What China Has To Look Forward To When It Opens In A Few Hours
It's all up to China tonight, and if early ETF indications are correct, today's US equity bloodbath is about to spill over right back into Chinese markets again, only this time without the benefit of circuit breakers making it an early close for local traders if they manage to push the market down 7% in 29 minutes.
Moments ago, on Bloomberg TV, Bill Gross said China's stock markets are likely to drop 5-6% on Friday: "Based upon the ETF in the United States, China is predicted to be down 5 percent or 6 percent…but China is an artificial market. All global markets are artificially based and to the extent that we have a catharsis, I think, depends upon central banks basically giving up in terms of what they do. I don't think that's going to happen."
Gross is referring to the following ETF:
Indeed, it appears that the US is far more bearish on what will happen in China tonight relative to the local futures market:
Incidentally, when asked whether the market turmoil will cause Chair Yellen to say the rate hike is done, Gross said: "I don't think she'll say that. They've been on this track of raising interest rates for so long that she's not going to come out with one or done. She may come out there -- someone may come out - Fischer perhaps - will come out and acknowledge the fact that global markets and that global financial conditions are an important consideration in terms of future policy. But I don't think they're going to divulge that they are not raising interest rates for times as Stan Fischer said a few days ago."
In other words, central banks to the rescue. Meanwhile...
Angry clients besiege Chinese brokerages
Back in China, which has had non-functioning markets on two of the past four days, should the market rout persist, the already angry local "traders", most of whom are undereducated and margined to the hilt, will likely snap.
According to Bloomberg, after yesterday's farce, angry clients besieged a brokerage as China's market crashed and was halted.
“We cannot go home. We are dealing with a flood of angry phone calls from clients complaining about the market plunge and the circuit-breaker system,” says Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. Wei added that “we are also feeling at a loss and confused today as we didn’t quite figure out what was going on."
Wei also says that Huaxi management "has asked us to placate clients and guide them to cut holdings rationally if they do margin trading."
Sorry, but when clients have not only lost a year's worth of income in minutes but on top of that can't liquidate the remainder, no amount of placating will work.
Wei then explained what even the Chinese regulator realized after the first few days of experimenting with the new circuit breaker: "the circuit-breaker mechanism actually fuels declines and that goes against the regulator’s goal of stabilizing the market." It remains to be seen if removing the circuit breaker, a device by definition meant to stabilize markets, will lead to calmer markets. Maybe for the first few minutes, but then all bets are off.
"The new rule on major shareholders’ stock sales isn’t going to work to prevent the market from falling. It’s restricting sales and the CSRC cannot do things like banning them from selling forever. It’ll be a tough day again tomorrow."
The circuit breaker has been removed, but we feel it will be just as tough tomorrow, or rather, when China opens in a few hours.
In the US, traders are "too old for this"
It's not just Chinese traders. According to another Bloomberg report, US traders "can't afford to sleep" during what is becoming a nightly rout, starting just around 8:30pm Eastern.
With China’s stock market in disarray, American investors are finding out just how long their day can last -- before they even get to work.
"This morning when I rolled over in my bed at 4 a.m. to check the markets and saw what happened in China and in U.S. futures I thought, ‘Oh, here we go,’” said Howard Ward, who oversees $42.7 billion as the chief investment officer of growth equities at Gamco Investors Inc. "I’m getting too old for this."
It's a cowboy market
“If it’s somebody who really doesn’t know a lot about China, this is kind of scary. They say, ‘Oh my god, their market can drop 7 percent,’” said Nick Sargen, who helps manage $46.2 billion as chief economist and senior investment adviser for Fort Washington Investment Advisors Inc. “The reason I can be more calm about it is that I follow that market, I can say, listen it’s a cowboy market.”
Bloomberg concludes by saying that "night owls have been rewarded for at least a year as China’s influence moved action in U.S. stocks to hours when exchanges were closed. In 2015, shares in the S&P 500 swung more during off hours than their small-cap brethren for the first time in at least 15 years."
So far this year, the only privilege night owls have had is to watch as China loses control of its market on half the trading days so far.
* * *
So what happens tonight? Keep an eye on the Yuan fixing around 8 pm: if the USDCNY sees another substantial jump (i.e., Yuan decline) from last night's 5 year low rate of 6.5646, this could suggest further turbulence and as all self-fulfilling prophecies go, unleash another pukefest which not even the circuit breaker adjustment will fix. It will also mean that unless the Chinese plunge protection team aka the "National Team" throws everything it has at the stock market, the Shanghai Composite could fall first 5%, then 7%, and then not stop but simply keep falling until someone finally does step in.
