Submitted by Tyler Durden on 01/07/2016 - 11:06
Chinese stocks have retraced 50% of their overnight losses following the lifting of the circuit-breaker rule. China FTSE-A50 Futures trading on SIMEX are up over 250 points, trading at the highs of the day but for some context, the index is still down 14% from post-Christmas highs.
China Suspends Circuit-Breaker Rule - "This Is Insane; We Were Forced To Liquidate All Our Holdings This Morning"Submitted by Tyler Durden on 01/07/2016 - 09:38 Update: *CHINA SUSPENDS STOCK CIRCUIT BREAKER RULE - In Q&A, CSRC insists circuit breakers didn't cause the China meltdown but admits they may have aggravated sell-off.
"It couldn't be worse," exclaims one manager who started his fund mid-year in 2015, blaming China's equity market carnage on its newly-created circuit-breakers (as opposed to the fact that the Chinese market trades at 64x P/E and there are sellers everywhere). "Panic will eventually turn into a buying opportunity," hopes one strategist while another proclaims "poorly-designed" circuit breakers need to be adjusted to 10% (seriously). Blame is everywhere, but it is Chen Gang who summed up the panic best, "this is insane... we were forced to liquidate all our holdings this morning."
Submitted by Tyler Durden on 01/07/2016 - 11:20 While previously there was some ambiguity with regard to who actually perpetrated the attacks which allegedly unfolded in Cologne on New Year's Eve, authorities are now sure that "most" of those involved were "freshly traveled asylum seekers." From Die Welt: "Primarily it was the most Arab perpetrators to sexual offenses or, to put it from their point of view to their sexual amusement. A group of men circling a female victim, closes it and takes on the woman."
Submitted by Tyler Durden on 01/07/2016 - 10:57 It's requiring more borrowed yen/yuan/dollars/euros just to keep the global economy from collapsing in a heap of impaired debt. The costs of waste, fraud and mal-investment are finally coming home to roost, and while near-zero interest rates serve to mask the future costs, near-zero rates cannot stem the rising tide of mal-investment. Rather, near-zero rates have fueled mal-investment, waste and unproductive spending. The diminishing returns on that strategy of "growth" are inescapable.
Submitted by Tyler Durden on 01/07/2016 - 10:49
Submitted by Tyler Durden on 01/07/2016 - 10:40 When Mario Draghi “disappointed” markets in December by “only” cutting the depo rate by 10 bps and “merely” extending PSPP by six months while electing not to expand monthly asset purchases, the Riksbank, the Nationalbank, the Norges Bank, and the SNB all breathed heavy sighs of relief. And while we doubt the ECB is done when it comes to going "full-Krugman" (as it were), Mario Draghi’s “hawkish” ease did buy his counterparts some breathing room. Case in point: Denmark just hiked.
Submitted by Tyler Durden on 01/07/2016 - 10:13 Canada's Ivey Purchasing Managers Index collapsed from an exuberant and simply unbelievable 63.6 in November to a contractionary 49.9 in December - one of the biggest MoM drops on record and biggest misses on record. On a seasonally-unadjusted basis, this is the weakest print in at least 2 years. From the best data since February 2012 to the worst since February 2015 seems to expose these soft-surveys as practically useless. The huge drop in Inventories suggests a major drag on GDP and an extension of Canada's recession.
Submitted by Tyler Durden on 01/07/2016 - 10:12
Submitted by Tyler Durden on 01/07/2016 - 10:08 "Demographics may not rule absolutely, but they likely will dominate investment markets and returns for the next few decades until the Boomer phenomena fades away. The 1% – in addition to the 99 – will need extra doses of Xanax, or additional slices of cake, to cope."
Submitted by Tyler Durden on 01/07/2016 - 09:54 Dr. Copper is sick. For the first time since May 2009, Copper futures prices traded with a $1 handle this morning ($1.99) as Nomura analysts warn the commodity is likely to see more downside risk over the medium term as the market is expected to remain in surplus through the end of the decade.
Submitted by Tyler Durden on 01/07/2016 - 09:26 This week has seen a slew of significant levels related to the post-2009 bull market break on several key stock indices.
Submitted by Tyler Durden on 01/07/2016 - 08:36 The much-watched four-week average of initial jobless claims rose to 277k, accelerating to the highest levels since early July 2015. This "trend shift" began as rate-hike odds increased in October... just as we saw the trend shift after QE3 ended...
Submitted by Tyler Durden on 01/07/2016 - 08:16 As the PBOC revealed overnight, China’s foreign-exchange reserves plunged much more than forecast in December, capping the first-ever annual decline (of $513 billion) as authorities sought to prop up a weakening yuan. More importantly, the $108 billion decline from $3.438 trillion to $3.330 trillion - far greater than the $20 billion estimated - was the largest on record, and shows that while on the surface the Yuan was stable, behind the scenes the PBOC was furiously dumping securities to prevent an all out currency rout as outflows hit a record.
