Markets Losing Hope After China PMI Hits 7 Month Low

Tyler Durden's picture

HSBC's Flash Manufacturing PMI printed at 48.1 - its lowest in 7 months as contraction continues in the world's growth engine - as inventories rise at a faster rate and new export orders plunged at the fastest rate since March 2009. Risk markets were already leaking lower before this but extended losses with ES down 6pts from the close (and over 11 from the day's highs). Treasuries are bleeding a little lower in yield but the real action is an exaggerated slide in WTI (which is rapidly heading towards a sub-$80 handle) and EURUSD which has dropped back to the day's lows around 1.2660. Copper, Gold, and Silver are also sliding lower as AUD weakens (as we suggested last night) back to 1.0150.



Commodities continue to slide...

and S&P futures catch up to broad risk asset weakness for now...

Charts: Bloomberg and Capital Context

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
HarryM's picture

I used to be a proud ZH'r , but after today , now my name is Toby


Warning  disturbing video



TruthInSunshine's picture

Another BRIC in the Wall Lyrics - Part 3 (Waters) 1:17

[Sound of many TV's coming on, all on different channels]
"The Bulls are already out there"
Pink: "Aaaaaaaaaaaaaaaaaaaaaaaarrrrrgh!"
"This Roman Meal bakery thought you'd like to know."


All in all it was just Jim O'Neills paper BRICs  in the wall.
All in all it was just Jim O'Neill's paper BRICs  in the wall.

And the London & New York banksters will warn of epic fallout.*
But Germans can't won't finance any PIIGS bailout.
For it would ensure German living standards for generations would rot.

They don't need New York or London bankster bullshit.
And they dont need Krugman's plans for his giant money pit.

German's don't need any thought control.
No more dark fiat charlatism for their nation.

For they have seen the Eurozone failed monetary union handwriting on the wall.

Hence-- they don't need any Bernanke Ponzinomics at all.
All in all it was inevitable that the bankrupt PIIGS would fall.
And in addition, so too would Jim O'Neill's paper BRICs in the wall.


*Hank Paulson's 'Martial Law & Tanks in the Streets' Redux - v2.0


chump666's picture


that was f*cking great!!!

GetZeeGold's picture



Yeah.....and it's just gettin better!


Spin cycle : ON


reader2010's picture

The Party will soon start to build more ghost cities in the middle of the South China Sea. BTFD! 

Michael's picture

As if 64 million vacant properties in China isn't enough.

reader2010's picture

Those've got no views and that's why they're vacant. 

GetZeeGold's picture



It's a great view if you like being alone.


Conman's picture

US teflon markets don't care about macro news. It might pretend to care for a day. As long as theres a the whirl of a printing press going somewhere in the world, its game on.

lewy14's picture

I'm starting to think the direction of the next "crash" is... up...

Growth is dying. Cash flows are drying up.

So anything resembling a stable cash flow gets bid to the moon. Equity risk is mitigated by inflation protection.

Meanwhile, System D is the new plan B...

chump666's picture

oil goes through the 80 handle will send stocks lower on the 'recession' fear that should exasperate towards the end of the year. 

But I feel sorry for NZ/Australia as their government are now lying like mad with their fudged GDP's. 

Everything is getting real time.


Ineverslice's picture

You go that right.  To my friends down-under, "No Won-Ton for you! NEXT!"

CrashisOptimistic's picture

Behold oil scarcity.  This is how it works.  The price spikes and destroys economic activity, and that destruction also destroys consumption of oil.  It is the occam's razor process that is very straightforward.

Down goes the price until the planet DARES to try to grow again, at which point the price will viciously spike again and wipe out the attempt, in a declining sawtooth of activity down to oblivion.

Don't get the cart before the horse.  Oil price is reflective of what is happening, not vice versa.  What is happening moves the price, because what is happening is oil consumption variance -- which cannot be compensated by changes in flow rate out of the ground.  It's a world where consumption and only consumption moves price, because extraction rate variance can only move one direction.

This is relentlessly down, for everything.

Milton Waddams's picture

In the new normal, higher oil prices are bullish because they are indicative of stronger aggregate demand.

In the old normal, higher energy inputs were considered a headwind to economic growth.

In reality...

CrashisOptimistic's picture

Yup.  Pretty much that.

