This page has been archived and commenting is disabled.
US Equity Futures Soar 4% After PBOC Rate Cut; Chinese Futures Jump After Overnight Market Crash
The PBOC was supposed to cut rates over the weekend - the risk, as we warned on Friday, was that it would not. It did not, and the result was a 16% plunge for the Shanghai Composite over the past two days as China's underwater investors realized China may have finally forsaken them, which dragged down the benchmark index not only red, but down 7% for the year after it had been up 60% in mid-June.
Still, while China was crashing overnight (it closed down 7.6% at 2,965, or below the "other" hard support level, down 16% in the past two days), other markets were relatively stable, if weak toward the end such as the Nikkei which tumbled 5%, soared 2% then retumbled 4% into the close although both Europe and the US posted solid gains in overnight trading as if they knew that an intervention by China was imminent. Whether or not they did is irrelevant but as we reported minutes ago, the PBOC finally did what everyone had expected it would do over the weekend, and cut the benchmark lending and deposit rates by 25%, while cutting its Required Reserve Ratio by 50bps, in the process sending global risk soaring because this time China's rate cut will supposedly be different than the last one just two months ago on June 27.
Here is the recent history of China RRR cuts:
- February 4: 50 bps
- April 19: 100 bps
- June 27: 50 bps
- August 25: 50 bps
Including regular benchmark rate cuts, this is the 5th time the PBOC has cut since November.
The strategists are promptly lining up to predict even more RRR cuts in coming days as China tacitly admits its economic situation is far worse than expected: case in point HSBC's co-head of Asian economic research Fred Neumann who told Bloomberg that China’s central bank will probably cut the reserve requirement ratio by at least another 100 basis points "in the coming months."
- Rate cuts should have stabilizing effect on investor sentiment; in itself not enough to boost economic growth
- “It does signal that Chinese officials have become more worried about the prospects for the economy and makes it more likely that they’ll follow up with further easing measures in the coming weeks and months”: Neumann
- “Investors had been hoping for more policy easing and Chinese officials finally delivered”: Neumann
- Beijing will probably roll out further easing measures, including monetary easing to support construction sector and fiscal measures to boost consumer spending: Neumann
Needless to say, the PBOC cut itself was not surprising, considering the PBOC now has to juggle and micromanage every aspect of the economy, from its sliding currency, to the bursting stock bubble, to record capital outflow, to soaring real interest rates, to the slowing economy. In fact, bulls around the globe will welcome the latest central bank bailout. Which also happens to be the worst aspect of today's intervention, because one can once again toss all the talk that China would finally stop intervening in asset pricing, with today's decision merely perpetuating the market's reliance on central bank bailouts around the globe. As a reference, this was the second time China cut both RRR and interest rates in 2 months: the last time it did so was during the depths of the financial crisis.
Algos, however are happy to buy now and ask questions later, and as of moments ago the market reaction was initially ebulient:
- China A50 stock futures soar +435
- Dow futures +602, up 4%
- S&P500 futures +72, up 4%
- Nasdaq Futures +184
- Germany's Dax up over 3%
- USD/JPY rises to 119.98
- EUR/USD tumbles 1.22% to 1.1477 after stops below 1.15 are triggered
- Stoxx 600 rises 14.79 to 356.80; fell 19.27 yday
- Sept. bund future falls as much as 141 ticks to 154.27
- German 10Y yield +10bps to 0.69%, US 10Y yield +8bps to 2.08%
- iTraxx Main index -4bps to 74, iTraxx Crossover index -20bps to 345
- WTI futures +$1.38 to $39.68/bbl, up 3.5% at last check
As a warning, the kneejerk reaction numbers are moving so fast by the time we hit save, we fully expect them to be no longer even remotely close to the current situation.
So while we, the vacuum tubes, and everyone else processes the latest Chinese monetary bailout, here are some of tonight's highlights from Bloomberg and RanSquawk:
- Treasuries decline after overnight rebound in stocks and oil and as China cuts benchmark lending rate and reserve requirement ratio; week’s auctions begin with $26b 2Y, WI 0.665% vs. 0.69% in July.
