Aug 29

damian-mcbride-collapse

According to McBride,

We were close enough in 2008 and what’s coming is on 20 times that scale.


We Are All Preppers Now (ZeroHedge, Aug 28, 2015):

Via The Mises Institute,

Damian McBride is the former head of communications at the British treasury and former special adviser to Gordon Brown, erstwhile Prime Minister of the U.K. Yesterday he tweeted some surprising advice in response to the plunge in global equities markets.;

Advice on the looming crash, No. 1: get hard cash in a safe place now; don’t assume banks & cashpoints will be open, or bank cards will work.

Crash advice No. 2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.

Crash advice No. 3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.

Evidently, McBride interprets the wipe-out of over $3 trillion in total global market cap during the three-day rout as a prelude to a much broader and deeper financial crash that will precipitate civil unrest. Continue reading »

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Aug 27

1929-crash

Remembering the Summer of 1929 (The Burning Platform, Aug 27, 2015)

Flashback:

Quotes from the Great Depression

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Aug 27

JPM Head Quant Warns Second Market Crash May Be Imminent: Violent Selling Could Return On Thursday (ZeroHedge, Aug 27, 2015):

“Price insensitive” flows are starting to materialize, and our goal is to estimate their likely size and timing. These technical flows are determined by algorithms and risk limits, and can hence push the market away from fundamentals.  The obvious risk is if these technical flows outsize fundamental buyers. In the current environment of low liquidity, they may cause a market crash such as the one we saw at the US market open on Mondaay”

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Aug 26

CHINA REAL GDP

China Stunner: Real GDP Is Now A Negative -1.1%, Evercore ISI Calculates (ZeroHedge, Aug 26, 2015):

With Chinese data now an official farce even among Wall Street economists, tenured academics, and all others whose job obligation it is to accept and never question the lies they are fed, the biggest question over the past year has been just what is China’s real, and rapidly slowing, GDP – which alongside the Fed, is the primary catalyst of the global risk shakeout experienced in recent weeks.

One thing that everyone knows and can agree on, is that it is not the official 7% number, or whatever goalseeked fabrication the communist party tries to push to a world that has realized China can’t even manipulate its stock market higher, let alone its economy. Continue reading »

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Aug 25

BTFD is as easy as a single click …



… and what could possibly go wrong?


BTFD? (The Burning Platform, August 25, 2015):

The CNBC bubble headed bimbos and brainless stock touting twits will be in ecstasy today as the ever predictable rebound is under way. The market will soar by over 500 points at the opening as the excuse of the day is China’s desperate interest rate cut to try and stem their downward spiraling economy and markets. The Wall Street captured boob tube brigade will tell their almost non-existent viewership that all is well. The terrifying plunge is in the past. The economy is great. Housing is strong. Stocks are now a bargain. It’s the best time to buy.

Now for some factoids. Six of the ten largest point gains in the history of the stock market occurred between September 2008 and March 2009. That’s right.

20150825_btfd

During one of the greatest market collapses in history, the market soared by 5% to 11% in one day, six times. Here are the data points: Continue reading »

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Aug 25

BrazilJobDestruction

Brazil’s flagging economy, which is mired in stagflation and remains a slave both to China and to what looks like intractable political turmoil, has destroyed nearly 550,000 jobs YTD. As Barclays notes, ” [the July] print is compatible with 140,939 job eliminations, pretty close to the historical low of -154,355 in June.”

In more ways than one (or two, or three) Brazil is the poster child for the global emerging market unwind that, thanks to China’s yuan devaluation, has accelerated dramatically over the course of the last week.

To be sure, the combination of slowing demand from China, the (now lower) possibility of a Fed rate hike, and, perhaps most importantly, the Continue reading »

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Aug 24

Chinese Stocks Are Crashing; Yuan Devalues, Deposit Rate Spikes To Record High, Japan Denies “G7 Response” Planned (ZeroHedge, Aug 24, 2015):

Following yesterday’s bloodbath (and the continued carnage around the world), AsiaPac stocks are lower with Japan unable to mount any sustained bounce despite every effort to lift JPY. The propaganda-fest is in full swing as Amari claims JPY is safe-haven asset and Aso denies any coordinated G7 response is being planned (which means they are all feverishly trying to figure out how to ‘save’ the world again from a 4-day stock drop). China is ugly with stocks down hard in the pre-open (CSI-300 -4.3%) as offshore Yuan depo rates spike to 22.9% – a record high – as liquidity outflows must be accelerating (as PBOC adds another CBNY150bn liquidity). China devalues Yuan 0.2% – most in 11 days.

