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China Stocks "Death Cross", Default Risk Hits 2-Year High As Regulators Promise G-20 'Whatever It Takes' To Stabilize Market

Tyler Durden's picture




 

Even before China reopened from its 5-day holiday, regulators were pitching Chinese stocks as cheap (37.3x P/E) and less-margined (+108% YoY) and promised to "safeguard stability" in a "variety of forms" seemingly pouting cold water on The FT's recent report (and the malicious instigator of China's market crash). All of this is quite ironic, given China's chief central bankers admitted "the chinese bubble has burst." As stocks open, CSI-300 (China's S&P 500) has confirmed a 'Death Cross' which in 2008 was followed by a further 60% decline. More troubling, however, is the incessant rise in interbank rates as despite CNY530bn of liquidity injected in the last 3 weeks, overnight rates have doubled. China credit risk jumps to 2-year highs and AsiaPac stocks are generally lower at the open (as US futures dumped'n'pumped) not helped by Japanese weakness on BoJ tapering concerns. PBOC strengthened the Yuan fix for the 4th day in a row - the most since Sept 2010.

After 3 days of stronger Yuan fixes into Wednesday of last week (before China closed), PBOC went even further - fixing Yuan 0.21% stronger, extending the streak to 4 days and 0.73% stroger - the biggest 4-day move in 5 years...

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3584 AGAINST U.S. DOLLAR

 

China's "S&P 500" just suffered a Death Cross (50-day moving average crossing below the 200-day moving-average)...

 

It did not end well on previous occasions and we note that Shanghai Composite is likely to suffer this technical signal within the next week also.

AsiaPac stocks are weaker...

  • *MSCI ASIA PACIFIC INDEX EXTENDS LOSS TO 1%
  • *FTSE CHINA A50 INDEX FUTURES FALL 1.1% IN SINGAPORE

Dow Futures algorithmically extinguished all the stops above Friday's highs and below Friday's lows before tumbling back to unch...

*  *  *

However, even before tonight's weakness began...

Speaking via the government's unofficial mouthpiece - Xinhua - China Securities Regulatory Commission promised...

*CHINA'S ECONOMY IS STABILIZING, IMPROVING, NDRC SAYS

*NDRC SEES CHINA ABLE TO ACHIEVE ANNUAL ECONOMIC GROWTH TARGET

 

we want to continue to stabilize the market and prevent systemic risk as a primary task to stabilize the market - to repair market...

 

when violent abnormal fluctuations in the market which may lead to systemic risks, the China Securities Finance Co., Ltd. will continue to play a role, safeguarding stability in a variety of forms.

In addition, CSRC seemingly started pitching Chinese stocks as 'cheap' again noting that the P/E ration has tumbled (yeah but Shenzhen sticll 37.3x forward guesstimates) and laverage has dropped (yeah margiun debt is down CNY1 trillion but it is still up 100% YoY)...

Cheap?

 

However, most troubling of all is the doubling of overnight lending rates in the Chinese interbank market... Despite CNY 530bn in liquidity injections in the last 3 weeks alone...

 

SHIFON has doubled!!!!

 

Indicating Chinese banks are under massive liquidity stress... and implicitly the government too...

  • *AG BANK, BOCOM CORE CAPITAL RATIO BELOW BASEL TARGETS: SCMP
  • *MOODY'S: CHINESE BANKS WILL FACE RISING OP PRESSURE

 

China is now credit riskier than Italy, Spain, and Saudi Arabia.

 

*  *  *

Away from China, Japanese markets are turmoiling after BOJ Tapering concerns mount...

 

and not helped by Toshiba's massive accounting fraud loss...

  • *TOSHIBA POSTS 37.8B YEN FY14 NET LOSS AFTER ACCOUNTING SCANDAL

Sending USDJPY plunging...

 

Paging Mr.Kuroda...

 

As everyone awaits South Korea's rate decision later this week... The carnage in Korean trade is unmistakable in the following Barclays chart:

As for what this means for Korean monetary policy, no surprise here: more easing.

