..
S&P FUTURES JUST BROKE BELOW THE LOWS SEEN LAST DECEMBER!
WHICH MEANS THERE'S NO FUCKING SUPPORT TIL ABOUT 1900
BUT MOAR LIKELY WILL CRASH ALL THE WAY DOWN TO THE LOWS SEEN LAST OCT NEAR 1800.
And I think I'll grab another scotch...
Luckily its the beginning of football season or I'd be really bummed right now.
Go Seahawks and may you 49'er fans sit on a stick (and also Wolverine cheering pricks sit on the other end of the stick)!
There are many in the Bay Area who enjoy sitting on a stick, so....
Sports, control for the masses, I thought ZHer's were better than that? I have not watched a sporting event in 7 years
And watching the commodities market is not watching a sporting event?
When they destroyed Candlestick, one of their shrines disappeared. Now they congregate at Coit Tower.
and Green Bay's season looks to be over. Lack of conditioning, IMO.
As bad as it is to lose Jordy, ya still got the best qb going. Imagine being an Eagle fan and waiting for the inevitable. Here's a nice shot of Bradfords first pass attempt in a game with the Birds. Sigh.
http://media.philly.com/images/YongKimEagles.JPG
You sir are very intelligent.
Over/under on CB jawboning at 1800?
It won't matter now anyway
You're probably right.
We'll see what happens at 21:30 ET. The ChiComs have unleashed one of their remaining bull dragons to torch the shorts by banning short selling and this:
In Desperation Move, China Allows State Pension Fund to invest up to 30% into Stock MarketYeah moving from one hole to the other. Real genius here.
S&P will find support when the next QE is announced. It doesn't matter what level it's at.
I'll spend a $100 on a bottle of single malt when S&P hits 666.
Until then it's a $10 bottle of Lauder's. Cheers.
Breakdown PO met? and on high volume.
Time to throwback to resistance?
Predicting what the Chinese will do next is great fun as long as its not your ass on the line. It'll be interesting to see what China does next.....
Dow down 100, then 111, then 160 just now 3:48pm pacific. Popcorn is ready...What do you think...370 down to the open?
Operation Twist it in your ass
What happens next? Margin Call.
or splats on asphalt below skyscrapers. JUMP you Fuckers
"Turn those machines back on!"
https://www.youtube.com/watch?v=RLySXTIBS3c
Chill out Mortimer
From the actual movie...."Margin Call"
The Music Stops scene.
https://www.youtube.com/watch?v=UOYi4NzxlhE
"She's gonna blow, men! Run!"
BTFD is next right....right.....Wong
CNBC is having a special at 7:00 pm tonight. Sadly, I don't have cable.
Just stab yourself in the leg with an icepick for an hour, same feeling....
Cait shaves her ass crack?
Narrated by Anderson Cooper.
Nothing's wrong, so why bother to have a special? I mean, seriously! If the meme and media perceptions management is true, why panic with specials?
Hah!
Steve Liesman was just on, he's says we're doing OK.....
Maybe Liesman will shave his ass crack on the air as a Special Report.
Fuck! That even gave me a bad visual... need to bleach my cerebral cortex
IM watching it now . Typical buy the dip shit shw with the standard disclaimers.
They Have Andy Lipow on from Lipow oil. Says oil is going to 34 a barrel and avg gallon of gas will be $2
I feel better now. They just went over to Bob Pisani. I feel better already just listening to him telling us that we knew about all of this stuff.
I'm feeling all warm and safe now
Goldman will say a rate hike is unlikely until next year.
It must be Goldman to keep the lie consistent.
Or, should I say the liar consistent?
It's a joke.
Keep selling physical gold to China, you fucking inbred morons.
When you prop a market up with fraud, lies and make believe paper for 8 years.... it is inevitable that it will not only correct to the levels of the crash, but far beyond that even.
The dow will hit 4000 at the very least.
The SP500? will likely hit.... 500 because irony is cruel.
The correction that has taken place thus-far will have far more dangerous repercussions as for the past few years market participants and businesses have become dependent on high market valuations to conduct their day to day business/papering over of new exotic nonsensical investment instruments.
The house of cards is collapsing, and people didn't realize that while the market was rising, some idiot was replacing the legs of the table upon which the house of cards was built, with MORE CARDS.
irony is mostly aluminum with a little steel still attached. clean off the steel and its worth a lot more.
because irony is cruel....
I don't like ironing either, but I just buy permanant press.
I yanked everything out except for two miners.
The 401K from my company will take a hit, but I put everything in cash/bonds, no stawks.
I expect my miners and PMs to crash temorarily....