- China halted intervention in stock market so far this week as policy makers debate merits of government campaign to prop up share prices and what to do next, according to people familiar with situation
- PBOC cut its benchmark lending rate for fifth time since Nov., lowering it by 25bps to 4.6% and the deposit rate by 25bp to 1.75% effective Wednesday; cut reserve ratio by 0.5ppt, effective Sept 6
- Some Chinese agencies involved in economic affairs have begun to assume in their research that the yuan will weaken to 7 to the dollar by the end of the year, said people familiar with the matter
- Franklin Templeton’s Mark Mobius says investors should hold off from buying developing nation shares as a rebound from six-year lows will be shortlived amid widening price swings
- Germany’s Ifo institute business climate index climbed to 108.3 from 108 in July. The median estimate was for a decline to 107.6, according to a Bloomberg survey of economists
- NYC Mayor Bill de Blasio, a Democrat who vowed to use the 2016 presidential campaign to raise the nation’s awareness of income inequality, has become the target of Republican candidates who call him a symbol of inept liberalism
- No IG or HY deals priced yesterday. BofAMLCorporate Master Index +3 to new YTD wide +172, widest since Sept 2012; YTD low 129. High Yield Master II OAS +28bp to new YTD wide 614, widest since July 2012; YTD low 438
- Sovereign 10Y bond yields higher. Asian stocks mixed, European stocks and U.S.equity-index futures gain. Crude oil and copper higher, gold falls
US Event Calendar
- 9:00am: FHFA House Price Index m/m, June., est. 0.4% (prior 0.4%)
- House Price Purchase Index q/q, 2Q, est. 1.2% (prior 1.3%)
9:00am: S&P/Case-Shiller 20 City m/m SA, June, est. 0.13% (prior -0.18%)
S&P/CS Composite-20 y/y, June., est. 5.1% (prior 4.94%)
S&P/CS 20-City Index NSA, June, est. 181.28 (prior 179.03)
- House Price Purchase Index q/q, 2Q, est. 1.2% (prior 1.3%)
- 9:45am: Markit US Composite PMI, Aug. P (prior 55.7)
- Markit US Services PMI, Aug, P, est. 55.1 (prior 55.7)
- 10:00am: New Home Sales, July, est. 510k (prior 482k)
- New Home Sales m/m, July, est. 5.8% (prior -6.8%)
- 10:00am: Consumer Confidence Index, Aug., est. 93.4 (prior 90.9)
- 10:00am: Richmond Fed Manufact. Index, Aug., est. 10 (prior 13)
- 1:00pm: U.S. to sell $26b 2Y notes
»
- 24659 reads
- Printer-friendly version
- Send to friend
- advertisements -
The DOW and S&P futures market was actually showing a reversal pattern yesterday.
http://razorsforex.blogspot.com/2015/08/possible-reversal-setup-on-dow-a...
Lets get this shit on!
Let the morons go at it.
Side step it by taking care of yourself....
Phys..
Rips
Crash resuming tomorrow or thursday.
Still gonna raise rates bitchez?
Boing Boing zoom
TRUMP in 2016 !
Exactly
Margin calls are backed up and will catch up in the next day or so.
This is just a dead kitty bounce
So mean the up market is not due to 'fundamentals?'
remember when u enter the casino the house ALWAYS wins...
It's not that there isn't going to be a worldwide crash, but it matters who goes first.
China clearly didn't want to go first, or at least they are trying not to be. I think the die is cast.
like an earthquake, tremors first...
china is soooo fucked. paper to da moon, with no real amount of growth to keeeeep it going...
The PPT will be there to backstop the whole thing. If things start to go haywire, the authorities will declare national immergency or some BS, Obama will pull out some obscure executive order, and stocks will be halted due to national security. LOL
Unfortunately the crooked markets will not be allowed to readjust the normal way, this will be kept up indefinetly.
On second thought...I will take those his & hers Ferraris thank you very much! USA! USA! USA!
China politburo wants to stave off social unrest
PBOC acting in some regard was pretty certain after hitting 2999
TBH, I'm susprised SOEs didn't buy harder volume at 3001 lol
I agree. Four hourly, Daily, Weekly AND Monthly are all showing oversold at the moment. Yesterday wasn't the big one.
As time moves on, Martin Armstrong's analysis seems to be fitting.
DavidC
lol dude, there no markets just interventions
there no longer are free markets anywhere on the planet !!
your reversals are nothing more then plunge protection team boys
stop fooling yourself and others
We are saved!! Buy! Buy! Buy!
Is this meant to be serious? Did you know that this ridoiculos chart is a refelection on money being pumped into the market by Yellen and company?
These are the articles many ZHers have been waiting to read for some time. V for vindication.
jb
They will try to assassinate Obama but it will not work. Pray for his safety in this time of need. If Obama goes, the U.S. goes. If the U.S. goes, the world goes. Pray with all your strength for him in the coming days.
Obama is a paid stooge and scumbag, just like Bush.
Obama....the little marxist tool.....bad idea at the wrong time.
Dup....dammit....I pressed it one time.
Jeeeesus tits dude...put down the fucking crack pipe....fuck.
"Jeeeesus tits dude...put down the fucking crack pipe....fuck."
Aww come on now. While the histrionics seem a bit over the top, do try and imagine our country led by "Old Drunk Joe".
I attribute that spectre as the sole reason of our current POTUS's longevity. I wouldn't be surprised if Hillary C is the Dems nominee and she names Biden as her running mate. What an excellent insurance policy!
"While the histrionics seem a bit over the top, do try and imagine our country led by "Old Drunk Joe"."
Um, dude, we're ALL imagining our country led by Uncle Joe right now.
Its looking like they're actually gonna take down the Hildebeast this time (do you think the FBI, State and the DOJ would be pursuing this email thing without at least TACIT approval from Obama?). Hillary steps out or continues walking with a severe limp, in steps Uncle Joe with Liz Warren as his VP running mate.
