Global Stocks Crash After Spiraling Chinese Devaluation Unleashes Worldwide Chaos And Selling

In yesterday's overnight market wrap, we commented that while Chinese stocks had succeeded in levitating following another massive government intervention, "the global market was far more focused with what was going on in China's currency, which as previously reported, plunged to new 5 year lows, while the spread between the onshore and offshore Yuan rose to a record wide, suggesting the depreciation in the currency is only going to accelerate from here, and a big payday for Kyle Bass is coming."

A few hours later this was confirmed when China set the Yuan fixing some 0.5% lower, the biggest drop since the official August devaluation... 

... and unleashed a global selling panic after China's stock market was promptly shut down less than 30 minutes into trading, when it hit the -5% "15 minute" circuit breaker, and immediately thereafter the -7% "all day" circuit breaker. This was the second market halt this week, and means that Chinese stocks have been fully halted on half of all trading days so far in 2016, just as we said was the endgame for this massively rigged market back when we described the Hanergy fiasco.

The following chart courtesy of Holger Zschaepitz summarizes the utterly farcical nature of Chinese markets quite effectively:

At that point the PBOC yuantervened...

... but it already too late: the damage had been done, and all in just 14 minutes of actual trading (net of the 15 minute trading halt).

"It’s a brutal start of the year, there’s just nowhere to hide on the market. This looks like a ripple effect from what happened back in August. It might continue for a few weeks, but given China’s central bank fire power, it shouldn’t last for more than that,” Alexandre Baradez, chief market analyst at IG France, says by phone.

As we also warned yesterday that none of what is going on in China should be a surprise, this is precisely how global markets took it, because what is taking place now is a carbon-copy of the global market response to the August devaluation, one which unleashed a 10% correction in the market, and led to the August 24 ETFlash crash, one which may also recur today judging by where global sotcks and US equity futures are trading right now:

Global stocks and crude oil tumbled on widening concerns about the Chinese economy, as markets' turbulent start to the year intensified.  The Stoxx Europe 600 was down 3.4% in midmorning trading, while Brent crude oil was down 1.9% at $33.42 a barrel.

S&P futures are holding near their worst levels of the day (had dropped as much as 55pts or 2.77%) amid global rout in stocks, commodities. In pre-mkt trading, Apple -3.2%, FreeportMcMoRan -5%, Netflix - 3.1%, Twitter -3%, Facebok -3%, Bank of America -2.8%, Wells Fargo -2.7%, Amazon -2.7%, Alphabet -2.6%. WTI down 2.7%, paring earlier loss of as much as 5.5% to $32.10/bbl.

Futures:

• S&P Futures 48pts or -2.4% to 1,938
• DJIA futures -389pts or 2.31% to 16,449
• Nasdaq 100 futures -139pts or 3.1% to 4,308

Commodities:

• WTI Crude -2.6% to $33.07/bbl
• Brent Crude -2.1% to $33.50/bbl
• Gold +0.3% to $1,096/oz
• Copper -2.9% to $2.03/lb

Rates/FX:

• 30-yr -2.26bps to 2.9149%
• 10-yr -2.64bps to 2.1438%
• 2-yr -2.40bps to 0.952%
• Dollar Index Spot -0.3% to 98.89
• Euro/Dollar +0.5% to $1.0837
• GBP/Dollar -0.5% to $1.4563
• Dollar/Yen +0.7% to 117.63

Other Assets:

• MSCI Asia Pacific down 2% to 124
• US 10-yr yield down 3bps to 2.14%
• Dollar Index down 0.36% to 98.82
• WTI Crude futures down 2.6% to $33.09
• Brent Futures down 2% to $33.54
• Gold spot up 0.2% to $1,096
• Silver spot down 0.2% to $13.99

Some other highlights: European shares fell the most since August, crude oil tumbled to a 12-year low, and South Africa’s rand sank to a record; haven assets extended gains, with Treasuries rising for a sixth day and the yen reaching a four-month high. Gold is trading near $1100, while Bitcoin is surging and was last seen at $450 as increasingly more Chinese use the digital currency to transfer their rapidly devaluing money offshore into more stable currencies.