In short: it will all be about a central bank rescue again.
But for now either go load up on coffee, or take a nap. It will be a long night.
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What's with all these 7s? 7 years, 7% crashes... Going for 777 instead of 666?
Well, fhe Chicom's said they have taken the circuit breakers off the markets for tonight. No doubt the Chicom govt has been sending plenty of black limos to the trading offices of brokers to take the big bosses around the block so they can "explain" the situation to them. Guaranteed a strong positive open for China tonight. As the evening grows longer, it may get more interesting ...
200,000 million working that lever in the Chinese Casino.
"Pull It!"
"Money Never Sleeps, Pal !"
Bud's wake up call from "Wall Street"
https://www.youtube.com/watch?v=UDCmNFD18nQ
This is your wake up call. Go to work.
Buy Gold Chinese people. Buy Gold !!!
Where may I purchase a Gold Chinese person?
Mirth.
The Real Black Friday
It's sure looking a lot like 2008 right now. Buckle up, it might get a whole lot more bumpy from here. Also the market headlines for the muppets are starting to look dire.
I'll be watching for what happens with the banana vendors tonight wouldn't miss it for the world.
...they'll be forced to liquidate. go short bananas.
There is always money in the banana stand!
If no shorting allowed to slow decent, then Just a free fall drop straight to the bottom...
Turd Ferguson said it's over for the S&P when the 6 mo & 24 mo MAs cross and we're there
Yes, I'm more reticent than to say that this is the one crash we've al been waiting for. It's certainly starting to feel that way, but I thought 2008 was going to be it as well. Let's see if old Yeller has any more grenade kicking or juggling tricks.
That one trick pony is one and done... Not even the Fed is going to save this bitch from a retrace and I don't care how much liquidity they pump into the markets... They have only been successful with this ruse because the global economy has been grinding along... Now the global economy is grinding to a halt and no amount of accommodation is going to create growth...
Hope you're right but me fears the printing press.
I'm not taking any chances, I'm going to drink some coffee AND take a nap.
Getting too old to make money off money?
GTFO. Some people actually have to do REAL work.
Really. I mean....FFS.....how hard can it be to BTFD !!
STFR - Sell The Fucking Rip!
Naw man, take out a 2nd mortage and trade stawcks. What can go wrong?
Kevin Henry was traded to the Chinese PPT for a years supply of sweet and sour chicken and 3 hookers!
Only 3 hookers?
but they were me so horney, me love you long time, anting you want hookers.
How much blow? Please tell me Kevin was worth at least 7gram rocks ?
the only reason to remove circuit breaker is because they are expecting a big decline and don't want to support the market at this (higher) level. they need to get trading started and make it through an entire day though or they will have a weekend riot. if the price drops enough they will buy and some will decide not to sell. that's how a market should work (except for the part about the gubbermint setting prices and manipulating markets and changing the rules every five minutes).
Your comment is 100.00% correct buzz.
I did some research. As opposed to the 15 minute 5.00% drop, the 7-8.00% drop closes the markets, " for the day" in Communist kidnapping China.
Traders were scared shitless because they couldn't cover their positions. They sold when the Chinese equity markets re- opened, the next trading session.
The usd/cny trading band is what? China clearly has an expansionist policy<>
China is saturated in debt. Just because they hold outstanding debt in the form of USTs means nothing. They have internal debt that stretches the size of their great wall.
You're correct... One of the most "misspoken understandings", pertaining to China, is the fact that their debt<> GDP load is even higher than Japan's.
Your comment was very astute...
I think that, because of demographics, investment capital, and resource allocation/ re-hypothecation, China is going to cause some problems. [serious problems]
re-hypothecation .. Where did I see/hear ..
Re-hypothecation ..
Where did I see/hear that before?
Ah yes ..
http://wantarevelations.com/2014/01/wanta-plan-macro-financial-economic-...
I'm not a trader. I have no real skin in this game. Except that I have been unemployed for the most part since the summer of 2012. I just want my old job back ..
I understand the PRC's debt is 300% of GDP. Since the USA's is closer to 100%, and the peg to the petro-dollar, the PRC is the boat anchor that can bring the rest of world down with it ..
The other side of the equation is that Lee Wanta's total net worth is 300% of PRC GDP. And it is all hard assets. As Story illustrated above, if Wanta has to acquire actual banks, then he will ..