Carnage –

  • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 6.4% TO 3,004.13
  • *CHINA’S CSI 300 INDEX SET TO OPEN DOWN 6.3% TO 3,070.01

This is the 5th day of crashing Chinese stocks in a row…

20150824_yuan4

Chinese Stocks are down 14% since Friday!! Continue reading »

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Aug 24

Click the play button below to listen to Chris’ interview with Marc Faber (37m:21s)

Marc Faber: The Global Economy Is Entering An Epic Slump (PeakProsperity, Aug 23, 2015):

Famed investor and author of the Gloom, Doom, Boom Report, Marc Faber, returns to the podcast this week to discuss the slowdown in the global economy, signs of which he claims are multiplying fast all around the world.

He predicts the next year is going to be an especially bruising one for investors, and recommends a combination of diversification and defense for those with financial capital to protect:

I do not believe that the global economy is healing. I believe that the global economy is heading into a slump once again. Continue reading »

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Aug 24

Deer

All the charts you need here:

“Black Monday” Brings Global Market Rout, Investors Mourn The Death Of Central Bank Omnipotence (ZeroHedge, Aug 24, 2015)

 

 

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Aug 24

What Is Really Going On: Market Liquidity Worse Than During The Flash Crash; 4500 Crash Events; Constant Halts And Unhalts (ZeroHedge, Aug 24, 2015):

Curious why few if any traders can actually execute any trades, whether buys or sells? The reason is that despite the relative calmness of the index prints, what is going on beneath the surface is an unprecedented wave of constant halt and unhalts as all stop levels were taken out, many in circuit breaker territory, making it virtually impossible for any matching enginge to, well, match buyers and sellers.

Here is a sample:

20150824_bbgnews_0

The resulting halts made it impossible for regular traders to step in, requiring central banks to buy via the CME’s Central Bank Incentive Program, to restore some market stability.

And just to add to the pain, there is absolutely no liquidity in either stocks…

… Or bonds: Continue reading »

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Aug 24

Bloodbath: Emerging Market Assets Collapse As China Selloff Triggers Panic (ZeroHedge, Aug 24, 2015):

On the heels of China’s “failure” to send the PBoC to the rescue with an RRR cut over the weekend, battered EM assets were hit hard again on Monday as stocks, bonds, and currencies all went into panic mode as the global meltdown gathers pace.

 

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Aug 24

Blood On The Streets: Down Dumps 1000 Points At Open, Biggest Drop Since Lehman (ZeroHedge, Aug 24, 2015):

Blood on the streets…

20150824_dow_1

Continue reading »

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Aug 24

Panic!! All Major US Equity Indices Halted (ZeroHedge, Aug 24, 2015):

20150824_halt

Nasdaq was the first to be halted at 0758ET.

The Dow is now down 850 points from Friday’s close and halted…

The S&P 500 Futures is halted for the first time in history.

Continue reading »

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Aug 23

maersk 2

Global Trade In Freefall: Container Freight Rates From Asia To Europe Crash 60% In Three Weeks (ZeroHedge, Aug 23, 2015):

Three weeks ago, when we last looked at the collapse in trade along what may be the most trafficked route involving China, i.e., from Asia to Northern Europe, we noted that while that particular shipping freight rate Europe had crashed some 23% on just one week, there was some good news: at least the Baltic Dry index was still inexplicably rising, and at last check it was hovering just above 1,100.

That is no longer the case, and just as with everything else in recent months, the Baltic Dry dead cat bounce is now over, with the BDIY topping out just above 1200 on August 4, and now back in triple digit territory, rapidly sliding back to the reality of recent record lows which a few months ago we suggested hinted that much more is wrong with global trade, and the global economy, than artificially manipulated stock markets would admit.

2015-08-23_9-02-48 BDIY

More importantly, a major source of confusion appears to have been resolved. Recall that as we noted on August 3, “many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible. We may have the answer.”