As Bloomberg summarizes, China’s tolerance for a weaker yuan is being seen as evidence policy makers are struggling to revive an economy that’s the world’s biggest user of energy, metals and grains. Those concerns helped wipe $2.5 trillion off the value of global equities in the first six days of this year.

It wasn't just China: as we observed overnight, George Soros warned that markets are facing a crisis, while the World Bank cut its global growth forecasts for this year and next as China’s slowdown prolongs a commodity slump and contractions endure in Brazil and Russia. "China has a major adjustment problem," Soros said Thursday at an economic forum in Colombo, Sri Lanka. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”

He could very well be right.

* * *

Looking at regional markets, Asian stocks continued the 2016 stock market rout, which has already seen the S&P 500 record its worse 3-day start since 2008. Nikkei 225 (-2.3%) and the ASX 200 (-1.7%) was led lower by losses in energy after oil prices declined to test the USD 33/bbl level to the downside with Brent at its lowest level since 2004. US equity futures declined with E-mini S&P down over 1% and Dow futures shedding around 150 points, as Chinese markets were halted for trade after the Shanghai Comp and CSI 300 fell by over 7%, with continued aggressive CNY devaluation again acting as a catalyst for the downturn. 10yr JGBs gained as losses in riskier assets supported a flight to quality, while today also saw a relatively well-received 30yr auction where b/c printed much higher than the 12-month average and the tail in price CSRC capped large shareholders' stake reduction to 1% of total outstanding share for 3 months, effective from January 9th and said that major shareholders should disclose share sale plan 15 days before the sale.

The MSCI Asia Pacific Index slipped 2 percent. A gauge of Chinese shares listed in Hong Kong slumped 4.2 percent and the Hang Seng Index dropped 3.1 percent. Benchmark stock indexes in Australia, Japan, Singapore and Thailand all lost more than 2 percent.

“The Chinese yuan is smack bang at the heart of concerns,” Chris Weston, chief market strategist in Melbourne at IG Ltd. “For risk assets to stabilize and sentiment to turn around, we are going to need a stable or even positive move in the Chinese currency. It’s clear that the market is becoming increasingly concerned by the global inflation outlook.”

Top Asian News:

• China Regulator Said to Discuss Markets Without Taking Action: Authorities met to discuss market conditions, circuit breakers
• China Renews Curb on Major Investors’ Stock Sales to Ease Panic: New rules ensure “orderly and legal” sales by key shareholders
• DBS, Standard Chartered Said to Face China Currency Suspensions: Standard Chartered said to have appealed to shorten hiatus
• Lack of Options on North Korea Presses China to Shift Policy: Diplomats question China threshold for ending Pyongyang cover

In Europe, equities have undergone another bashing today as global markets react to the continued bearish sentiment in China. With equity trading in China lasting just half an hour today, in a similar fashion to the rest of the week Euro Stoxx is lower by 2.8% on the day, now lower by almost 6.6% on the week The Euro Stoxx 600 has fallen today by the most since the August 24th collapse , after the CNY fix was moved by the most since the same date, and as such safe havens Bunds, JPY and gold have all benefitted today, while in terms of fixed income, short sterling has seen bull flattening extended, with the June contract breaking above Q4 highs. In line with the China concerns, energy and material names are once again under performing, with Brent and WTI both reaching fresh multi year lows in early European trade.

Top European News:

• Euro-Area Economic Confidence Increases to Highest Since 2011: Reflects better sentiment in industry, services
• Marks & Spencer Chief Bolland Quits as Sales Slump Persists: Retailer’s holiday sales decline more than analysts’ estimates
• German Factory Orders Rise in Sign of Solid Domestic Demand: Orders up 1.5% in November vs. estimate for 0.1% increase
• Osborne Warns U.K. Economy Faces ‘Dangerous Cocktail’ of Risks: China, commodity prices, Middle East cited as hazards
• Euro-zone Dec. Economic Confidence 106.8; est. 106
• Euro-zone Dec. Business Climate Indicator 0.41; est. 0.39
• Euro-zone Dec. Industrial Confidence -2; est. -2.9
• Euro-zone Dec. Consumer Confidence -5.7; est. -5.7
• Euro-zone Nov. Unemployment Rate 10.5%; est. 10.7%
• Euro-zone Nov. Retail Sales -0.3% m/m; est. 0.2%
• Netherlands Dec. EU Harmonized CPI 0.5% y/y; est. 0.5%
• Germany Nov. Factory Orders 1.5% m/m; est. 0.1%