We now expect the BoK to deliver a further 25bp rate cut in Q4, most likely in October. We see an outside chance of an earlier move, at the 11 September meeting, but we continue to believe that the BoK will prefer to move after the initial delivery of the fiscal supplementary spending and the US FOMC meeting on 17-18 September. Also, we now expect the first rate hike in Korea in Q3 16, rather than in late Q1 16. Moreover, with key indicators for the services economy showing a healthy post-MERS rebound, we believe the urgency to act immediately is still low. We believe the existing focus on engineering a weaker KRW bias – possibly by stockpiling essential commodities such as fuel – will remain.  

Of course, further easing by South Korea, or even an outright devaluation, means the ball will then be in the court of Korea's trade competitors, who will then be compelled to match the Korean move with further easing (or devaluation) of their own, and so on, until one can no longer sweep the global recession under the rug. It isn't called the global race to the bottom for nothing.

 

Charts: Bloomberg

 

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Sun, 09/06/2015 - 21:26 | 6517052 SHEEPFUKKER
SHEEPFUKKER's picture

We have to kill the market to save the market. 

Sun, 09/06/2015 - 21:33 | 6517066 medium giraffe
medium giraffe's picture

"Paging Mr.Kuroda..."

He's dead Jim.

Sun, 09/06/2015 - 21:36 | 6517080 jldpc
jldpc's picture

you have a very polished way with words, dead on, simple, no ambiguity.

Sun, 09/06/2015 - 21:47 | 6517118 knukles
knukles's picture

One way to look at this is ... If they want a war, they could just give us (row) one helluv a war.
Look, we're in a global currency bugger thy neighbor, no holds barred competitive currency devaluation, excess money war right now.  No question.

So if you want your currency lower.... what happens if you quit managing it lower and just let it rip?
Hah!
Everybody traded FX in their lifetimes already knows that it takes little, very little, to make a currency drop.  Hard to keep it strong.
So why fight it?  Seriously!?!?!?!?!?!?!?
Quit with the Kabuki Theater (So sorry for the Jap ref in Chinee article.)

Crater it (let it happen) no intervention, keep your treasuries to by shiny, etc., and bet to where you want to get to without all the hassle.

As The Invisible Hand said; "Leave the exchange rate to us."

Sun, 09/06/2015 - 21:56 | 6517150 medium giraffe
medium giraffe's picture

Unless your fiat secures your imperial hegemony.

Sun, 09/06/2015 - 22:02 | 6517169 38BWD22
38BWD22's picture

 

 

"Death Cross"

"Whatever It Takes"

 

Sounds pretty ominous...

Sun, 09/06/2015 - 23:33 | 6517404 Md4
Md4's picture

Yes...it does.

And if the last three weeks tell us anything, it's that these fools MEAN it.

So, what does "anything" mean?

Well, just look at what it's meant already:

NIRP

Bank "holidays"

Cash controls.

Market shutdowns.

Bailouts, liquidity windows, fiat revaluation (with no notice).

Benefit cuts.

And who knows what else...?

Folks, I'm tellin' ya, this thing is going to have to be STOPPED by the masses not benefitting, because if "anything" means anything...

...then it also means everything.

And, I'm quite sure we don't want that...

m

Mon, 09/07/2015 - 01:50 | 6517592 cookie nookie
Sun, 09/06/2015 - 22:47 | 6517321 KnuckleDragger-X
KnuckleDragger-X's picture

Reality is a stoned cold bitch, and she doesn't read the propaganda sheets. A command economy sucks when it doesn't obey orders......

Sun, 09/06/2015 - 23:10 | 6517369 tc06rtw
tc06rtw's picture

 
 …  only  zombies  obey orders.

Sun, 09/06/2015 - 21:37 | 6517082 Money Counterfeiter
Money Counterfeiter's picture

That Keynesian wall is a MF. Gold is real money everything else is debt.  So guess what is next?