We did. To wit: Continue reading »

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Aug 23

PetrodollarImage_0

Full article here:

Why It Really All Comes Down To The Death Of The Petrodollar (ZeroHedge, Aug 22, 2015):

Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge causing the currency to immediately plunge by some 25%. The rationale behind the move was clear enough. What might not be as clear is how recent events in developing economy FX markets stem from a seismic shift we began discussing late last year – namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order.

 

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Aug 21

Blood On The Streets Of Europe – Stocks Crash By Most In 4 Years, Bond Risk Surges (ZeroHedge, Aug 21, 2015):

Carnage – everywhere. A surging EUR – as CNH carry traders unwind en masse – has led to an unwind across most risky assets in Europe. This week saw EuroStoxx 600 – the broad index – crash almost 6%, its biggest drop since September 2011. Perhaps most stunningly, Germany’s DAX was the biggest loser – collapsing 7.4% on the week. European bonds are are also seeing risk increase dramatically with Portugal and Italy worst (aside from Greece’s blowout). Europe’s VIX topped 30 this week, as US VIX surges.

Worst weeek for European stocks in 4 years..

20150821_EUEOD1

Led by a complete collapse in DAX… Continue reading »

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Aug 21

China’s “Judgment Day” Arrives – Malicious Sellers Slam Stocks Below Communist Floor (ZeroHedge, Aug 20, 2015):

Chinese media are describing tonight’s market action as “Judgment Day” for China, as SCMP’s George Chen explains, the crusade of ‘malicious short sellers’ against the Communist central planners and their ‘funds’ is in full swing. The “manage-the-economy-by-technical-analysis” strategy appears to have failed as Shanghai Composite has broken notably below its 200-day moving average – which six times before has been defended aggressively. Chinese Stocks are back at 7-week lows, just off the crash lows in July.

  • *CHINA’S SHANGHAI COMPOSITE FALLS 3% TO 3,552.82 AT BREAK
  • *CHINA’S CSI 300 INDEX FALLS 3.1% TO 3,646.45 AT BREAK

The big showdown – can the 200DMA be defended… or more crucially, the July lows!!

20150820_SHCOMP1 Continue reading »

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Aug 18

China Stocks Crash, More Than Half Of Market Halted Limit Down; PBOC Loss Of Control Spooks Global Assets (ZeroHedge, Aug 18, 2015):

China sure has its micro-managing hands full these days.

spinning plates 2_0

Just hours after the PBOC announced a modestly “revalued” fixing in the CNY, which curiously led to weaker trading in the onshore Yuan for most of the day before a forceful last minute intervention by the central bank pushed it back down to 6.39…

… it was the local stock market spinning plate – which had been relatively stable during the entire FX devaluation process – that China lost control over, and after 7 days of margin debt increases the Shanghai Composite plunged by 6.2% in late trade, tumbling 245 points to 3748, just 240 points above its recent trough on July 8, a closing level some 27% off its June peak. The smaller Shenzhen Composite Index fell 6.6% to 2174.42. This was the biggest single-day rout since July 27.

shcomp

According to Reuters, “volatility in both indexes spiked in the afternoon in what is becoming a mysteriously recurring pattern in China’s stock markets since Beijing stepped in to avert a full-blown price crash in early summer.”

There were various reasons cited for the selling: one was that with Chinese housing data coming in stronger than expected, that Beijing may limit its future interventions to promote further easing of financial conditions and thus, supporting the market as we warned last night after the housing data came out:

Another reason cited by Bloomberg is that stocks fells on “short-selling concerns.” BBG cited Central China Securities strategist Zhang Gang who said that “investors worry about potential aggressive short-selling activities after some brokers resume short-selling transactions, and this has hurt sentiment.”

Bloomberg adds that some speculative funds exited after gains in morning on fears that short-term speculative buying of SOE concept stocks may have come to an end.

According to the WSJ, “fresh anxieties about China’s commitment to steadying the stock market sparked heavy losses in Shanghai Tuesday, despite signals of a housing recovery and the central bank’s latest steps to keep cash from fleeing.”  The heavy selling in the final minutes of trading echoed sessions in recent weeks, when faltering assurances of China’s role in the market hastened losses.

“At 2 p.m. it started to turn south again at a very fast rate,” said Steve Wang, a research director at Reorient Group. “People questioned why the government hadn’t yet stepped in” at a time of the day that it usually would, he added.