In FX, the offshore yuan swung from a 0.3 percent gain to a 0.7 percent loss and back in the space of about 30 minutes in early trading in Hong Kong’s freely traded market. It was subsequently 0.4 percent higher versus the greenback, while the onshore rate weakened 0.5 percent. The People’s Bank of China cut the yuan’s reference rate by 0.5 percent, the most since the week of an Aug. 11 devaluation that roiled global markets.

“We saw aggressive intervention in the offshore yuan market,” said Zhou Hao, an economist at Commerzbank AG in Singapore. "We don’t really understand the rationale behind the market movements in the past few days. Obviously, these movements have reminded us of the market rout last year.”

The central bank is considering new measures to prevent high exchange-rate volatility in the short term, according to people familiar with the matter. China updates its foreign-currency reserve levels Thursday, giving traders an insight into how much its management of the yuan cost in December. The holdings fell by more than $400 billion in the first 11 months of 2015 as the PBOC bought yuan to support the exchange rate.

The yen, which has been the best-performing major currency so far this year amid the demand for safe-haven assets, rose as much as 1 percent to its strongest level since August versus the dollar.

In commodities, the Bloomberg Commodity Index fell 0.8 percent, headed for its lowest close since 1999. Copper dropped 2.7 percent in London and nickel sank 2.9 percent.

West Texas Intermediate crude slid 3.3 percent to $32.86 a barrel, poised for the lowest settlement since February 2004. U.S. gasoline inventories surged the most in 22 years and crude supplies at Cushing, Oklahoma -- the American hub -- climbed to an all-time high, government data showed Wednesday. Concern about a global oversupply saw crude cap its biggest ever two-year tumble in 2015, with OPEC abandoning limits on production and U.S. oil stockpiles remaining about 100 million barrels above their five-year average.

Gold rose as much as 0.8 percent to a two-month high of $1,102.85 an ounce.

“Gold is probably the only one beneficiary among all the commodity markets from all the turmoil in the geopolitical scene,” Bob Takai, chief executive officer and president of Sumitomo Corp. Global Research, said by phone from Tokyo.

The only data of note in the US this afternoon is the latest weekly initial jobless claims reading, while we’re also due to hear from the Fed’s Lacker (at 1.45pm GMT), delivering his economic outlook, as well as Evans (at 7.15pm GMT) who is scheduled to talk on the economy and monetary policy.

Top Global News:

• Chinese Stocks Halted as Yuan’s Slump Sends Markets Into Turmoil: Equity rout triggers trading halt in less than 30 minutes, PBOC cuts yuan fixing most since August; Shanghai Fund Manager Dumps All Holdings in ‘Insane’ Market: Shanghai Heqi Tongyi forced to liquidate holdings amid plunge
• George Soros Sees Crisis in Global Markets That Echoes 2008: China’s devaluation hurting rest of the world, Soros says
• Barclays Said to Plan Closing Most of Asia Cash Equities Unit: About 50% of positions in Asia equities may be eliminated
• United CEO Munoz Has Heart Transplant With Return Still Seen: Expected back at work by start of 2Q, company says
• Microchip Said to Be Reconsidering Offer to Acquire Atmel: Atmel’s disappointing quarterly sales said to raise concerns
• Yahoo Said to Propose Job Cuts as Part of Mayer’s Revival Plan: Announcement expected by earnings report in coming weeks
• $30 Oil Just Got Closer as WTI Slides to 12-Year Low on China: WTI trades at lowest since December 2003
• Morgan Stanley’s Gorman Extends Tenure, Spurring Fleming’s Exit: In senior-level shakeup, Gorman names Colm Kelleher president
• Red Kite Bucks Metals’ Worst Year Since Crisis With Mining Bets: Firm is committed to physical metals fund after ‘tough year’
• U.S. to Deepen Probe Into BofA’s Client Protection Rules: WSJ: Scrutiny on certain dividend-tax trades, whether bank broke rules designed to safeguard client accounts
• ‘Star Wars’ Shoots Past ‘Avatar’ to Break U.S. Box Office Record