So if you think the idea of a year or so with Uncle Joe at the helm running out Obama's clock is scary, try thinking about eight years. Because you may just get it.
people will start seeing thru trump and back to jeb and da hilt...
sooooooooooo predictable
If it comes down to a Bush vs. Clinton election I'll vote straight Democrat ticket. Get this shit show over with sooner rather than later- hasten the collapse.
At this point, what difference would it make?
Shotgun Joey?
The Preening Priggish Douche?
Mister Non-Accomplished DICK?
Mister "Is There A Question SOMEWHERE in the yammering, Mr. Chairman?"
Asswipige 77th out of 81 in law school Joe?
Choo Choo ShamTrak Blow Biden?
Him?
FAAAAAAACK...
gimme the crack pipe...
"If Obama goes"
It works the other way too. If Obama doesn't go, the U.S. doesn't "go". If the U.S. doesn't go the
world doesn't go!
They will try to assassinate Obama but it will not work. Pray for his safety in this time of need.
Truly, I have to believe that was sarcasm. I absolutely have to believe it because I cannot wrap my head around anyone actually sincerely feeling this way, even Michelle.
Fiat has gone full retard.
Hyperinflation will end this madness.
voted best comment(at least my me-ha)!!!!
MOAR!!!
I am pretty sure that all this money printing/easy money/mal-investment can only be viewed as negative for Gold.
The truth always asserts itself at the end. Ignore this to your peril.
China is now putting more pressure on food prices - and this when most Chinese spend a significant part of their income on food as it is.
This will not end well ...
Hungry folks take risks.
Risk on.
Feed yourself ...its the way
RIPS
We've reached peak complacency. Traders buying the market up because some central bank somewhere will do something to intervene.
Gzeez, cankicking next level.
Chinese chaotic waterwheel torture.
http://www.ace.gatech.edu/experiments2/2413/lorenz/fall02/
Fluctuations? No Fluckuasians. No, no ... Fluckuamericans
Notice president blow bag has been silent as of late? Now he will cone out and tell us all is well and to go shopping . Our economy is strong .
I'd rather have him send me a check like BushCo. Obama's such a piker.
Herded like sheep.
Print and inflate with 'the market" as the only "safe haven" for our money.
So simple a caveman can figure it out.
I still say fuckem
Phew! Crisis averted!
Now back to our regular normal markets. It's hard doing "gods" work without a little help from time to time.
Unicorns and rainbows everywhere.
Protocol #20: 20 Replace sound investment with speculation
Dr. Schroedinger call your office...
it may be our last chance to get in at the "bottom"
Weimar FTW!
Chinese style, with rice cakes and bamboo shoots (under your fingernails).
You will submit to your all-powerful overlord, Jailer Yellen.
Booyah, bitchez! Cramer sez BUY, BUY, BYE.
It's a full retard shitshow now. I fully expect Bullard to come out today and announce that the Fed won't raise rates until 2018.
Well , hello WWIII
It may not be bombs .. were in a financial war and I don't care to par take in this...
Such epic BS we were not even in OVERSOLD TERRITORY YET!!
Well I will give an alternate theory. I think there were a shitload of 401k sell orders after yesterday, that should get executed at the open. They have to bang the open to absorb the inventory.........
Was thinking the same thing...
Wow. Ok, the important question in my mind is Yellen's move. Does the cut in China make it easier or harder for her to raise by a small amount, any time in the next 6 months? I can't figure out a good answer.
> Janet Yellen
> Brucelyn Jenner
Great. China is contained again. Now we'll have to go through that shit all over again a few days from now.
Bull's death thows.
It's all over folks.
Just as the Rockefeller cabal unloaded all of their oil holdings a few months before the zios imploded the oil market.
Just as the Rothschilds unloaded the FT newspaper and the Economist a matter of weeks ago.
It's all over folks.
Just waiting for the fat lady to sing.
China rate cuts look like a countdown. About 10 weeks, 9 weeks, 8 weeks...
New ATH by Christmas! Then the mother of all crashes in 2016
Millions of Americans wondering where the money to cover their next rent check will come from will likely miss this story.
Sell the fucking rallies - STFR.
Central Banks can't keep doing this, they're screwed. We're all wcrewed. Look at the Herculean efforts it takes just to keep the global markets from going where they need to go to reflect reality. QE 4 is already lurking in the wings.
This shit is just absolutely disguting to watch. The fraud and deception of what these assholes referr to this manipulation as a free market is just insane.
Yellen Physics Axiom 1: What goes down must go up.
So the Chinese central bankers are playing pharmacists and doling out the little happy pink pills to traders around the globe. After 4 hours of artificial equity pumps and dumps, should they seek emergency consultation? Hello, Yellen, hello ....
if you achieve an erection lasting longer than four hours, you should contact, ah hell, never mind
If you missed the exit back at 18,000. Here's your chance and say thank you. Leave this market to the idiot scalpers.
And! It's gone.