Again, Wanta is not just blowing smoke here ..
http://eagleonetowanta.com/?p=297
http://eagleonetowanta.com/wp-content/uploads/2015/11/Puppet-Masters-Des...
So it would appear Wanta (actually the Ghost of Reagan) is Deus Ex Machina ..
Do consider, this was in the planning stages before Jan. 20, 1981, and went into full effect in Dec. '81. This is not just someone pulling a rabbit out of their hat at the last minute. This has been very well thought out, by some of the greatest minds on the planet ..
Do you really think The Voice is just pulling Jim Willie's leg, at around 4:00AM in the second week of this past December? That Joe Six Pack is going to see some real fruit in the first quarter '16 ..
If not, then we have a very dystopian future to look forward to .. (without even bringing up Dr. Michael S. Heiser and his musings at this point)
J.j do you feel important?
I'll read your Juxtapost in due time. Typical unlearned Liberal, looking to be re-eductaed.
BTW? Yor're NOT an trader.
Poet that doesn't know it? Your links are pathetic... along with your thesis. [rookie coat tail grabber]
imo people who want out at any price should be able to do so. gubbermints would rather close the fucking market.
Gotta maintain order and the appearance of control.
dont laff...eight years ago it cudda been me in those pictures
I'm going to Costa Rica... They have this clinic, that specializes, in Z/H trading neck syndrome.
The delusion is strong on Bloomberg TV...
2016, the year of the Monkey Wrench.
And to think, London produces a single Obi Nigerian wizard trader that is worth 100 000 000 chinese 'undereducated' Chinese traders.
They should pay Obi £100 a month for his services, then form a syndicate and just place all their money on his trades of 8 and up.
Fucking genious I tell you!!! Don't be luaghing, it's fucking genious!!!
I've been short since mid december :)
The first 2 weeks where a pain in the ass but I'm up 300% on my index puts :)
ALL IN THE MONEY BABY!!! LET IT BURN!!!
Out of curosity? No Debt, what's your opinion regarding England leaving the European Union?
Us Cable shorts would love your inquisitive evaluations?
S.S. Sudden Debt? She has an shallow draft?
Her keel allows some list, as she sails into the setting tide?
I envy your timing....
Started hedging in Dec 14 and went full short last April/May. Bled a ton of premium, but back to break even today.
Let the games begin...!!
May the out-of-the-money become in-the-money...!!
GBP/AUD?
Well not that I'm a consipracy theorist however, eh hem.
In general there has been discussions that three or more down days can lead to a sort of market momentum and that most crashes occur as final panics because of the successive pounding that is distrubited over several sessions.
Thus for max effect or bang for your buck the plunge protection teams of the world should unite to defend Friday.
They really do not want "or maybe they do want" to go into the weekend with this thing spurting red.
THAT tends to unerve folks.
Black Monday in 1987 was such a day as all the traders knew on Monday that it was going to be fubar and it was. If this were a real market this dislocated then you'd expect some horrifying pukefests to get the valuation back into line with reality.
Again either they start shoveling a lot more fiat into the furnace quickly and stop this or they can go into the weekend spurting red too and at that point give all the world a weekend to get puckered assholes.
Whatever the Fed has up it's sleeve.... This is (financial) WW3 after all. Whether this will be a waterfall crash or a Chinese water torture drip crash, who knows? Perhaps thinking that good ol' Jamie D. knows makes me a conspiracy theorist.
there is 2 wild cards in the deck. and they could be anywhere in this rd.
think i'll enjoy just observing...
PBOC, FOMC, BOJ, ECB
alphabet soup goes blue horseshoe meets boiler room to see who can hit F5 the fastest & longest tonite
I guess that video "The Day the Dollar Died is about to come true?
Starting with the Yuan?
The Day the Dollar Died -China government will pump a lot of money real soon into this... I don't expect help from the FED. I wonder if western banks are inducing this panic. Certainly feels like it...
suddendebt - don't be a pig - clear some chips if up that much - maybe 20-25% ... we're 10-15% off the top, can cover in pieces on the way down.
remember meridith whitneys biggest mistake was not turning at least neutral and then not to bullish when we bottomed out. she nailed the banks blowing-up but pressed to hard when we bottomed-out & came back-up. not sayin the sell-off is necessarily over, but if it pops 5%, u won't be thinking clear if still holding a full-plate short.