Bulletin Headline Summary from Bloomberg and RanSquawk:

• Another day of turmoil in China as more circuit breakers are triggered in the domestic markets and more intervention is required in the CNY
• European equities have undergone another bashing today with the Euro Stoxx 600 posting the largest intraday decline since the August 24th collapse
• Looking ahead, today's highlights include, US Initial and continuing Jobless Claims and comments from Fed's Lacker and Evans
  Treasuries advanced for a sixth day after a plunge in Chinese stocks halted trading for a second time this week and as oil fell to a 12-year low, WTI nearing $30/bbl.
• The worst start for Chinese markets in two decades showed no signs of letting up after PBOC cut its yuan reference rate by the most since August, sparking a selloff in stocks that forced the $6.6t market to shut early
• “This is insane. We were forced to liquidate all our holdings this morning,” says Chen Gang, CIO at Shanghai Heqi Tongyi Asset Management Co., which manages about 300m yuan
• China’s FX reserves tumbled by a record $108b in December as the PBOC sold USD to stem a slide in yuan. That was about four times greater than analysts predicted in a Bloomberg survey, and reduced the stockpile to the lowest level in three years
• The manager of a Chinese hedge fund that returned a surprising 86 percent during last year’s stock rout will sell all its stock holdings as renewed fears tanked China’s markets again
• French police confirm report of gunshots fired outside a police station in the 18th arrondissement, or district, of Paris; I-Tele reports police shot an attacker who entered the station with a knife
• DBS Group Holdings Ltd. and Standard Chartered Plc are among banks suspended from some forex business in China, according to people with knowledge of the matter
• Anglo American Plc led a slump in mining stocks to the lowest in more than a decade as market turmoil in China, the biggest consumer of metals, ignites a vicious spiral of tumbling equities and collapsing commodity prices around the world
• Iran accused Saudi Arabia on Thursday of an aerial attack on its embassy in Sana, the capital of Yemen, in a potential escalation of a sectarian and geopolitical conflict that has put the region on edge, NYT reports
• South Korea will resume the propaganda broadcasts that previously led the Kim Jong Un regime to threaten war, in order to punish North Korea for conducting a fourth nuclear test
• The latest outbreak of bubonic plague on the Indian Ocean island of Madagascar has killed 63 people since August, the Health Ministry said
• $8.25b IG priced yesterday, no HY. BofAML Corporate Master Index OAS +1bp to +174, 2015 range 180/129. High Yield Master II OAS widens 8bp to +711; 2015 range 733/438
• Sovereign bond yields mixed. Asian and European stocks plunge, U.S. equity-index futures slide, with S&P -2.4%. Crude oil and copper lower, gold gains

US Event Calendar

• 7:30am: Challenger Job Cuts y/y, Dec. (prior -13.9%)
• 8:30am: Initial Jobless Claims, Jan. 2, est. 275k (prior 287k)
• Continuing Claims, Dec. 26, est. 2.2m (prior 2.198m)
• 9:45am: Bloomberg Consumer Comfort, Jan,. 3 (prior 43.6)

Central Banks

• 8:10am: Bank of Canada’s Poloz speaks in Ottawa
• 8:45am: Fed’s Lacker speaks in Raleigh, N.C.
• 2:15pm: Fed’s Evans speaks in Madison, Wis.

We concludes as is customary with Jim Reid's overnight event wrap

The holiday period is starting to feel like a bit of a distant memory. There’s a huge sense of unease in markets at the moment and a big part of that are the concerns with China which dominated much of yesterday’s risk-off tone and, given the Asia session overnight, look set to dictate markets today. From the opening bell this morning the CSI 300 took 12 minutes to tumble to -5% and trigger a 15-minute trading halt. After resuming, the index then took 2 minutes to hit -7% for the day, breaching the second threshold of the circuit breaker and resulting in Chinese equity markets shutting early for the second time this week. So markets were open for just 29 minutes with a total trading time of 14 minutes. The Shanghai Comp closed -7.32% and Shenzhen -8.34% with the latter down over -15% YTD already. Those huge moves have dragged the rest of Asia lower. The Nikkei (-1.96%), Hang Seng (-2.39%), Kospi (-0.77%) and ASX (-1.93%) are all in the red. US equity futures have tumbled over 1% and Oil is testing the $33 mark (down -2%) after falling nearly 6% yesterday. Asia and Australia iTraxx indices are 3 to 4bps wider.