Sun, 09/06/2015 - 21:37 | 6517084 JungleCat
JungleCat's picture

Ponzi is also dead.

The man....not the scheme.

Sun, 09/06/2015 - 21:39 | 6517094 Truther
Truther's picture

.

Sun, 09/06/2015 - 21:28 | 6517057 order66
order66's picture

They're so fucked. Just glad that "China has very little impact on U.S. economic trajectory" so I can sleep nights.

Sun, 09/06/2015 - 21:39 | 6517086 Yen Cross
Yen Cross's picture

 That inventory build over the last quarter will be great for the impoverished masses,  during the "holiday seasons."

 I like my flat screens extra spicey, with extra cheese. lol

Sun, 09/06/2015 - 22:04 | 6517182 38BWD22
38BWD22's picture

 

 

LOL, Yen, you're in fine form tonight.

Sun, 09/06/2015 - 22:21 | 6517228 Yen Cross
Yen Cross's picture

 I'm getting ready to pack it in. Got up @ 6 a.m. and went for a run. BBQed, boneless chicken breasts and pork chops with garlic, basil, tangerine sauce.

 It was a beautiful day.

 

 I'm just bored, before the Fed. statement, the week after next.

Sun, 09/06/2015 - 22:07 | 6517189 ThroxxOfVron
ThroxxOfVron's picture

At the present burn rate I calculate that The BOC will exhaust ALL Foreign Reserves in 27 months: in the last week of December in 2018.  

 

YEN CROSS: Do you think Yellen will be forced to fire up The FED/BOC Swap Lines to stabilize the exchange rate ?

Mon, 09/07/2015 - 01:40 | 6517573 Yen Cross
Yen Cross's picture

 I can't stop laughing.

 You almost caught me on that one.

The usd/mxn is even moar ugly.

Sun, 09/06/2015 - 21:33 | 6517075 fowlerja
fowlerja's picture

Looks like the charts are slanted in the wrong direction...you can see it very clearly in the eyes of a Chinese stock trader...

Sun, 09/06/2015 - 21:34 | 6517076 Yen Cross
Yen Cross's picture

Ha

Sun, 09/06/2015 - 21:39 | 6517088 DirkDiggler11
DirkDiggler11's picture

I get the sense that it will be deeper into the Asian trading session tonight before the real Reindeer games begin.....

Sun, 09/06/2015 - 21:47 | 6517102 NDXTrader
NDXTrader's picture

Wow, I read Zero Hedge all weekend and I thought Armegeddon was hitting tonight. But of course futures are up 1%. Lucy has pulled the football so many times - the crash won't come until Grandma Yellen announces QE7 and the market craters 1500 points. The amount of money ZH has lost people is astounding

Sun, 09/06/2015 - 21:48 | 6517120 khnum
khnum's picture

The Dow may even get to 50,000 by QE7 but the real economy is swirling the bowl and will be through the shitter well before then.

Sun, 09/06/2015 - 21:51 | 6517131 NDXTrader
NDXTrader's picture

No doubt...and no one really disputes that unless they are on CNBC. But seriously, if you only read ZH you would have thought we were opening at 5000 on the Dow tonight and should all head to the bomb shelter

Sun, 09/06/2015 - 21:49 | 6517126 knukles
knukles's picture

Actually, ZH's info has been astoundingly great.
If you've lost money, you've not used the info properly or listened to the Lunatics in the Threads.
Nobody took your money from you, but you.  Yeah, everybody needs a straw man and a hug.

Sun, 09/06/2015 - 21:52 | 6517137 NDXTrader
NDXTrader's picture

Please, I love ZH, but if you've taken their advice with respect to the stock market you live in your Mom's basement

Sun, 09/06/2015 - 22:20 | 6517207 ThroxxOfVron
ThroxxOfVron's picture

The weekend isn't over yet.

There is still time for another coupla posts pumping Gold.

 

Bungholio still has the rest of the holiday to chum the swissy vault renter bros.' repository of the fabled alpine suppository!  