I'd phrase it more precisely that high oil prices are indicative of higher oil consumption. 

That is the key wording that departs from economics and their preferred layout -- because in a world of oil scarcity consumption does NOT equal demand.  "Aggregate Demand" is an economics phrase.  English language demand is a desire for product, and in this world of scarcity, that exceeds consumption.

Demand exceeding consumption more or less permanently  is essentially definitive of the disintegration of economic theory.  That is what has happened to the world, and it's forever.


carefreemanjoe's picture

Heads I win, tails you lose kind of argument? But for how long?

chump666's picture

That is a really good point.  The oil indicator is market orientated, not fundamentals per say.  Thing with China is they have sticky inflation which is probably occurring via oil (since they are net importers).  Scary part, is even if they go bust oil may still stay above a certain market rate, that is quite high.  Hard to say.  Oil volatility is brutal.

Anyway check this chart re: Asia/China going all USD crazy

I think that the only time the Fed will go full blown QE3 is if China messes with the Yield curve and dumps USTs. 

It's getting chaotic out there.  Even without EZ in the picture.

Bad vibes.

bigwavedave's picture

PM Smackdown due this week. Fuel the truck.

mcguire's picture

 the banner ads started up right on que.. 


Ineverslice's picture

That's,  Allottavagina.

I prefer beef drapes myself.


pursueliberty's picture

Women want to cut off one of my favorite parts.

I have a strange correlation between large labia minora and the level of sexual fluid a woman creates.  The wettest pussy will have large lips.  That is from personal experience and it is a well tested theory.

meatball's picture

It is interesting that the Chinese stock market isn't propped up like the one in the US. I guess the rich people there don't have their money in stocks so there is no pressure for the government to help them out.

reader2010's picture

Their super rich have snapped up high-end properties in NYC, San Francisco, Vancouver, London, Paris, Sidney and Singapore instead. 

meatball's picture

Yeah, the Chinese love real estate. Considering their stock market has so many frauds, they are smart to stay away.

q99x2's picture

The Voyagers may be the only remnants left at the end of all of this.

Bunga Bunga's picture

The Bernank needs to buy ES with toilet paper.

Tom Green Swedish's picture

I honestly don't think you should blame any of this on Bernanke.  Why don't you try Greenspam for once.  The Helicopter Ben thing is getting real old.

Dapper Dan's picture

Way off topic here but,

TOKYO — The much vilified operator of the tsunami-hit nuclear power plant at Fukushima released a report on Wednesday that said the company never hid information, never underplayed the extent of fuel meltdown and certainly never considered abandoning the ravaged site. It asserts that government interference in the disaster response created confusion and delays.

The report, inches thick, (keep in mind 1 inch thick in Japan is considered quite thick) was compiled by an in-house executive committee, overseen by a third-party panel of experts and presented to reporters after deep bows by a line of executives. The company stuck to a defense it has offered since the earliest days of the crisis: that no company could have predicted or prepared for last year’s magnitude 9.0 quake and subsequent tsunami.

Please explain to me how Japan can take 50 of its power plants off-line for months and not affect productivity?

Did they have extra coal/oil plants on standby?

Something does not add up, and I have found very little infomation regarding this puzzle.

  A typical nuclear power plant produces 500 to 5000 megawatts of power. If we take 2000 as average, an average plant produces 2000 megawatt hours in an hour, or 48,000 megawatt hours in a day,

50 x 48,000 = 2,400,000 megawatt hours a day.

2,400,000 megawatt hours a day is NOT being generated or distributed! 

 I will go out on a limb here and say that this is some sort of conspiracy, and then I will cut off that limb in question.

?On topic for sure here.

?Please note that the PMI is The Purchasing Managers' Index (PMI) and is an indicator produced by the Markit Group, the following is from Wiki

?In January 2008 Markit acquired the Boat MiFID-compliant trade reporting platform from a consortium of nine investment banks.[15] In April 2008 the company bought NTC Economics, a provider of global macro-economic indicators and owner of the widely-referenced Purchasing Managers Index (PMI) series.[16] In July 2008 Markit acquired JPMorgan Chase's FCS Corporation, a provider of syndicated loan market portfolio and risk management software and services, including the Wall Street Office family of products.[17][18]  Catch that nine investment banks! what does acquired mean, that they bought it or that the investment banks gave it to them? Gratis.