A lot of the blame is being put again on the currency after the PBoC set the Yuan fix 0.51% weaker today, the eighth consecutive weakening but this time the largest since August. That’s caused plenty of volatility in the currency this morning. The onshore Yuan is currently 0.6% weaker as we type while the offshore Yuan is actually +0.2% firmer although at one stage traded nearly as much as 1% weaker. The moves have however caused a broad sell-off across most EM currencies with China’s December FX reserves data due out at any time now and set be very closely watched. As we type headlines are also out suggesting that China’s securities regulator is to cap the size of stakes that major investors can sell at 1% of a company’s shares, effective this weekend, in a bid to surely help ease some of the panic ahead of the open tomorrow.

Today’s moves so far come after another tough session for risk assets yesterday, while there was a reasonable amount of newsflow to get through too. The moves for Oil yesterday saw WTI close at the lowest since December 2008 and Brent at the lowest price since June 2004, while Gasoline closed -7.55% and Natural Gas -2.49% following the latest batch of bearish gasoline inventory data. Meanwhile, the FOMC minutes were probably a touch more dovish than expected (more shortly), although the US dataflow was actually relatively supportive with a much better than expected ADP print (257k vs. 198k expected) raising hopes for Friday’s payrolls, while the ISM non-manufacturing printed at 55.3 which was below expectations (56.0) and down versus November (55.9) but all things considered still relatively resilient in light of the manufacturing data earlier in the week. If this wasn’t enough, we then saw the World Bank weigh in after the closing bell, downgrading their global growth forecasts for 2016.

All told the S&P 500 closed yesterday down -1.31%, meaning the index is down -2.63% to start the year which is only just shy of the -2.73% return for the first three trading days of 2015 which was the worst start to a year since 2008. It was a similar performance for European stocks yesterday where the Stoxx 600 closed down -1.26%, taking its YTD loss pass the 3% mark already. Yields continue to dip lower in most core government bond markets. 10y Bund yields were down nearly 4bps yesterday to settle at 0.502% and nearing the early December levels. 10y Treasury yields finished down nearly 7bps meanwhile at 2.168% and a two-week low.

Onto the Fed. The main point of note in yesterday’s FOMC minutes were the comments from officials suggesting that last month’s decision to commence liftoff was a ‘close call’, reflecting concerns around the outlook for inflation in particular. The text revealed that ‘for some members, the risks attending their inflation forecasts remained considerable’ and that ‘among those risks was the possibility that additional downward shocks to prices of oil and other commodities or a sustained rise in the exchange value of the dollar could delay or diminish the expected upturn in inflation’. Aside from those comments, in truth there was little else of note from the minutes and instead the text was pretty consistent with the post-meeting statement. On timing of future moves, there was more emphasis on the need for ‘gradual’ adjustments in the fed funds rate, while also emphasizing the need to adjust policy as economic conditions evolve. There was also reference to the stress in US HY around the timing of last month’s meeting. While participants didn’t downplay the moves, there appeared to be little concern from officials about the wider implications for now however.

Back to the rest of the US data yesterday. As well as the ADP and ISM numbers, the final services PMI for December was revised up 0.6pts at the final count to 54.3. That helped to take the composite up to 54.0 at the final read from 53.5 in the earlier flash. Meanwhile, the November trade balance reading revealed a shrinking of the deficit to $42.4bn (vs. $44bn expected) from $44.6bn reflecting a drop in imports. Factory orders data offered few surprises after coming in at -0.2% mom in November as expected, while there was no change to the final revision for durable goods in the same month at 0.0% mom. Core capex orders was revised up one-tenth to -0.3% mom. Having highlighted the recent downward revision, yesterday’s narrowing of the trade deficit and resultant contribution from net exports has seen the Atlanta Fed now upgrade their Q4 GDP forecast to 1.0% from 0.7% a few days ago.