One can’t help but smile at this interpretation of what the “market” has become. Some who aren’t smiling, however, are those who once again decided to lever up with margin debt – as noted above, today was the 7th daily increase in retail investor leverage – only to lose all of it again just as we warned would happen yesterday. And now even the official party mouthpiece is starting to issue snarky announcements.

Losses among stocks of state-owned enterprises in Shanghai started building earlier in the morning amid skepticism about Beijing’s commitment to reform. Reports of efforts to accelerate reform, long touted as a way to open up bulky conglomerates to private investment and market forces, had gained momentum in recent weeks and buoyed related stocks.

The final damage: a total of 58% of stocks listed in Shanghai hit their downward daily limit of 10%, while 52% of all Shenzhen-listed shares met the same barrier, according to FactSet.

Here is a case study of what a government takeover of the stock market gone wrong looks like:

Take Guangdong Meiyan Jixiang Hydropower Co.: The state-run firm tasked to prop up the market, China Securities Finance Corp., is the biggest shareholder in the hydropower firm as of August 4, according to a company filing. CSF Corp.’s hefty role makes the company a “signature stock,” said Deng Wenyuan, an analyst at SooChow Securities.

When its shares fell by their 10% limit on Tuesday, it “may have sparked investors to resort to panic selling,” he said. The company’s shares had surged 150% as of Monday, 10 days after the stakeholder announcement.

Stocks that would benefit from reform of state-owned enterprises and those favored by CSF Corp. had been a driving force behind market rally since the June rout. “Both engines lost power today,” Mr. Deng added.

All this happened when neither measures to calm worries of capital flight given a weaker yuan nor positive economic data satiated investors.

Adding to liquidity and capital outflow fears, earlier China’s central bank injected the largest amount of cash into the financial system on a single-day basis in almost 19 months, signaling Beijing’s growing concerns about capital outflows after the yuan’s recent weakening. Reuters adds that “the central bank made its biggest injection of funds into money markets in more than six months early on Tuesday, adding to worries that liquidity was tightening as investors moved more capital out of the country. Minsheng Securities estimated 800 billion yuan ($125 billion) had flowed out in July and August alone.

And while the currency was for the time stable as this is where all the PBOC firepower appears to be focused on these days, China also lost control of commodities: Copper dropped as much as 1.7% to $5,030/mt, lowest since 2009, before trading at $5,041.  Aluminum also dropped as much as 1.2% to $1,549.50/mt, lowest in six years, before paring loss to $1,555.50. Nickel, zinc and lead decline at least 1.7%, and so on.

The return of the Chinese rout, which many thought had been “contained”, also spilled over to other global markets.

Asian equity markets fell, led by Shanghai Comp (-6.2%) as participants digested the latest property prices from China, which continued to show a recovery while the PBoC injected CNY 120bIn (most since February 9th) via open market operations, consequently disappointing growing calls of further easing, which comes alongside the resumption of short selling and margin financing by some large Chinese brokers. ASX 200 (-0.3%) and Nikkei 225 (-0.2%) were pressured by energy names as oil prices continued to slump. JGBs pulled off best levels on the back of a disappointing 20-year auction which posted a lower than prior b/c and a wider tail in price. Moody’s maintained China GDP growth forecast at 6.8% in 2015 and 6.5% in 2016, but sees growth declining to 6% in following years.

Stocks in Europe traded lower, as market participants continued to fret over the recent volatility in Chinese based financial instruments. As such European equities opened softer (Euro Stoxx: -0.20%), while energy names underperformed amid continued weakness in the commodity complex. Given the heavy commodity/energy sector weighting meant that the FTSE-100 index underperformed its EU peers.

Despite the weakness in equities, Bunds and Gilts failed to sustain the initial bid tone and pulled off the best levels following the release of firmer than expected UK CPI data. As a result, Gilts have underperformed Bunds, with the Short-Sterling curve aggressively bear steepening following the release.

In FX, GBP outperformed following the release of aforementioned firmer than expected UK CPI data, with the ONS noting that the latest increase was mainly due to clothing, with smaller price reductions in this years summer sales compared with a year ago.

Elsewhere, JPY gained from risk averse flows and also the growing uncertainty over the likelihood of a Fed rate hike, with China being seen as the main culprit for the delay, as opposed to Greece which was often noted in communiqué released by the Fed in the past.