Sun, 09/06/2015 - 22:14 | 6517210 Yen Cross
Yen Cross's picture

 Keep on buying the ATH NDX. You make my risk premiums cheaper.

 There's (2) sides to a trade. Sell the rips Bitchez.

Sun, 09/06/2015 - 22:22 | 6517232 NDXTrader
NDXTrader's picture

People have been saying that since the Naz was under 2000. I can pullup posts where ZH said the S&P was wildly overvalued at 900. I'm not the enemy here, this ponzi will fall, but not until people lose faith in the dollar. That's not now

Mon, 09/07/2015 - 01:50 | 6517586 Yen Cross
Yen Cross's picture

There's people that I pay attention to.

 You're part of that collection. I Know you understand the markets.

 I would never tell you how to trade, and you'ld likely tell me to fuck off.

 Personally, I'll be selling the rips.

 As I said earlier NDX, I know you understand the markets.

Sun, 09/06/2015 - 22:16 | 6517215 jcdenton
jcdenton's picture

Then you better pay attention to this chart genius ..

https://staticseekingalpha.a.ssl.fastly.net/uploads/2015/9/3/29482055-14...

Unless one has taken most of their profits since 2009, and converted them into real hard assets, otherwise if you have kept reinvesting the bulk of those profits in the [stock] market with thought of even making more, you are about to lose it all ..

Because quite simply, it was never real money to begin with. At some point, the chickens come home to roost. It may well take some 500 years to achieve necessary monetary reset and reforms, but it will happen. Zinskauf can only be allowed for so long. At some point, zinsen is so abused, it must be purged completely, because it is so full of poison. There is no good in it. We are going to learn the hard way -- nummus non paret nummum ..

http://www.truecovenanter.com/truelutheran/luther_trade_and_usury.phtml

Sun, 09/06/2015 - 22:23 | 6517238 NDXTrader
NDXTrader's picture

I would venture to guess I have more gold, bullets and food than you - all paid for with Naz profits. You have a good 2-3 years left to do the same.

Sun, 09/06/2015 - 22:50 | 6517325 Ms No
Ms No's picture

2-3 more years would be nice, what makes you think it will hold out that long?

Sun, 09/06/2015 - 23:16 | 6517376 NDXTrader
NDXTrader's picture

What makes you think it won't. As I said above, it will end when people no longer have faith in the dollar. You and I may not, but the 99% still do and that's not ending soon

Sun, 09/06/2015 - 21:58 | 6517158 DirkDiggler11
DirkDiggler11's picture

Really NDXTrader, what "trades" did ZH command that you place for tonight and when did ZH command that you place them?

First of all, have some fucking patience. The Chineese market hasn't even been open 30 minutes yet. Tonight will be a slow boil, but it will boil over, most likely deep into the trading session. If you have any fuckimg balls, then short the rip in U.S. Futures right now, you will make money.

Secondly, man up you fucking pussy. ZH provides information and commentary. You draw your own conclusions, filtering out what you do not personally buy into. Don't fucking bitch and blame somebody else for your piss poor trades.

If ZH has lost you so much money, then it should be easy for your to leave. See ya.

Sun, 09/06/2015 - 22:28 | 6517252 NDXTrader
NDXTrader's picture

Wow, internet tough guy. Where did I say anywhere that ZH made me make any trade? I was long on Friday afternoon as the market came back because no way "they" were letting us end up down 300-400 points. Held long because obviously they were going to push it up over light futures trade this weekend. It's not rocket scientist. Why fight the people that print money in their basement?

Sun, 09/06/2015 - 22:04 | 6517180 Ms No
Ms No's picture

I don't know why people assume that none of us are making money.  I have made more money in the last 7 years than all other years put together.  Arguably the biggest opportunities this country has ever seen are right around the corner... but only if you don't lose your ass first (or communism).  If people can handle this risk/chaos then more power to them, but damn!   It's not hard to find opportunity but you sure as hell better know when to get out and the Hedge absolutely excells in providing information in this area.