Meanwhile, the Fed Vice-Chair Fischer was vocal again yesterday. Following on from San Francisco Fed President Williams’ comments that he see’s 3 to 5 rate hikes this year, Fischer said that in his view four rate hikes ‘are in the ballpark’, although at the same time highlighted the concerns emanating out of China saying that there ‘are levels of uncertainty and they’ve risen a bit now’.

Over in Europe yesterday the final revisions to the December PMI numbers were generally encouraging. The final Euro area composite PMI was revised up 0.3pts to 54.3, with the services component up the same amount to 54.2. That took the composite back to its cyclical high seen in August. By country, Germany saw an upward revision to its already strong flash reading, by +0.6pts to 55.5. The print for Italy was also encouraging having risen +1.7pts to 56.0. This offset a bit of weakness in the final revision for France (-0.2pts to 50.1) while the reading out of Spain also fell last month (-1.6pts to 55.1). Our European economics team confirmed that yesterday’s PMI’s point to GDP growth of +0.5% qoq in Q4, which is slightly above their +0.4% expectation and suggestive that the economy should continue to expand at a solid rate in the near term, with external headwinds (China and the US) the main risks.

Before we take a look at today’s calendar, just quickly highlighting those World Bank growth forecast changes. 2016 global growth has now been downgraded to 2.9% from the earlier 3.3% forecast back in June. This reflected concerns of a slowdown for emerging markets, with the Bank citing concerns around China and also the recessions in Brazil and Russia. It was noted that the Bank cut its outlook for China growth this year to 6.7% from the earlier 7% previously, while a 6.5% forecast was made for 2017. That forecast for this year is in-line with the views of our Chief China Economist.

It’s set to be a slightly quieter day ahead for data with markets probably more focused on events in China. In Europe this morning we’ve got factory orders and retail sales numbers out of Germany, along with the latest Euro area confidence indicators as well as the November unemployment print and retail sales data for the region. The only data of note in the US this afternoon is the latest weekly initial jobless claims reading, while we’re also due to hear from the Fed’s Lacker (at 1.45pm GMT), delivering his economic outlook, as well as Evans (at 7.15pm GMT) who is scheduled to talk on the economy and monetary policy

Comments

[juicy_bananas]

Obama, in a show of true leadership, has promptly called an emergency meeting to discuss climate change.

[DirkDiggler11]

Correct, King Coal is worse than ISIS and must be stopped at any cost ! Right after Obumma finishes another round of golf and Reggie as the 19th hole....

( edited because I can't spell)

[The Count]

We hope you enjoy your front row seats as armageddon unfolds.

[Kagemusho]

Just hold your raw corn kernals in the air; the heat in atmosphere from the immolating markets will pop them for you. You may have just enough time to eat one before they're incinerated...if you're not burned as well...

Looks like Pandora's Box is cracking open just a bit, and already Hell has squeezed out under the lid.

I've been told the Chinese ideogram for 'change' contains both 'chaos' and 'opportunity'. I think we're seeing the 'chaos' part first.

[Kefeer]

Armageddon is at least 1007 years away from today.

[nidaar]

..from the restaurant at the end of the universe!

[DirkDiggler11]

The 1929 level on the S&P keeps sticking in my mind, I don't know why ....

[I AM SULLY]

A phrase I've heard echoing from my unconscious the last few months ...

"Soul Harvest Nears"

[I AM SULLY]

PREPARE TO BE BUTT RAPED!

IT'S THE SCREW-BI-LEE ONCE AGAIN!

THE BANKERS WILL BE MADE WHOLE!

YOU WILL GET STUFF SHOVED IN YOUR HOLE!

... AND YOU WILL BE MADE TO EAT YOUR OWN TURDS!

http://iamsully.com/?p=15541

http://iamsully.com/?page_id=10095 

[crackerjack_finance]

I believe the global equity rout provided cover to let the price level go lower....

Regardless of the price action in China equities, up, down, whatever, the fact that the markets are not "real" at this stage of economic development (no futures, no shorting, no selling, inside info rampant, poor companies that don't earn returns, state subsidized lending/credit problems, margin debt, no free flow of capital, halt stocks when going down) is in and of itself exceptionally BEARISH.

