Chinese Stocks Are Surging On Weak Macro Data BTFD-iness

Having dropped over 10% in the previous 2 days, what better way to get the speculative frenzy of Chinese housewives levered up and buying stocks again than terrible macro data. With China HSBC Manufacturing PMI printing 49.2 (the 3rd monthly contraction in a row) and China's official Services PMI tumbling to its lowest since Dec 2008, the 'bad' news seems to have been greeted wondrously as Chinese stocks are up 2-4% on the news. CHINEXT back to fresh highs, Shenzhen is outperforming, and Shanghai and CSI-300 are all pushing higher. Add to this the news that the CSI-300 its rebalancing some positions and the 'correction' in China is now old news...

How Much More Extreme Can Markets Get?

These charts help us understand that a top is not just price, but a reversal in extremes of margin debt, valuation and sentiment. Many observers have an unyielding faith that central banks will never let markets decline ever again. There are four flaws in this blind faith...

China Will Establish No-Fly Zone Over Islands If "Threatened"

"Whether we will establish an ADIZ in the South China Sea will depend on whether our maritime security will be threatened," Adm. Sun Jianguo, deputy chief of staff of the People’s Liberation Army said at a security event in Singapore on Sunday. China also claims its man-made islands in the Spratlys are primarily for providing "international public services." Its regional neighbors aren't so sure.

Will A Robot Steal Your Job?

Will a robot steal your job? It turns out that the answer depends on the prevailing macroeconomic conditions much more than people think.

Russia Wards Off "Provocative And Aggresive" US Warship In Black Sea

While we are used to hearing of the 100s of "close encounters" between NATO and Russian planes,but, as reported by state news agency RIA - citing an anonymous source in Russia's armed forces, Russian military aircraft were scrambled to head off a U.S. warship that was acting "aggressively" in the Black Sea. This appears to be the first reported ship-to-plane 'encounter' and, just as US and China tensions are escalating in the South China Sea, it appears US and Russian military 'discussions' are shifting from words and proxy-fighting.

Russian Pivot: Greece Will "Probably" Join BRICS Bank, Official Says

Greece still has one card left to play in fractious negotiations with creditors: the so-called 'Russian pivot'. Over the course of difficult talks between Syriza and the troika Moscow has, at various times, sought to take advantage of the hostilities between Athens and Brussels by making a series of overtures including the possibility of Greece joining the BRICS bank. Now, at least one Greek official says the country will likely accept the invite.

China Deploys Artillery On "Sand Castles" In South China Sea

"U.S. surveillance imagery shows China has positioned weaponry on one of the artificial islands it is developing in the South China Sea," WSJ reports. US Defense Secretary says the US will "fly, sail, and operate" wherever it wants.

A Generation Of Rate-Hike Rookies Makes Jeff Gundlach Nervous

Rates have been so low for so long, that many of the traders who will be on the front lines if and when the Fed ever does decide to start down the long path to normalizing policy have never, in their professional careers, seen a rate hike. “The experience that many investment operations have with rising rates for most of us is very low for some it’s nonexistent," Jeff Gundlach warns.

GDP Report Confirms Global Trade Is Crashing, And Why That Is Good News For Some

We did not actually need confirmation that global trade is slowing to a crawl (and has in fact reversed): after all, we have been showing just that for the past year, most recently earlier this week but it is important to note that in today's negative GDP print, it was net trade (exports less imports) that subtracted -1.9% from the final GDP print, driven by a -1.03% annualized drop in exports. This was the biggest hit to US trade since thegreat financial crisis.

Frontrunning: May 29

  • Former House Speaker Hastert indicted on federal charges (Reuters)
  • Blatter expected to win re-election despite soccer corruption scandal (Reuters)
  • NYSE Looks to Ease Late-Day Pileup (WSJ)
  • What Will Happen to a Generation of Wall Street Traders Who Have Never Seen a Rate Hike? (BBG)
  • Japan spending slump casts doubt on central bank optimism  (Reuters)
  • Unclear rules, market volatility take toll on bank capital  (Reuters)
  • Greece Told Budget a Red Line for Creditors Venting at G-7 (BBG)
  • The Economist Who Realized How Crazy We Are (Michael Lewis)
  • Pimco Said to Have Considered Goldman’s Cohn for Top Job (BBG)

China's Nauseating Volatility Continues, US Futures Flat Ahead Of Disastrous GDP Report

The most prominent market event overnight was once again the action in China's penny-index, which after tumbling at the open and briefly entering a 10% correction from the highs hit just two days ago, promptly saw the BTFDers rush in, whether retail, institutional or central bankers, and after rebounding strongly from the -3% lows, the SHCOMP closed practically unchanged following a 2% jump to complete yet another 5% intraday swing on absolutely no news, but merely concerns what the PBOC is doing with liquidity, reverse repos, margin debt, etc. Needless to say, this is one of the world's largest stock markets, not the Pink Sheets.