Submitted by Tyler Durden on 01/07/2016 - 07:57 On the one year anniversary of the Charlie Hebdo attacks, one man decided to "celebrate" by storming a police station in Paris - with a knife. He was promptly shot.
Did you see what just happened in China? For the second time in four days, a massive stock market crash has caused an emergency shutdown of the markets in China. On both Monday and Thursday, trading was suspended for 15 minutes when the CSI 300 fell 5 percent, and on both days the total decline very rapidly escalated to 7 percent once trading was reopened. Once a 7 percent drop happens, trading is automatically suspended for the rest of the day. I guess that is one way to keep the stock market from crashing – you just don’t let anyone trade. And of course the panic in China is causing other markets to go haywire as well. As I write this, the Nikkei is down 324 points and Hong Kong is down 572 points.
Debt Jubilee is coming. That is to say, Debt Jubilee is coming to the Western world. This is not a prediction, and thus no crystal balls, or other fancy, forecasting techniques are needed. Rather, all that one requires is a rudimentary grasp of the current level of Western insolvency, and the capacity to operate a calculator.
This has been the general subject matter of many previous commentaries. In specific terms, one of these pieces itemized the West’s Deadbeat Debtors club, as measured in those nation’s overall debt-to-GDP ratios:
What would it mean to you if you had an unexpected trip to the emergency room? If your car required an expensive repair? What if your income was interrupted for a week, or two weeks, or even longer? Do you have an emergency fund built into your budget to see you through these everyday calamities, or are you only one missed paycheck from disaster?
According to a recent survey released by Bankrate, 63% of Americans do not have the emergency savings to take care of a crisis that costs $1000 or more. How do people handle unexpected expenses? According to the survey:
“Would be foolish to rule out a similar if not a more devastating outcome.”
The US dollar has soared against other currencies, or these currencies have fallen or crashed against the dollar, whichever way we look at it. And economists are trying to explain that phenomenon.
With commodities-linked currencies, like the Canadian dollar, the Aussie dollar, and the Norwegian krone, the commodities rout was blamed. In addition, the Bank of Canada is fighting its own currency war against the US, Canada’s primary trading partner.
It’s trying to demolish the loonie by jawboning it down, rather than resorting to QE like other central banks are doing. [Bank of Canada Crushes Loonie, Created Mother of All Shorts].
In this day and age it seems like almost everything is disposable, and many employers have found that they can make a lot more money if they have a workforce that can be turned on and off like a faucet. In America today, there are more than 17 million “independent workers”, and they represent a bigger share of the workforce than ever before. Federal laws give a lot of protection to “full-time workers”, but for temporary and contract employees it is a much different story. Temp workers don’t get health insurance, vacation time or retirement benefits. They are simply paid for the limited amount of time that they are needed and then they are disposed of immediately. There has always been a role for such workers in our economy, but these days some of the biggest corporations in the entire country are getting rid of “full-time workers” and replacing them with temp workers just so that they can make a few extra bucks. As a result, the ranks of the “working poor” continue to expand, and the decline of the middle class is accelerating.
The Federal Reserve’s recent rate hike is symbolic, intended to signal the end of the financial crisis and the start of normalization.
The rise will have minimal effect on consumption and investment. Analysts have already moved beyond the Fed’s well-telegraphed decision, focusing on the future trajectory of U.S. monetary policy.
The Fed forecasts around four additional rate increases in 2016 and a similar number in 2017. This would mean that U.S. official rates would be around 1.375% and 2.375% by the end of 2016 and 2017, respectively. The median estimate for the longer-term federal funds rate is around 3.5%.
Submitted by Tyler Durden on 01/07/2016 - 06:00 Surging volatility in global equity, currency, and credit markets and significant stress in a major world economy have George Soros on edge. Speaking at an economic forum in Sri Lanka, the billionaire hedge fund manager warned global markets are facing a crisis and investors need to be very cautious. On the heels of the second trading halt in four days, Soros exclaimed "I would say it amounts to a crisis... which reminds me of 2008."
by Elias Isquith, Salon:
One of the predominant themes of the 2016 presidential campaign thus far — and one that is unlikely to lose significance once the primaries give way to the general election — is the American people’s exasperation with a political system they see as corrupt, self-serving, disingenuous and out of touch.
It is not an especially partisan or ideological sentiment; you can just as easily find it among supporters of Sen. Bernie Sanders as among fans of Donald Trump. You can even find those who support paragons of the status quo, like Hillary Clinton or Jeb Bush, making similar complaints. It’s about as close to a consensus position as you’re likely to find nowadays in American politics.