Crackerjack's 2016 outlook and predictions to poke fun at, a few days late...

http://crackerjackfinance.com/2016/01/2016/

[RadioFlyer]

Cue False Flag in 3, 2, 1...

[Kefeer]

I agree and it will be widespread and very tragic...God have mercy on all of us more than He already does.

[Trucker Glock]

Gartman: It's definitely a bear market this time

Hahahaha

[DirkDiggler11]

Fartman is great at predicting a blizzard after he is already snowed in.

[CuttingEdge]

Keep an eye on PBOC's UST holdings.

They start  dumping (along with Russia for a bit of Putin payback) and "Dollar come Home" will be the next great Wall Street tragicom - if they don't start WW3 in the ME beforehand, of course.

[jakesdad]

I keep thinking of the scene in "too big to fail" where paulson's at 08 olympic opening & chinese counterpart tells him russians tried to get them to coordinate dumping our bonds.  I have to assume ukraine, fifa, snowden, etc have not taken that offer off the table?  assuming the russians, chinese, indians & iranians aren't idiots (which seems pretty self-evident) I would expect they've been preparing for a post us dominated world for at least 15 yrs & 08 probably gave it a lot more urgency.  if I were them I wouldn't necessarily be trying to cause it as there's no need to risk provocation when we're doing so good a job of it all on our own but there could come a point where they decide it's time to play kervorkian...

[Kefeer]

They will not start a direct conflict with Russia; we would be destroyed because we have antiquated weapons by comparison.  Thank God!

[CuttingEdge]

Err...with the white man's version of an Islamic nutjob like McCain having influence, I disagree. Politely.

[zaphire999]

Where's OBI the Nigerian wizard .. what are his top picks for today??

[I AM SULLY]

I recommend http://stazhit.com ...

(totally guaranteed to achieve 22.5% returns over the investment lifetime)

http://iamsully.com/?p=12097

[zaphire999]

well done

sounds like 

STAZHIT

is dazhit!!

[I AM SULLY]

(I can send you a prospectus)

(it will only cost you 1 oz of gold)

[I AM SULLY]

I should have said - "... more detailed prospectus ..."

(fuck)

(I just screwed the sale)

(I always do this)

[franzpick]

Sneak chart preview to today's upcoming leg down toward bear market lower lows: 

http://finviz.com/futures_charts.ashx?t=INDICES&p=d1

[Kefeer]

Note the Russel 2000, that is the one index that is most difficult to manipulate and will forward lead the other indices.  Looks like a head and shoulder breaking loose downward; thanks for the linkage.

[Old Man River]

The DJIA usually ends the session positive after a remarkable futures start like this?

[juicy_bananas]

Interesting.  Obama started with a recession and will go out with a recession. 

If you like your recession you can keep your recession.

He dindu nuffin.

[Kefeer]

Obama began with a recession and intentionally turned it into a depression; got to get the facts straight.

[CHoward]

I just want to see bodies falling out of windows on Wall Street this morning - now, that would make my day.

[I AM SULLY]

Be patient my son ...

With all the "virtual office shit" - I suspect many cities will enjoy that view, this year ...

https://www.youtube.com/watch?v=9vST6hVRj2A

[Kefeer]

Thanks for the video link Sully; we were at Whitefish bay 2 years ago and the remembrance is still strong...that was quite the tragedy to be sure.

[I AM SULLY]

There are still good investments out there ...

"You can choose the other guy, or you can go with the folks who build bridges between mismanaged fear-schemes and war-mongering death pyramids."

-- STAZHIT.COM

http://stazhit.com

http://iamsully.com/?p=12097

[22winmag]

Smoke 'em of you got 'em.

[I AM SULLY]

"The sailors say, they'd a made white-fish bay, if they put 15 more miles behind her ..."

- Wreck of the Edmund Fitzgerald

(a great song for your play list today)

https://www.youtube.com/watch?v=9vST6hVRj2A

[foodstampbarry]

Mr. Yellin Obarry's poll numbers are tanking... Turn those printers back on! Turn those printers back on!!

[I AM SULLY]

Everything is fine ...