Everybody like the nice calling card from the PBOC to the Fed - dont fuck with our currency rise to fiat status with the IMF? Take this as a warning shot that we control the means of production in today's world economy...Hell we havent even started dumping treasuries big time yet and the Saudis have not dumped the US dollar for oil trade settlement....what's the big deal just because the west is overlevered and the US is in the whole 200 trillion.....
A currency devaluation to take market share is a 40% devaluation not 5%....Get a grip....this is nothing compared to what the Chinese can do....
By the way that 8000 tons of Gold in US reserves...wont be long and the will have to prove to the rest of the world their inventory or the dollar will go to 0.
Hey! Let's all keep this shit in perspective. The S&P 500 closed down just shy of 5% year to date.
And you'd think that something big and bad was happening.
Probably a great tell that the talking heads are really and truly very very uncomfortable with the blather and bullshit
We have eyes opening, increasing volume, and increasing volatility on a market propped up by fake earnings, govt injection, and hot air. There are widespread fundamentals that say the market should be much lower. Fundamental investors KNOW that the rug will pull out, and we've just been waiting for it to happen. Looks like there is a chance it is now. (of course, the fed can always ride the cavalry in with another round of QE, and everybody will make another batch of kool-aid......sigh...)
You need to hit the weekly or monthly to see the CAC-40 gapping down off the chart, minus 4.5%. This is either a misprint, or else it's the new abnormal:
http://www.investing.com/indices/france-40-futures-advanced-chart
Wouldn't that further devalue the Yuan?
80% of all current traders/investors/hedge funds/stock btokers have not seen a bear market in their tradoing careers...they are all "trained" to buy any decline....
Until they will be "re-trained" to sell every rally the chances of a new bull market are not great.....
While the biggest worry for longs may be the PBOC, new shorts can't help but note that even CBS Evening News just had equity turmoil as their lead story, likely the first time in many years. Either way, will be fun to see the whole universe focus on our little patch of the world for a week or two, before high school football, Premier League relegation battles and the new reality TV season draws them back from the madness we're forced to dwell upon daily.
PREDICTIONS (Plural)
This is it and all HELL is finally unleashed--tomorrow--
OR PPT steps in again and we go positive 300pts on some silly booosheeit..
either or.....
“People are saying ‘I told you so,’ but that warning has been in place too long—you would have had to be a superhero to know what would happen.”
Katie Stockton, chief technical strategist at BTIG, commenting on narrow leadership in the bull market to WSJ
Damn, ZH. She just called us Superheros.
the squid and the fed already know what level will be defended.
there is no market, there is only old yeller and her maggot owners.
What happens next? Nothing. CBs are silent.
I guess alot of scotch and burbon Gona end up on some keyboards tonight
CNBC actors have just been called in to do a special show this Sunday evening. Stay tuned for the usual on steroids.
Now that is f***'n funny. Is Kudlow the special guest?
Record it for me would ya? I'm getting sloshed on Sunday fun day
Unleash the cracken already, I would be drinking if I wasn't already hungover.
Spent the day just watching Tv , didn't feel like doing shit , flipped around on basic cable , fucking MSM saying people shouldn't panic ,that people who cashed out in 08 lost out on the past 7 years....those who stayed in killed it...
I am no rocket scientist but if people are still in now (401k) etc they will be at 2008 level or worse faster than they can blink..
Corzined!
Oh please... They started to cover some on friday.
Sp -18.25 , Nas -44.50 Dow -163and falling quickly
China looks to be in for an extremely bumpy ride as a lot more investors question the risk of holding yuan assets. The general consensus held by everyone from deposit holders in Hong Kong to high-yield-bond investors in Europe was this would continue. Over the years this has pushed along the misallocation of credit on a grand scale and continued the build-up of bad assets in the banking sector.
An estimate by Goldman Sachs has indicated China might be facing credit losses of as much as $3 trillion as defaults ensue from the expansion of the past four years. Nomura claims $90 billion left the country in July with the pace accelerating since the People's Bank Of China shocked the world by ditching its currency peg to the U.S. dollar. Capital flight for the first three weeks of August may be approaching $100 billion despite the use of harsh anti-terrorism and money-laundering laws to curb illicit flows.More about this shift and the implications in the article below.
http://brucewilds.blogspot.com/2015/08/chinas-massive-capital-outflows.html
Don't both Gartman AND Cramer have to go bearish to trigger a pop?
Enlighten me: what do South Park and Seinfeld have to do...nvm
China gunning for the dollar. This is not a China growth issue.
I'm of the sound mind that it will correct soon enough!...Now, do nothing and watch it drop!!
ready to "capitulate"?...I think not
Cnbs was supposed to have markets in turmoil tonight what happened