In commodities, Commodities remained under pressure, with WTI trading near lowest level since March 2009, weighed on by the ongoing concerns over China and Iranian supply related risks. At the same time, aluminium and copper also continued to come under pressure and trade near their lowest levels since 2009.

Of note, it was reported that Kuwait Shuaiba oil refinery (Refinery has 200kbpd output) due to reopen within a few days after Monday’s closure due to a fire which had no effect on exports due to existing stockpiles.

In summary: European shares trade mixed, off earlier lows, with the tech and health care sectors outperforming and basic resources, oil & gas underperforming.  Oil and copper drop, leading the Bloomberg Commodity index to a 13-year low. Sterling gains after U.K. core inflation rises to highest in 5 months. Asian stocks traded lower with Thai market underperforming after Bangkok bombing, baht reached weakest since 2009; Shanghai Composite fell 6.2% as yuan weakened in onshore trading. The Dutch and Spanish markets are the best-performing larger bourses, U.K. the worst. The euro is little changed against the dollar. Japanese 10yr bond yields fall; U.K. yields increase. Commodities decline, with zinc, copper underperforming and gold outperforming. U.S. housing starts, building permits due later.

Market Wrap

  • S&P 500 futures down 0.3% to 2094
  • Stoxx 600 little changed at 387.4
  • US 10Yr yield down 1bps to 2.16%
  • German 10Yr yield little changed at 0.63%
  • MSCI Asia Pacific down 0.6% to 137.1
  • Gold spot up 0.2% to $1120.4/oz
  • Eurostoxx 50 -0.2%, FTSE 100 -0.5%, CAC 40 -0.4%, DAX -0.2%, IBEX little changed, FTSEMIB -0.2%, SMI -0.1%
  • Asian stocks fall with the Sensex outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific down 0.6% to 137.1
  • Nikkei 225 down 0.3%, Hang Seng down 1.4%, Kospi down 0.6%, Shanghai Composite down 6.1%, ASX down 1.2%, Sensex down 0.1%
  • Euro down 0.06% to $1.1071
  • Dollar Index down 0.05% to 96.76
  • Italian 10Yr yield up 1bps to 1.77%
  • Spanish 10Yr yield up 1bps to 1.95%
  • French 10Yr yield up 2bps to 0.96%
  • S&P GSCI Index down 0.5% to 360.6
  • Brent Futures down 0.4% to $48.6/bbl, WTI Futures down 0.4% to $41.7/bbl
  • LME 3m Copper down 1.8% to $5020.5/MT
  • LME 3m Nickel down 1.7% to $10440/MT
  • Wheat futures down 0.1% to 503.8 USd/bu

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Stocks in Europe traded lower, as market participants continued to fret over the recent volatility in Chinese based financial instruments
  • GBP outperformed following the release of aforementioned firmer than expected UK CPI data, with the ONS noting that the latest increase was mainly due to clothing
  • Commodities remained under pressure, with WTI trading near lowest level since March 2009, weighed on by the ongoing concerns over China and Iranian supply related risks
  • Treasuries steady, 10Y yield lowest since late May amid declines in currencies from Russia’s ruble to AUD and as a measure of EM stocks fell to four-year low.
  • Shanghai Composite Index slid 6.2%, biggest loss since 8.5% rout on July 27; about 35 stocks fell for each that rose, while more than 600 companies plunged by the daily 10% daily limit
  • In giving markets a greater say in setting the yuan’s level, Zhou Xiaochuan is bowing to Robert Mundell’s maxim that a country can’t maintain independent monetary policy, a fixed- exchange rate and free capital borders all at the same time
  • Britain’s inflation rate rose 0.1% in July, more than forecast, and a core measure of price growth increased to the highest in five months
  • Japan needs an economic injection of as much as JPY3.5t ($28b) to shore up consumption and stave off a further economic contraction, said Etsuro Honda, an economic adviser to Abe
  • Merkel and Schaeuble will lobby lawmakers today to support the EU86b aid package for Greece, saying it offers a “sustainable path” even though the IMF has yet to commit to footing part of the bill
  • Bob Corker (R-TN), the chairman of the Senate Foreign Relations Committee, said he opposes the nuclear agreement with Iran, arguing it won’t end the country’s nuclear enrichment program and may lead to greater instability in Middle East
  • Deutsche Bank AG co-CEO John Cryan is overhauling the fixed- income division his predecessor built as he seeks to boost profit and capital
  • Sovereign 10Y bond yields mixed. Asian stocks slid, European stocks lower, U.S. equity-index futures decline. Crude oil and copper lower, gold gains

