Hong Kong

A Greek exit from the euro would change everything. The greatest change being simply doubt and fear regarding the outlook for other vulnerable EU nations, EU banks and the EU banking and financial system. We discuss short and long term considerations, best and case outcomes, and wealth preservation strategies.

Chinese stocks had a tough night with CHINEXT dropping back into official correction once again and the rest of the Chinese stock euphoria fading systemically. In fact, Chinese stocks have gone nowhere in the last month - which is a major problem for a margin-loan-driven ponzi-fest. However, there is a much more worrying canary in China's coalmine which as one analyst warns means "investors are becoming more fearful than greedy." The "No-Brainer" China IPO Trade has tumbled in the last few weeks as limit-up gains disappear, and is nearing a bear market.

• WSJ urges Fed to blow uberest of all bubbles: Memo to Fed: Let the Economy Overheat (WSJ)
• Gunman at large after killing nine at black South Carolina church (Reuters)
• Nine Dead in Charleston Shooting Labeled a 'Hate Crime' (BBG)
• Hong Kong Votes Down Beijing-Backed Election Plan (WSJ)
• Greece Has Already Cost Investors $897 Billion This Year (BBG)
• Merkel Maintains Tough Stance on Greece as Deadline Looms (WSJ)
• Small U.S. frackers face extinction amid drilling drought (Reuters)
• Brian Williams to Stay at NBC, but Lester Holt Will Be Anchor (WSJ)

A rumour has been making its way around the blogosphere suggesting that gold coins are not available for purchase from retail outlets across Europe. This information is misleading and incorrect.

Chinese Margin Debt to Stock Market Cap Hit 3.6% or more than the US 2.2% despite record margin debt highs. The Stock market cap to GDP, Buffet favorites stock warning indicator is at 118% for China. Is China a secular bull market one we should ride for decades or just a bubble mania?

As Chinese stock market capitalization topped $10 trillion for the first time in history, so the spectre of total and utter speculative mania looms as the balance of margin loans tops $2.2 trillion and remains among the most obvious early warning systems for an increasingly fragile government-sponsored equity bubble. The problem, as Bloomberg reports, is that any pullback by margin traders would undercut one of the biggest drivers of the rally leaving the "regulator trying to slow down the growth without triggering panic," as Bocom's chief China strategist explains.

It’s not only Greece this morning. Things just don’t seem to be functioning smoothly anywhere. More arrests in Hong Kong, delays to the Shenzhen-Hong Kong Exchange link, Kuroda having to say he didn’t mean what he said, weaker start to the new month’s numbers in the U.S., an Indian export number that put paid to any hopes of a reversal of what has been an inexorable six-month collapse, disappointing European car sales (slowest in 6 months) with noted weakness in Latin America being cited, peripheral bond spreads widening out, Spanish 10-yr hitting highest yield in 10 months.

"This is what happens when you let money run riot and you allow industries to police themselves. This is what happens when the rich and powerful are endlessly granted special privileges, celebrated and permitted or even encouraged to place themselves above the law. And this is what happens when ordinary people feel bored by and excluded from politics, largely because their voices matter so little..."

It is fair to say, Bloomberg’s Richard Breslow dares to say - without being trite, that this really is a very interesting pivotal week we are heading into. The FOMC trying to thread the needle of moving on, keeping everyone calm and keeping a wary eye on a geopolitical landscape that isn’t getting better. Greek negotiations that layer existential questions of problem resolution paralysis on top of default and Grexit. And let’s not forget MERS, Turkey coalition issues, Hong Kong bomb makers, Ukraine and meaningful MPCs given Kuroda’s comments, CHF wariness and NOK economic projections. Feels to me like Act 4 of Macbeth, “Double, double toil and trouble.” Lots of predictions, forecasts and pronouncements, but what will it all really mean and should we beware what we ask for?

• Razor-edge U.S. Congress vote to decide fate of Obama Pacific trade pact (Reuters)
• EU Readies for Default as Tsipras Drives Greek Finances to Brink (BBG)
• Greece Can’t Plan a Barbecue, Let Alone a Currency, Nielsen Says (BBG)
• IMF quits Greece talks amid ‘air of unreality’ as deal unravels (FT)
• Greece Counts Cost of One Man's Gamble (BBG)
• Merkel urges Greece and creditors to keep pushing for deal (Reuters)
• Fearful ECB starts countdown on Greek funding lifeline (Reuters)
• Greek stocks suffer further pummelling (FT)

As recently as several months ago, the financial press was surprised when a wave of Deutsche Bank employees, particularly those in the bank's legal department (such as here and here), decided to take their own lives. Now at least one Deutsche Banker, perhaps perturbed by the recent news involving the unexpected departure of his co-CEOs coupled with the even more unexpected raid of the bank's global headquarters, has decided to show the jump from sui- to homicide is a simple one.

• Pressing for Greek concessions, Merkel and Hollande keep Tsipras waiting (Reuters)
• Treasuries Extend Slump as Pimco Dumps Two-Thirds of Holdings (BBG)
• U.S. prepares plans for more troops, new base in Iraq: officials (Reuters)
• Texas policeman resigns after video shows him toppling teen (Reuters)
• Kuroda Says Hard to See Yen Dropping More, Spurring Surge (BBG)
• Tech Startups Woo Investors With Unconventional Financial Terms — but Do Numbers Add Up? (WSJ)
• Putin is a 'bully', U.S. needs to respond resolutely: Jeb Bush (Reuters)

MSCI has not decided to include China stocks in its index yet - as opposed to what mainstream media believes. MSCI instead says the inclusion is "on track" for inclusion but there remains three significant hurdles including liquiidty restrictions.