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.
(18 votes)
»
- Login or register to post comments
- Printer-friendly version
- Send to friend
- advertisements -
Rerax pau. First resson in business is don't get emotionau about stocks - it crouds your joldgement.
-Golden Gecko
Horry Fook. Re in trobel.
/sarc
My bullion broker now takes Bitcoin. Digits for Physical. WTF?
http://www.newsbtc.com/2016/01/07/bitcoin-price-watch-pattern-completes/
Maybe because bitcoin is money. More so than the green pieces of paper or digital credit card numbers bullion brokers take.
Don't worry if the markets start crashing we will just close the markets down.....it's easy peasy in commi land!
Just picture those CRIMINALS in China, scrambling.
hope they have plenty of PRECIOUS
If this doesn't go well tonight, I wonder how many brokers will be throat punched or have their hearts ripped our through their chests.
In China, they just "PUFF" and they're gone; like tragic magic.
I'm sure the U.S. government and Fed are envious.
Does it really matter; what matters is that you live your life in a way that benfits those around you. Stay away from surreality; buy metals, food, have a water source and know Christ for Christ's sake and yours.
You can have Christ....I've got the food and water....along with manpower, a working ranch, and the firepower to defend it. Good luck with Christ !!
Ok, it is a bit humorous to say "stay away from surreality" and "know Christ" in the same sentence but we all know what he meant - rely on yourself and whatever guides you spiritually, not on others or on government.
It will not surprise me tomorrow if the Chinese maket opens 7% lower then the central banks move in and push the market up14%
......or opens 14% lower and then....
the latter being far more likely imo
Yuo. They are not fooling anyone with the no circuit breaker thing. We don't need no stinking circuit breakers! We have the central bank to print money and buy stocks.
China goes + tonight
The Chinese Plunge Protection Team will do whatever it takes to turn it around in Friday's open. Whatever it takes.
The reason they dropped the trading halts is because they prevented the Chinese PPT from turning the market.
That said, even after a turnaround tomorrow, this market will not hold.
It is too overvalued and the cat's out of the bag in China relative to the overall economy. So this is one of a half dozen 'gas releases' we'll see in 2016. First one was Fall of 2015.
Stay tuned tomorrow for : THE CHINA SYNDROME II:The Unclear Reaction!
Trailer: The China Syndrome (Starring Michael Douglas!)
https://www.youtube.com/watch?v=UFMsnicAtiY
The colossal global misunderstanding is that the Chinese stock market has some relevant connection to the Chinese economy, BUT it does NOT - and you will not be able to understand this unless you understand the pervasiveness of superstition, gambling and the cult of "luck" in Chinese culture, which is just as primitive now as it was 8,000 years ago, in spite of Mao.
The Chinese stock market is ONLY just another venue where the stunningly superstitious and gambling-addicted Chinese go to try their luck. The Chinese regime let the market soar to absurd heights as a way to provide virtual wealth to the peasants. Unfortunately, like erections, not possible to keep it up forever, and eventually you have to pull out and deflate, preferably in that order.
Well that and...most of it is owned by the State, that is to say, the Chi-Com government.
The happiest economic moment of my life has come, seeing a communist government DEVALUE it's own citizens LABOR through currency manipulation to maintain IT'S stawk paper prices, kinda reminds one of the socialist twits on Wall Street doesn't it?
Fucking Forward! ;-)
Love the comment but worry about your overall state of economic happiness.
I would expect it to be something like the two tenderfeet who rushed up to Cripple Creek and thrust themselves into a discussion between various financial geniuses and their expensive hired geological team.
"Where should we dig?" they inquired.
To get rid of these yokels, the head geologist indicated a spot far enough away so that they wouldn't be bothered with the rubes any longer. "Over there."
The rest, to the sum of 1.5 million 1892 dollars, is history.
Oh don't worry about me, I'm a well known capitalist around these parts. I have proven an old axiom to be untrue.
I can indeed stay rational longer than the markets can stay irrational.
Much MUCH longer in fact.
/////
;-)
What the financial world has to look forward to is 1) The so far undiscounted consequences of China spending 108 bil of their 3.3 tril of reserves, in the single month of November, I.E., 3%, or possibly 36% per year, defending the currency, and today 2) The consequences of eliminating the -7% trading halt, in the hopes that some new world-class, market-clearing, game of catch-the-falling sword will stabilize their historic, popping equity bubble.
Watching the chicoms mimic western banker credit expansion-contraction ploys has been a comedy of Keynesian errors: fortunately history repeats itself, the first time as tragedy, the second time as farce.
Exposing BlackRock: Who’s Afraid Of Laurence Fink and His Overpowering Institution?