Tsar Pointless's picture

The world is a vampire.

You? You're just a blood-sucking leech.

Who do you think would win in a competition?

Hope. It's what's for dinner.

GetZeeGold's picture



....and you can keep the change. No really.....just keep it.



slaughterer's picture

Don't worry, the "successful" 5-year Spanish Bonos auction should lift everything up.  

ebworthen's picture


The thingamajig slave facotry nation is slwoing down?

How could this be possible?  Has anyone told PhD Economist Krugman?

Better juice the debt spending to perpetuate the offshoring caliope, stat!

WaEver's picture

WOW these guys have a model to actually know where the S&P should trade !

marginview's picture

Granted ZH has incredible inside knowledge of the markets and also gets some calls right, which it always highlights, but it's dead wrong yet again about its principle call on gold. It's down under 1600 again and not exploding to 3/4/5000... as the world leaves fiat currencies. Mises's Human Action which used Austrian logic to prove the demise of fiat was written in the 40s and for all its brillance we're still waiting. Maybe the Austrian school has some good insights but is also missing a few key ones like any other school school of economic thought.

ZH/Mises could be right eventually but in 10/20/30.. years and then saying 'as we predicted' is useless. 'Knowing when' is the most important knowledge of all and getting the timing wrong constantly is as not much better than being wrong about 'knowing what' is going to happen like Greenspan or Bernanke.

Tom Green Swedish's picture

Gold is the biggest market scam.  They have effectively fooled people into buying a garbage asset here. There is no inflation in the USA, there is no need for Gold.  This isn't 1970, people are buying betting that the USA will turn into the Weimar Republic.  I would not speculate on this, because even if you did have gold you only get paper for it (if you were able to manage to trade it for something you need like food nobody would take it. Gold is for crappy third world countries with huge inflation.  That is what is driving the price up. Its not going to help them with what they need. This gold scam sucks.  You cannot reverse going off the gold standard.  It's too late, its already be 40 years and you have to have some inflation.  And seriously if some third world country wants to try to sell me some gold for assets, I'll pay what its worth to me to them $42 bucks an ounce.  I have nothing to trade for gold.

lewy14's picture

Paper market: negative real returns on assets with actual default risks.

Gold: no return - no default risk.

It's a tradeoff which makes sense for a part of the portfolio.

GetZeeGold's picture



Hell yes I'm buying the subsidized gold.....only government program that's ever worked out for me....thanks Ben Shalom!!!


johnjkiii's picture

Add to that: Spain just did a €2.5 Bill bond deal & the 5yr. cost them 6%. Full blown bailout coming soon.

Tom Green Swedish's picture

Would you rather live in Spain or India?

carefreemanjoe's picture

You can take a horse to the water but not make it drink. Bailout after bailout will serve no purpose unless the Spanish Govt finds a way to put Spanish youths on work. Alas, Spanish youths cannot go to China and work.

Bobbyrib's picture

All Bernanke's toothpicks and all of his duct tape

Couldn't prop up the stock market bubble again.

Zola's picture

Tyler , would you or other ZH readers have a pie chart summarizing bank liabilities by type breakdown (ie how much is deposit money, how much is overnight funding indexed on interbank lending, how much is 1-3y maturity bonds, how much is 3-5, 5-7 etc...) would be helpful , esp to show the importance of the interest rate level set by the central bank on the cost of funding for those liabilities. Or maybe i should ask Reggie ?

Tom Green Swedish's picture

Tyler has a chart.  It's called The Feds balance sheet after TRAP.

Tom Green Swedish's picture

Bullish on stocks besides banks and technology (Social Networking (Should be called Social Advertising / Spying) / Crap Startups / Smartphone Scam Dot Com Bubble 2.0). Bearish on BRICS, besides Russia. Bullish on commdities except for Oil and PM's.

Phat Stax's picture

But, but.... Jason Lerath said int the WSJ today that QE3 very probably coming in August!   The shills are starting to get shrill.

Tom Green Swedish's picture

There will be no QE Dewey or Mental Louie 3.0.  Just will make us look like fools with no growth.  The banks love it because they get some more play money, but its not a practical solution.