Chinese Stocks Tumble Despite Margin Debt Rises As Virtu Is Unleashed To Provide "Liquidity" After Citadel Ban

No lesser liquidity-providing high-frequency-trading never-a-losing-trade shop than Virtu financial has been 'allowed' to trade Chinese capital markets. Coming just days after Citadel's ban, one can only assume that Chinese regulators made a deal with the devil CEO Doug Cifu to levitate markets at any and every cost in order to pick up pennies in front of de-leveraging, over-margined army of farmers and grandmas now seeking exits. Sure enough for the second day in a row margin debt is on the rise again. The retail-dominated Chinese stock market will be ripe picking for the HFTs, as long as not to many are allowed and a tail-chasing flash-crash ensues... but for now its appears yesterday afternoon's selling pressure continues with CSI-300 down almost 2% at the open.

Japan's Dire Message To Yellen: "Don't Raise Rates Soon"

There are so many parallels between the current period since 2007 in the U.S. (The Great Recession), the period since 1990 in Japan (Japan’s 2+ lost decades), and the period after 1929 in the US (The Great Depression) because they are all periods of a ‘balance-sheet recession’ (or similarly, ‘secular stagnation'; that it is next to impossible to dismiss the comparison. Using this, there is an important lesson for the Fed to consider now in weighing whether to raise rates.

Police Officer Caught On Tape Discussing "Ways To Kill A Black Man And Cover It Up"

Earlier this week we reported a stunning statistic: in July, the US police had killed 118 people mostly through gunfire, the highest number of police "induced" fatalities in 2015, and on pace for a record 1150 deaths for all of 2015. To be sure, most of these deaths took place in the "ordinary course" of police business, primarily in self-defense. However, in many instances, the killings took place in "less than ordinary course", usually involving the police officer making a rash judgment that cost the victim their life, and in many cases shooting without a clear cause. But the worst example of what is increasingly, and broadly, referred to as "police brutality", are cases such as that of Alexander City officer Troy Middlebrooks, was, as NBC reports, was "caught on a secret recording discussing ways to kill a black man and cover it up."

China Responds To US Declaration Of Cyber War

"The United States is on the brink of making another grave mistake under the name of protecting cyber security... If it stubbornly implements retaliatory measures against China in cyber space, it will be known for being a cyber bully and will have to shoulder responsibility for escalating confrontation and disrupting the peaceful order in the cyber space."

"Debt Is A Fickle Witch"

Debt is a fickle witch. When left to its own devices, which it has been for nearly seven years with interest rates at the zero bound, it tends to get into trouble. Unchecked credit initially seeps, and eventually finds itself fracked, into the dark, dank nooks and crannies of the fixed income markets whose infrastructures and borrowers are ill-suited to handle the capacity. Consider the two flashiest badges of wealth in America - cars and homes...

For Commodities, It's 2008 All Over Again

18 of the 22 components in the Bloomberg Commodity Index have dropped at least 20% from recent closing highs, meeting the common definition of a bear market. As Bloomberg details, that’s the same number as at the end of October 2008, when deepening financial turmoil sent global markets into a swoon.

Scotiabank Warns "The Fed Is Cornered And There Are Visible Market Stresses Everywhere"

The Fed’s zero interest rate policy has provided a subsidy to investors for the past 7 years.  The lure of easy profits from cheap money was wildly attractive and readily accepted by investors. The Fed “put” gave investors great confidence that they could outperform their exceptionally low cost of capital.  These implicit promises by central banks encouraged trillions of dollars into ‘carry trades’ and various forms of market speculation. Complacent investors maintain these trades, despite the Fed’s warning of a looming reduction in the subsidy, and despite a balance sheet expected to shrink in 2016.  It has been a risk-chasing ‘game of chicken’ that is coming to an end.  Changing conditions have skewed risk/reward to the downside.  This is particularly true because financial assets prices are exceptionally expensive...There are warning signs and visible market stresses beyond those mentioned yesterday.

The Swiss National Bank Bought Another 500,000 AAPL Shares Just Before 10% Correction

We were amused to learn that in the quarter in which AAPL stock almost hit a new all time high, the Swiss Central Bank, which reported a record $20 billion loss in the second quarter, and a record $52 billion in the first half, added another 500,000 AAPL shares, bringing its new grand total to a whopping 9.4 million shares, equivalent to $1.2 billion as of June 30 (well below that now following the recent 10% correction).