Well, the Nasdaq finally did it. It has climbed all the way back to where it was at the peak of the dotcom bubble. Back in March 2000, the Nasdaq set an all-time record high of 5,048.62. On Thursday, after all these years, that all-time record was finally eclipsed. The Nasdaq closed at 5056.06, and Wall Street greatly rejoiced. So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later. Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong. Just like the last two times, what we are witnessing is an irrational financial bubble. Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst. And even now there are signs of economic trouble bubbling to the surface all around us.
The following are 11 signs that we are entering the next phase of the global economic crisis: Continue reading »
We’ve spent quite a bit of time recently discussing the fact that China faces tough choices as Beijing attempts to counter decelerating economic growth while maintaining a peg to what has lately been one of the world’s strongest currencies. With pressure coming from four consecutive quarters of capital outflows totaling some $300 billion, devaluation is a somewhat risky (if inevitable) proposition and so the PBoC has opted for interest rate and RRR cuts to keep liquidity flowing into the economy.
But even as the reserve requirement cut freed up more than a trillion yuan, policymakers must also grapple with competing agendas such as deleveraging a system that, as we exposed more than two years ago, and as Bloomberg now reports, is weighed down by a veritable mountain of debt.
China has a $28 trillion problem. That’s the country’s total government, corporate and household debt load as of mid-2014, according to McKinsey & Co. It’s equal to 282 percent of the country’s total annual economic output.Continue reading »
Back in 2011, Zero Hedge first asked the key question that matters to the gold market: what are China’s true holdings of physical gold.
As is well known, the last time China did provide an update of its official gold inventory was in early 2009 when it disclosed to the IMF some 1,054.1 tons of gold held at the PBOC headquarters (or elsewhere). The problem is that this number is now very outdated, and substantially undercuts China’s true gold holdings. Continue reading »
In what may be a harbinger of things to come and in a sign that Beijing will allow the market to play a greater role in determining companies’ financial future,a subsidiary of China South Industries Group has missed a coupon payment, marking the first default by a Chinese state-owned firm.
Just hours after Chinese property developer Kaisa defaulted on two dollar-denominated 2018 notes (the 30-day grace period on some $52 million in interest due March 18 expired), we learn that a third publicly-listed Chinese firm will now miss a coupon payment proving yet again that “you never know where the skeletons in the closet are or what company will be next.”
“Ultimately, the current QE programs will fail. I think most likely through a large devaluation in the emerging market currencies. Having dodged and parried so many blows from Central Bank QE programs, the market is seemingly failing to break higher. Breadth is narrowing in the US stock market, and credit spreads widening. Economic data, with the exception of jobs, which is a lagging indicator, indicate the US economy is peaking. To me it looks like the US and China might go into recession at the same time.”
As we observed yesterday when we showed that if comparing the collapse in China’s housing market with that of the US following their respective peaks then China is already a recession, we added that “as shown in the chart below [China] has recently engaged in several easing steps, with many more to come according to the sell-side consensus.” Sure enough, just a few hours later, the PBOC announced its second Reserve Requirement Ratio (RRR) for all banks since February 4, when China had its first industry-wide RRR cut since May 2012. The move will be effective Monday, April 20.
Get ready for another major worldwide credit crunch. Today, the entire global financial system resembles a colossal spiral of debt. Just about all economic activity involves the flow of credit in some way, and so the only way to have “economic growth” is to introduce even more debt into the system. When the system started to fail back in 2008, global authorities responded by pumping this debt spiral back up and getting it to spin even faster than ever. If you can believe it, the total amount of global debt has risen by $35 trillion since the last crisis. Unfortunately, any system based on debt is going to break down eventually, and there are signs that it is starting to happen once again. For example, just a few days ago the IMF warned regulators to prepare for a global “liquidity shock“. And on Friday, Chinese authorities announced a ban on certain types of financing for margin trades on over-the-counter stocks, and we learned that preparations are being made behind the scenes in Europe for a Greek debt default and a Greek exit from the eurozone. On top of everything else, we just witnessed the biggest spike in credit application rejections ever recorded in the United States. All of these are signs that credit conditions are tightening, and once a “liquidity squeeze” begins, it can create a lot of fear.
Over the past six months, the Chinese stock market has exploded upward even as the overall Chinese economy has started to slow down. Investors have been using something called “umbrella trusts” to finance a lot of these stock purchases, and these umbrella trusts have given them the ability to have much more leverage than normal brokerage financing would allow. This works great as long as stocks go up. Once they start going down, the losses can be absolutely staggering.