Sun, 09/06/2015 - 21:41 | 6517104 gwar5
gwar5's picture

The markets will stabilize when they undergo their necesary corrections and hit bottom.

Sun, 09/06/2015 - 21:44 | 6517109 nmewn
nmewn's picture

lmao!

"...regulators were pitching Chinese stocks as cheap (37.3x P/E) and less-margined (+108% YoY)..."

Meng! Whip these damned unpatriotic pig farmers & shoe shine boy's into shape dammit! We're trying to get the fuck out of this thing!!!

Sun, 09/06/2015 - 21:54 | 6517145 Yen Cross
Yen Cross's picture

nmewn the assclowns were on Fox Farce this morning trying to expaine how P/E ratios were undevalued.

 Yeah right, Zero cap-ex@zirp = stock buybacks= layoffs= dividend disbursements.

Sun, 09/06/2015 - 22:24 | 6517241 ThroxxOfVron
ThroxxOfVron's picture

I thought that imminent FED tightening was going to be negative for Bonds?

China selling to stabilize Yuan and prop it's farked Banks was negative for Bonds?

What happened to the narrative?!

Mon, 09/07/2015 - 01:56 | 6517601 Yen Cross
Yen Cross's picture

  Can you believe the PBOC balance sheet is almost $ 24 trillion dollars?

 Can you believe that the GDP of exports from China is always above 7%?

 

Sun, 09/06/2015 - 21:53 | 6517143 rsnoble
rsnoble's picture

It's easy to stabilize their market.  Stop fucking with it and let it crash to what it's really worth.

On the other hand, is it really a market if it's stabilized?

Sun, 09/06/2015 - 21:56 | 6517154 Yen Cross
Yen Cross's picture

 The S& Piss pinged the 200 hour avg., and got rejected.

 Get to work Mr. Kuroda-shima.

Sun, 09/06/2015 - 21:56 | 6517157 offwirenews
offwirenews's picture

Futures are flying. Asian markets flying. Oil rebounding 

Apparently everything's awesome. 

Sun, 09/06/2015 - 22:05 | 6517183 Bunga Bunga
Bunga Bunga's picture

I hope a new Mao will end this insanity soon.

Sun, 09/06/2015 - 22:08 | 6517193 StarSoul
StarSoul's picture

I'm Asian and we always loose playing the western game of finance. Why can't we go back to simple Gold as a currency that kept us alive for 1000s of years?

Sun, 09/06/2015 - 22:21 | 6517213 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

Between the United States' Federal Reserve issuing the world's reserve currency and managing the financial system's most deep and liquid markets, America holds the status of "prime mover" in these (and other) matters. Much like in a casino, those who join at a later date find that the house always wins.

Sun, 09/06/2015 - 22:32 | 6517272 black dragon
black dragon's picture

star, things will be going your way again soon.  and the abberation of history known as western finance will soon be over

Sun, 09/06/2015 - 22:53 | 6517332 Bunga Bunga
Bunga Bunga's picture

Because when gold is a currency, the government can't tax you through inflation.

Sun, 09/06/2015 - 22:19 | 6517220 black dragon
black dragon's picture

ive got 9 lbs of white widow. i having no problems breaking down and getting my price for :0

Mon, 09/07/2015 - 00:37 | 6517517 MSimon
MSimon's picture

Prohibition is price supports for criminals.

Mon, 09/07/2015 - 02:01 | 6517605 Yen Cross
Yen Cross's picture

 If I was intraday trading paper gold, I'd probably get long about now.

 That hourly chart looks ripe for the picking. Close the trade/cover 2-3 hours before New York opens.

 Commodities seem to get slammed in the middle of the night. </sarc>

Mon, 09/07/2015 - 02:40 | 6517632 Sid James
Sid James's picture

Long on toasted factories then.

Mon, 09/07/2015 - 05:26 | 6517730 thatdudeisntme
thatdudeisntme's picture

excuse me but how does a crashing stock market hurt China's economy? it still has a trade surplus growth YoY?

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