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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..... Don't worry The Federal Traders are sending in Hank Paulson off the bench. He has a new face and a new Bazooka, "lets Roll"
with operation "Asian Persuasion". Our market deserves to rally, its just not fair for our markets to fall in sympathy like building 7. Hammer the shorts Hank, all day Friday, then again Monday morning.... I am tearing up, do it for the country... then bite the head off a live bat for affect, take a bow and exit stage right... you're a great American Hank, get in there and make us whole and proud.
U.S. bank holiday starting tomorrow?
The second graph (CSI-300 Futures vs ASHR) doesn't make that much sense,
ASHR dropped from $38 to $30 because there was a $8 special dividend,
Wrong data, wrong conclusion.
This is true. Wonder if the graph has any interest if it were to be corrected.
Mr. Yellin what is your plan? CNBS is running out of lies.
So, if at the end of their next trading day, China closes down over 10%. What does tomorrow look like in US markets? Any guesses?
I'm going with China down 20% at their close, followed by 4% down at the close of US markets.
I'm seeing this as just the 1st leg down for the US markets followed by 2 to 3 more.
Standard Disclaimer: https://books.google.com/books?id=COkrTMOm1moC&pg=PT216&lpg=PT216&dq=bea...
Look familiar?
The China call may be spot on. I think US would be even lower than 4%, maybe 5.75%. The PPT is out of Viagra.
I doubt that any Chinese IPOs are going to take off tomorrow...bad timing if they try...
Might be a good day for whats-his-name with the chinese ebay to take his company private
I've been bearish as hell, but I'm long tonight. I assume all of the central banks in the world will be working overtime to keep China above 3000. If they can't do that then we really are looking at a 1987 scenario
The wankers spent Trillions on the "Recovery", they won't just let it all go because China shit in their mess kit. Rally until it hurts, then short some moar.
Don't forget a fake ass jobs print tomorrow morning, to be revised later.
The village idiots across the pond, make me laugh...
Prim & Proper.
YA, U.S FUTURES JUST SURGED FROM 30 DOW PTS TO 180 IN LESS THAN 2 MINUTES, S&P WENT FROM UP 2 TO UP 25 IN SAME TIME.
NOTRIGGED!!!
10 minutes until showtime...
Nap Time.
Welcome Terrorists? Drone operators welcome
Oh dear, the NIKKEI turd just emerged from the depths of the toilet. It's a floaty !!!
Brack Flyday!
2%+ gains at open!
^citation needed
Bloomberg... hope to see some reality before the end of the day...
Epic ramp at open!
Epic ramp at open!
Epic ramp at open!
Triple post? Wtf
Epic Motherfucker.....Needed to be said 4 times. lmfao. Just watch those little motherfuckers ramp this shitshow back to green for the year. don't think it can happen...trust me...this will all be in the rear view mirror and forgotten in 3 2 1
Hey, they can run SPX up to 2020 and chop around for a while, rally oil, get some "flation" talk going.... won't change anything.
Why is it! !! THAT YOU PUSSIES,with rotten teeth, keep sending your rejects to us?
The 7% becomes less of the starting value everyday, so at least they are losing less and less each day. Before long, that daily 7% down will not even be meaningful.
It's a madhouse!
What did I miss...Green shoots, all over the Futures!...Even the Vixx!
I guess, Chinas been fixed
Daytime here in Aussie, loaded up on snacks, going to be an entertaining day......and we are off!!
Calming markets is like trying to calm the freakin' ocean:
"OCEAN, BE STILL!"
How about a sweet roll and a cup of reality?
I'll be brief.
It's more than likely that the turmoil we've seen in the Chinese markets for the last year and a half is the handiwork of the Chinese government through the PBOC.
They are not concerned about all the myths in the Bloomberg/ZH article, as they only serve to make American investors even more panicey than they already are. Which is exactly what China wants. To slow down the American recovery (if it's possible for it to go any slower)
Will the suspension of circuit breakers make for a greater sell off? What if the PBOC devalues the yuan even more?
Wake up Wall Street!
China is giving you a dose of your own medicine. The Shanghai Composite is costing the markets money in England, France, Germany, etc.
What about China too? What did the PBOC learn from the Fed?
Maybe the PBOC is selling into the bloodbath. Or maybe they are picking up shares on the cheap to sell them later, after they raise the value of the yuan and rally the market.
The Fed has been doing versions of that for years, so no complaints.
Hey, Tyler! what's with a whole article based on Bloomberg? Bloomberg is the shyster mouthpiece of Goldman Sachs. If GS wants you to mislead you about something, but doesn't want the bullshit seen coming out their front door, they call Bloomberg who is very happy for the scoop even though it doesn't pass the smell test.
There is no 'tomorrow', tomorrow for them is Saturday, a non-trading day.
More interventions and experiments from China Regulators, please. It makes volatility trends clearer for arbitrages. Also, it helps in spades to hand over more power to global markets and strengthen globalizations with the evisceration of pompous and irrelevant nations/economies with their vainities (currencies). It is just another day of heavy scores in the games btw global traders and CBs. Contagions are euphemism, just call them overspills from the epi-center.
And the percentage of your predictions that have been right??? Maybe 30%, which is great if you are a baseball player, but seriously. In economics? Chimps tossing a coing are going to do better. Remember hyperinflation? The Brics? How China was going to do wonderful? And Silver would go to $100 per oz?
Really, why does anybody pay any attention to this site any more?