Some man in a black suit just shot me with a dart, but ... what a nice man ...

https://youtu.be/nU615FaODCg

[Trucker Glock]

Yahoo! Finance Top News (emphasis added)

World could face months of Chinese market aftershocks

Soros: It's the 2008 crisis all over again

Ford CEO: We're expecting a great year in China

Is The Onion losing market share yet?

[blown income]

Wow ..what a drive in when I left pitch dark avoided a head on accident fucking car was 3 foot into my lane!!!!

[I AM SULLY]

http://55on465.com

[I AM SULLY]

http://iamsully.com/?p=14538

[Jstanley011]

Hi Janet. There is someone here to meet you. Mr. Bear, meet Janet Yellen. Janet, meet Mr. Bear. He's here to bite your head off.

[polo007]

According to Macquarie Research:

https://app.box.com/s/5a4c8phvhb3p8cfp7x2zv01u1mqx0sao

China choices – narrowing

Between a rock and a hard place

Policy decisions are being made on the run...

- China seems to be increasingly making decisions on the run. As discussed in our prior reviews (here and here), China is between a rock and a hard place. It is facing an irreconcilable set of choices, with structural reforms and desire to place the country on a sound long-term footing clashing violently with short-term objectives of stability and reduction in excessive levels of volatility.

- Opening capital account and liberalization are in conflict with the country’s persistent objective of controlling both quantity and prices (an impossible feat but China is constantly attempting to do both). Liberalization and de-regulation (including SOE and public sector reforms) threaten to undermine hoarding of labour force and place greater pressures on wages, but hold out a long-term promise of significant competitive and structural benefits. Capital market reforms, whilst improving long-term capital allocation and supporting consumer re-balancing, expose large parts of the economy to disruptive changes. It is truly a dilemma from hell without any obvious exits.

...due to failure to re-balance & challenging global outlook

- Most of these challenges stem from China’s persistently high saving rates (~48% of GDP) which forces the country to continue investing (~45% of GDP) whilst exporting the balance to other countries. As discussed here, we believe China is starting to run into a number of natural constraints (such as declining ROE/ROIC; rapidly rising debts; diminishing capacity of other countries to absorb China’s surpluses). The easiest and the least painful solutions are not available (i.e. spontaneous rise in consumption at a higher rate than increase in investment and robust recovery in global economy and trade). Hence, China is facing a multitude of sub-optimal decisions and choices, such as significant rise in public sector spending; transferring value from corporates to households; devaluing Rmb; and/or blunt administrative directives.

- The problem with each of these choices is that addressing one area causes significant disruption in another. Lowering Rmb helps with competitiveness and releases some of the pressure, but at the cost of lower domestic liquidity and potential for significant capital flight. Given that China can no longer deleverage, it must ensure that liquidity constantly rises and that there are always ‘bubbles’ to support further leveraging. Unlike the Fed, China seems to be uncomfortable with the idea of perpetual leveraging, even though it does not have an alternative. Hence, confusing signals between reforms and administrative actions. Whilst in the last eight years most governments have been using direct intervention, administrative measures work best when they are relatively consistent rather than rapidly changing in the mid-stream.

Lowering China weighting; adding to India, Phil and Mal

- Although we maintain that China has a broad range of instruments and low degree of external vulnerability, we believe the current confusion is inviting much larger capital outflows whilst unnecessarily prolonging the agony of high volatilities. Unless China abandons reforms (such as introduction of capital control), it has no choice but to further lower currency; embark on fully-fledged QE and embrace non-capital market reforms. It is decision time and risks are rising. We are lowering our position in China, adding to our existing overweight in India and the Phil whilst also raising Mal to neutral weight.

[thismarketisrigged]

the ppt has woken up early.

they brought dow futures from -400 to -320 in 15 minutes, and the s&p futures from -47 to -38 as well.

kevin henry is working overtime today, that is for sure

[Trucker Glock]

Rotten motherfuckers

[G. Marx]

China responds to sell-off by locking investors' money up, so they are forced to sell holdings here.

[roadhazard]

Yippie-Ki-A mother fuckers.

[conraddobler]

China is either complicit with the new financial order or being manipulated into having no other options so they can be brought on board.

[silentboom]

Some ding wong.