According to Vanity Fair, One of Fink’s favorite phrases to insert into casual conversations is: “As I told Washington…” And it’s something to be said without much exaggeration. When Timothy Geithner went from being President of the New York Fed to Secretary of the U.S. Treasury, Fink’s access to the top echelons of political power grew immensely. Indeed, apart from other government officials, the BlackRock chief became “the Treasury secretary’s most frequent corporate interlocutor and an emblem of BlackRock’s growing influence in global financial affairs,” noted the Financial Times.
Using data compiled from the Treasury Secretary’s public records from 2009 to 2013, Geithner held phone calls or private meetings wit Fink at least 104 times during the duration of his term. Even with Geithner’s successor at Treasury, Jack Lew, pervasive contact has been maintained with Fink.
http://andrewgavinmarshall.com/
The major differential between BlackRock and every other asset manager is that risk management is not separate. Risk management is the foundation and cornerstone of the firm's entire platform.[18] Aladdin keeps track of 30,000 investment portfolios, including BlackRock's own along with those of competitors, banks, pension funds, and insurers. According to The Economist, the platform monitors almost 7 percent of the world’s $225 trillion of financial assets.[18]
BlackRock Solutions was retained by the U. S. Treasury Department in May 2009[19] to manage the toxic mortgage assets (i.e. to analyze, unwind, and price) that were owned by Bear Stearns, AIG, Inc., Freddie Mac, Morgan Stanley, and other financial firms that were affected in the 2008 financial crisis.
https://en.wikipedia.org/wiki/BlackRock
we few, we happy few, we band of silver holders . . .
Not close to happy yet . . . death of Comex and real price discovery first.
If you know the wherabouts of some, be happy.
When price discovery finally happens you will do better than most, assuming you can dive that deep.
Wait until China starts setting a fix in April!
This will be like shooting fish in a barrel. Strong sell off at the open followed by the savvy buying and grabbing 10% plus profits intraday trough to closing peek. US market will open with strong higher gap and finish day up 450 plus points.
I hear Bear Stearns is just fine, word is to buy some.
Ron ron zacapa...best. 23-28 year old. Highlands Guatemala...yum.
Mighty fine rum.
It is very good ;-)
Grab a bottle of El Dorado 12 year old.
Just drink it straight, please.
I am so humored at the comments like china is corrupt. HELLO! Wake up people because no one is more corrupt than the traders here. What you think Bear sterns went down or Lehman went down because of bad investment. Then we have AIG fall apart to be bailed out by Hank Paulson a Goldman ex CEO WHO NEVER LOST A PENNY. Yet the tax payers lost big.
Lets clear the air folks, China is in debt butonly like 30 % of there GDP. The financial troubles here are not due to China and if we agree it is then we are admitting there economy dictates ours meaning we are no longer top dog. Lets also agree China has a ton of treasury notes of U.S. not the other way..
I am tired of thw WSJ THINKING us morons.
Wise up people before another twin tower episode, you know like that Dubia tower that burned recently for weeks and never collapsed. Did any one notice how quiet the news media never covered.
Spread the nets outside the skyscrapers!
With the exception of JP Morgan please.
Those little old Chinese ladies knitting while watching stocks on-line reminds me of this:
The atmosphere of the late '20s (financially speaking at least) can be summed up in the following (likely apocryphal) anecdote.
In the winter of 1928, Joe Kennedy decided to stop to have his shoes shined before he started his day's work at the office. When the boy finished, he offered Kennedy a stock tip: "Buy Hindenburg." Kennedy soon sold off his stocks, thinking: "You know it's time to sell when shoeshine boys give you stock tips. This bull market is over."
Heh, Short everything this guy has ever touched
Madame DeFarge knitting in front of the guillotines was having a lot more fun.
so china is unpegging from the dollar and all hell is about to break out.
this cnbc selloff special is so fucking funny,
the ''markets'' r down 5 percent in 4 days, and they are acting as if this is the 1987 black monday crash again.
china fell fucking 7 percent in 30 minutes, and we fall 5 percent in 4 days, and they panic
...Orderly markets are green, all this red is very disturbing.... I want my mommy, and Becky sunny side up.
And the final pic is one of the few remaining capitalists to have not been rounded up by Vice Public Security Minister Meng Qingfeng.
He's short ;-)
That guy is first generation out of the huts. He'll go back to bug soup. What's he got to lose?
It's Thunderdome to him.
lol....thought it was Kieth Richards!:)..damn i need new rose colored glasses.
Finally, a broker/financial advisor who admits the truth.
This just in....the NFL chapionship game will be played in the Dust Bowl.