If one compares the history of the Chinese and US housing bubbles, one observes that it was when US housing had dropped by about 6% following their all time highs in November 2005, that the US entered a recession. This is precisely where China is now: a 6.1% drop following the all time high peak in January of 2014. If the last US recession is any indication, the Chinese economy is now contracting! So much for hopes of 7% GDP growth this year.
Since I began writing analysis for the liberty movement more than eight years ago, I have always said that we will know when the endgame of the globalists is upon us when the criminals come out into the light of day and admit to their crimes. At that moment, it will be because they no longer fear either the repercussions or their plans being obstructed.
As I plan to show in this installment of my series on the hidden fiscal collapse of America, the endgame has indeed arrived. At the very least, the international elites seem to think success is within their grasp, for they now openly expose their own criminality. But they do so in a way that attempts to divert blame or to rationalize their actions as being for the “greater good.”Continue reading »
While the Chinese are long to bed, futures continue to trade on their exuberant stock market… and it’s going south in a hurry. As we noted earlier, the catalyst appears to be a regulatory decision to increase the number of ‘shortable’ securities (and follow-through from PBOC’s day prior demands of brokers to monitor margin trading). Both of these actions were taken as ‘signals’ that policymakers may be getting nervous about the ebullient wealth creation… Chinese stock futures are now down almost 7% – the 2nd biggest drop in 7 years.
This seemed to sum things up rather well…
“I’ve never seen a drop in markets like this in my entire career” -17 year old hedge fund managers everywhere
So the Chinese economy is weakest in 6 years, there is a record inventory, near-record production, and record drop in rig count… and now WTI Crude has surged to its highest since Dec 2014 (running stops above last week’s highs).
On Tuesday Russia officially becomes a founder of the China-led Asian Infrastructure Investment Bank (AIIB). It means Russian companies can take part in infrastructure projects in the Asia-Pacific region, and could attract foreign investment into Russia.
Russia applied for membership as a founding member of the AIIB 2 weeks ago, along with another 52 countries. The founding members have the right to establish the rules guiding the bank’s activities. China reportedly had rejected requests from North Korea and Taiwan to join the AIIB. The final list of the bank’s founding members will be announced on April 15. Continue reading »
This constitutes a form of economic martial law. And while this article is passing out one nightmare after another, please consider the fact that China and Russia are being purposely left out of the TPP.Why? From an economic standpoint, that makes no sense unless one realizes that we are on a collision course with World War III and the BRIC nations, headed by China and Russia who will be our opponent in the upcoming conflict and the military balance of power is purposely being shifted by senior American politicians which are intentionally designed to weaken both the American economy and the American military.
Massive shortages are at our doorstep and the US economy is days away from shutting down. Walmart is resupplied six times per day. The shortages will soon show up in your shipped medications, food supplies and so forth. The crisis isn’t coming, it is here!
A little over a month after Chinese authorities moved to crack down on discussion of “Under The Dome,” the viral documentary which highlighted China’s pollution problem, and less than a week after Turkey banned social media after photos depicting now deceased prosecutor Mehmet Selim Kiraz with a gun to his head showed up on Facebook and Twitter, free speech is yet again under attack in emerging markets as Beijing has reportedly threatened to shut down Sina Weibo which China’s internet czar claims is disseminating false information, providing a platform for terrorists, questioning the “facts,” not exercising enough censorship, and, much like the townsfolk of colonial era Salem, “propagating heresy”.
The regulator’s statement said since the start of the year, 6,038 complaints against Sina were made, including 1,227 in just the first eight days of this month alone, which was more than any other major website had received.
“The White House is concerned that China may be using its size and power to “force other countries” into subordinate positions”. This accusation seems particularly amusing given that it seems to describe US foreign policy perfectly. “
To be sure, China has had a good couple of months when it comes to projecting their rising superpower status to the rest of the world. Indeed, Beijing’s military made history three times last week alone by agreeing to sell some $5 billion in subs to Pakistan, by getting set to start the country’s first nuclear submarine patrols, and by swooping in to rescue more than 200 evacuees in the embattled Yemeni port city of Aden (and risking armed conflict in the process) in what Reuters notes is “the first time that China’s military has helped other countries evacuate their people during an international crisis.” Continue reading »
Last week, a group of initially unidentified foreign troops disembarked in the Yemeni port city of Aden which is currently under siege by Iran-backed Rebels seeking to capture one of the last remaining major holdouts still controlled by fighters loyal to President Hadi. When the mystery soldiers arrived, the media made the somewhat logical assumption that a Saudi-led ground incursion had indeed begun. Surprisingly, the soldiers turned out to be Chinese and were in Yemen to ensure the safety of more than 200 civilians evacuating the city in an “unprecedented” move that at least according to one Chinese professor, makes China “look really good.”