US Event Calendar

  • 8:30am: Housing Starts, July, est. 1.180m (prior 1.174m)
    • Housing Starts m/m, July, est. 0.5% (prior 9.8%)
    • Building Permits, July, est. 1.228m (prior 1.343m, revised 1.337m)
    • Building Permits m/m, July, est. -8.2% (prior 7.4%, revised 7%)

DB’s Jim Reid concludes the overnight event wrap

We’re not going to lie to you this morning. This really isn’t the most interesting EMR we’ve ever published as the summer lull seemed to suddenly hit yesterday after so far having been delayed by Greece, Fed debate and more recently China. Having said that the commodity complex continues to be weak, the Malaysia ringgit continues to drift lower, US data yesterday was mixed and Greece still has ongoing internal political intrigue to watch. Today UK CPI and US housing starts/permits will be the main events. So that’s today’s EMR in a few lines and now to justify our existence we’ll flesh it out.

The overriding theme yesterday was the continued weakness in commodity markets and yesterday we saw Oil tumble with WTI (-1.48%) tumbling to a fresh six and a half year low at $41.87/bbl and Brent (-0.91%) falling to $48.74/bbl as China concerns, soft GDP data out of Japan and lingering supply-related headlines continue to weigh on the complex. The latest leg lower has seen WTI in particular fall over 11% already this month after a 21% decline in July. Although the falls dragged down energy stocks slightly yesterday, the S&P 500 started the week on a firming footing, closing up +0.52% and rebounding after sentiment was buoyed following the latest US housing data. European stocks were a tad more mixed. The Stoxx 600 (+0.26%) and CAC (+0.57%) both finished higher, however the DAX (-0.41%) was unable to recover from an earlier decline.

Overnight FX markets have been relatively calm for the most part after the PBoC effectively made little change to the Yuan fix this morning (within 0.03% of Monday’s close). The onshore Yuan has softened 0.26% while the more freely traded offshore Yuan is 0.06% weaker having initially strengthened. Asian FX markets continue to be under pressure this morning although the moves are certainly a lot more muted relative to the last week. The Malaysian Ringgit (-0.52%) however continues to be the standout underperformer, while the Korean Won, Indonesian Rupiah and Philippine Peso are also a tad lower this morning. There’s been little change in the Aussie Dollar meanwhile (hovering around $0.738) after the RBA minutes offered few surprises and continue to point towards no change in the current cash rate.

Meanwhile, July property prices data out of China this morning showed an improving trend after prices rose in more cities than declined for the first time in 16 months. According to the National Bureau of Statistics, new home prices rose in 31 cities last month (out of 70), versus 27 in June and 20 in May. That compares to new home price declines in 29 cities for July, while 10 cities saw prices unchanged. Despite the slightly improved housing market picture out of China, equity bourses there are leading declines although the bomb blast in Thailand overnight appears to be weighing on sentiment. The Shanghai Comp and Shenzhen are -1.46% and -1.20% respectively at the midday break, while the Thailand stock exchange has plummeted over 2%. The Nikkei (-0.16%), Kospi (-0.41%), Hang Seng (-0.08%) and ASX (-0.71%) have also declined this morning.

Back to markets yesterday. Once again the weakness in the commodity complex wasn’t just confined to Oil markets as Aluminum (-0.79%) and Copper (-0.97%) also declined over the session, bringing their YTD losses now to -15.4% and -18.8%. With that pressure and the read-through to dampening inflation expectations, US Treasuries caught a bid yesterday with the 10y benchmark yield in particular falling 3bps to 2.169%. That move lower was also helped by a particularly soft August NY Fed Empire manufacturing reading with the print falling 18.8pts to -14.9, the lowest level since April 2009. The details revealed that gauges of new orders, shipments and inventories in particular were significantly weaker in the month although there was some optimism to take out of the six-month ahead expectations reading which rose 7pts to 34.6. In any case, there’ll be plenty of attention on Thursday’s Philly Fed manufacturing survey in light of the weakness in NY Fed survey.

