China

China

Suddenly The "Experts" Are Dumbfounded

Over the course of the last few years one thing that has been prevalent more than nearly any other time we can recall is just how many so-called "experts" have lined up to proclaim how their prognostications "were surely sound." The rationale? They must be correct in all their assumptions for – "Just look at these markets!" Well suddenly when one looks at these markets – it's not for the reasons the "experts" wanted. Now it's: "What in the world is going on in these markets!?"

USDJPY Breaks Key Technical Support: Next Target 118.96 According To Goldman

After valiantly defending the 121 level, moments ago what is perhaps the most important carry currency for the US stock market dipped below and is now trading at fresh lows not seen since May. What happens next: "A break below that point will further imply that the decline since June isn’t actually corrective at all but rather something more impulsive. If this is true then the next likely target should be down at ~118.96; a 1.618 extension from the June high."

"I'm A Tad Worried At The Market's Complacency"

"With this brewing crisis around Greece, the fact the Shanghai stock market is exposing all kinds of uncomfortable truths about China, (for instance, the lack of competitiveness, overleverage, massive over-expectations in valuations, the failure of the stock market as “bread and circuses” for the middle classes, and the fears of the party at a troublesome time), and the big bond reversal in the last quarter… and its perhaps surprising that things aren’t a whole lot worse. It’s no wonder global commodity markets are flimsier than a chocolate tea-pot. The first half of the year was pretty torrid… but it could still prove pleasant  compared to what may be coming. I’m wondering if Global Markets are poised on the edge of the precipice about to take a step forward?"

European Stocks, Bonds Surge On Blatant SNB Intervention

At around 645ET, EURCHF suddenly took off out of nowhere. This instantly lifted European stocks off new post-Greferendum lows, slammeds EU credit risk lower, lifted US equity markets, and drove Treasury yields higher. The SNB has declined to comment on whether it intervenened but we ask in all frankness, have we become so divorced from 'free markets' that China can blatantly enter markets to save them (and fail) and European markets can mysteriously go bid and no one bats an eyelid that this is all rigged.

Frontrunning: July 8

  • Greece and China expose limits of 'whatever it takes' (Reuters)
  • China no longer has a market: China Stock Sellers Frozen Out of 71% of Market (BBG)
  • China’s Market Rescue Makes Matters Worse as Prices Lose Meaning (BBG)
  • China Stocks Plunge as State Support Fails to Revive Confidence (BBG)
  • China Market Rout Spreads From Stocks to Price of Pig Food (BBG)
  • China’s State-Owned Firms Ordered Not to Cut Share Holdings (BBG)
  • Greece Requests Three-Year Bailout in First Step Toward Meeting Creditors’ Demand (WSJ)
  • Greece Faces Euro Exit Unless Demands Accepted by Sunday (BBG)

Will Greek "Hope" Offset "Limit Down" Contagion From The "Frozen" China Crash

Today's market battle will be between those (central banks) "hoping" that a Greek deal over the weekend is finally imminent (which on one hand looks possible after a major backpeddling by Tsipras - who may never have wanted to win the Greferendum in the first place - yesterday in Brussels and today during his speech in the Euro Parliament, but on the other will be a nearly impossible sell to Greece as any deal terms will be far harsher than the deal offered by the Troika 2 weeks ago and will have no debt reduction), and those who finally noticed that the Chinese central planners have effectively lost control.

China Now Risks "Financial Crisis"; Loses Could Be "In The Trillions" BofA Says

The impact of a full-blown financial crisis in China, if it materializes, on the economy would likely be severe. On corporate earnings, other than the drag from slower growth, many companies may have to book stock-market related losses over the next few quarters by our assessment. Stock lending related losses could run into Rmb trillions.

Presenting China's Plunge Protection Playbook

Over the past two weeks, China has resorted to an eye-watering array of policy maneuvers and pronouncements in a desperate attempt to resurrect the country's margin-fueled equity bubble. Amid the chaos, Morgan Stanley — whose "don't buy this dip" call might well have been the straw that broke the dragon's back, so to speak — is out with a detailed history of Beijing's plunge protection playbook.  

Why GM Is Back Below Its IPO Price - Pictures From GM's China "Parking Lot"

Despite broad and deep price cuts introduced earlier in the year, GM's sales in China were roughly flat in June continuing the streak of weakness since March (when GM changed its reporting to retail sales from wholesale delivery). This is the weakest start to a year for China auto sales since 2012 and GM's share price is now back notably below its 2012 IPO price. Judging by the massive volume of cars 'parked' in GM's Shenyang Liaoning lots, it is clear that automakers learned nothing from the last "if we build it, they will come" channel-stuffing inventory surging dysphoria that, among other things, led to their last bankruptcy... if only Chinese buyers would take up the credit terms like Americans.

Ragin' Contagion: When Debtors Go Broke, So Do Mercantilist Exporters

Despite endless assurances that the Greek debt crisis is contained, the reality is that the ragin' contagion of debt crises will spread not just to other deeply indebted nations but to the mercantilist economies that depend on selling goods to borrowers. Strip out the borrowing, and you strip out most of the customers for German, Dutch and Chinese goods.