Despite US equities initially slumping on the back of the data, homebuilders led a rebound after the release of the NAHB housing market index for August showed a 1pt uplift to 61 as expected and in turn reaching the highest reading since November 2005. It’ll be interesting to see if the positive momentum around the US housing market continues today with housing starts and building permits due this afternoon. Despite the better housing data, the Oil related pressure saw Dec15 and Dec16 Fed Fund contract yields fall 0.5bps each, while the probability of a Fed move in September edged a touch lower to 46% from 48% on Friday.

There was very little to report over in the European session yesterday. Sovereign bond yields largely mirrored the moves in the Treasury market. 10y Bund yields closed the session 3.4bps lower at 0.624% while yields in Italy, Spain and Portugal finished 4.8bps, 7.0bps and 3.9bps lower respectively with Italy now falling to the lowest yield (1.757%) since May 8th. Data wise the only notable release was the June trade balance reading for the Euro area which showed a slightly smaller than expected surplus (€21.9bn vs. €23.1bn), up €0.6bn from May.

Elsewhere, it looks like the political tensions in Greece will continue to bubble away for now with Greek press Ekathimerini suggesting that Greece PM Tsipras and his advisers are set to hold off on an immediate call for a vote of confidence and instead focus in the coming weeks on the actions that the government must take as part of its bailout commitments. The article suggests that this could as a result push back any potential timing for snap elections before going on to quote a Greek government official as saying that an October/November time frame for snap elections might be more of a possibility. Meanwhile and staying in Greece, following on from German Chancellor Merkel’s comments on the weekend, German Finance Minister Schaeuble echoed Merkel’s comments regarding IMF participation, saying on German TV ZRD yesterday that ‘I’m also very sure that the IMF will contribute to the program, just as we declared this to be indispensible’. Schaeuble also called upon fellow lawmakers to approve the bailout package, saying that it offers a ‘sustainable path’.

Turning over to today’s calendar now, it’s all eyes on the UK this morning where we get the July CPI/RPI/PPI releases and which may well shed some more light for economists revising their BoE rate forecasts. Aside from that, there’s no other releases in Europe this morning while this afternoon in the US we’ve got July housing starts and building permits data to look forward to. DB’s Joe Lavorgna notes that he expects the housing starts reading in particular to continue to support the grinding improvement in the US housing market, but that building permits may well be slightly softer relative to June due to the possible payback for upward distortions in the Northeast region over the past few months.

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Aug 18

Collapse

23 Nations Around The World Where Stock Market Crashes Are Already Happening (Economic Collapse, Aug 17, 2015):

You can stop waiting for a global financial crisis to happen.  The truth is that one is happening right now.  All over the world, stock markets are already crashing.  Most of these stock market crashes are occurring in nations that are known as “emerging markets”.  In recent years, developing countries in Asia, South America and Africa loaded up on lots of cheap loans that were denominated in U.S. dollars.  But now that the U.S. dollar has been surging, those borrowers are finding that it takes much more of their own local currencies to service those loans.  At the same time, prices are crashing for many of the commodities that those countries export.  The exact same kind of double whammy caused the Latin American debt crisis of the 1980s and the Asian financial crisis of the 1990s.

As you read this article, almost every single stock market in the world is down significantly from a record high that was set either earlier this year or late in 2014.  But even though stocks have been sliding in the western world, they haven’t completely collapsed just yet. Continue reading »

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Aug 18

Indonesia Impaled: Currency Crashes To 1998 Asian Crisis Low As Exports Crater (ZeroHedge, Aug 18, 2015):

On Monday we laid out the rather dire road ahead for the world’s emerging economies in the face of China’s entry into the global currency wars. The path ahead is riddled with exported deflation and decreased trade competitiveness for a whole host of emerging economies [and] all of this is set against a backdrop of declining global growth and trade, a trend which many had assumed was merely cyclical, but which in fact may prove to be structural and endemic.” Well don’t look now, but trade just collapsed for Indonesia as exports and imports plunged 19.2% and 28.4% (more than double to consensus estimate), respectively in July. Meanwhile, the rupiah is sitting near multi-decade lows.

 

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