Breaking Down China’s $23 Trillion Debt Pile

Back in April, we highlighted Beijing’s “massive debt problem”, noting that as of last year, total debt in China amounted to some $28 trillion when you include government debt, corporate debt, and household borrowing.
As Bloomberg noted at the time – and as we’ve discussed extensively – Beijing is facing the virtually impossible task of trying to de-leverage and releverage at the same time.
“Various parts of the government don’t always seem to be working from the same playbook,” Bloomberg observed, before quoting Credit Agricole’s Dariusz Kowalczyk who pointed out the “obvious contradiction between attempts to deleverage the economy and attempts to boost growth.”
Indeed, there are times when the scale seems to tip in favor of deleveraging. For instance, Beijing has recently shown a willingness to tolerate defaults and the case of Baoding Tianwei Group Co even suggested that in some instances, state-affiliated companies may not receive immediate government support. Nevertheless, the abrupt 180 on LGVF financing and the transformation of the local government debt restructuring initiative into the Chinese version of LTROs betrays the extent to which China is still reluctant to deleverage its economy in the face of flagging growth.
Against that backdrop we bring you the following graphic from Bloomberg which breaks down China’s massive debt pile and shows the degree to which it’s grown over the past decade.

This post was published at Zero Hedge on 08/03/2015.

Businesses Flee Catalonia, Foreign Investment Plunges, as Confrontation with Spain Comes to a Boil

And now that the wrecking ball is in motion…
As the countdown begins to Catalonia’s plebiscite-style elections, scheduled for September 27, cracks are already beginning to show in Spain’s most important economic region (at least pound for pound).
A few days ago, a study by Axesor showed that since the region’s pro-independence premier, Artur Mas, took office in 2011, 3,800 companies have upped sticks and left Catalonia for other regions of Spain. By contrast, just 2,547 companies have relocated from other regions to Catalonia during the same period.
Of the 3,839 companies that abandoned Catalonia, almost half ended up relocating to Madrid. Indeed, during the same period Madrid has seen a net inflow of 1,766 companies while Spain’s third largest city Valencia registered a net influx of 361 companies.
While some of those companies were lured away from Catalonia by the prospect of lower taxes – Catalonia is currently the highest-taxed region of Spain – fears are growing that more and more local companies are voting with their feet against Catalonian independence. These fears were compounded by recent tweaks Rajoy’s government made in Spain’s corporate governance law to make it much easier for the country’s biggest publicly listed companies to move the location of their headquarters.
It’s not just local companies that are getting the jitters. In March of this year Spain’s Ministry of Economy released data showing that in 2014 foreign direct investment in Catalonia plunged 16%, while in Spain as a whole it increased 9.2%. In Catalonia’s neighboring province, Valencia, overseas investment grew by a staggering 300% in the space of just one year.
‘With foreign investment falling in Catalonia by 15% and surging in Valencia by more than 300%, it’s pretty obvious that foreign investors are beginning to have serious doubts about the political and economic future of Catalonia,’ said the president of Catalonia’s Business Association Josep Bou:

This post was published at Wolf Street on August 3, 2015.

Crashing: Apple, Twitter, Oil, Commodities, Greek Stocks, Chinese Stocks

The month of August sure has started off with a bang. Tech stocks are crashing, oil is crashing, industrial commodities are crashing, Greek stocks crashed the moment that the GreekSTOCK MARKET reopened for trading, and Chinese stocks continue to crash. At this point we have not seen a broad crash of U. S. stocks yet, but it is important to note that the Dow is already down more than 700 points from the peak in May. If it continues to slide like it has in recent days, it won’t be too long before we will officially reach ‘correction’ territory. Just a few days ago, I described August as a ‘pivotal month’, and so far that is indeed turning out to be the case.
A full-blown financial crisis has not erupted yet, but we are well on the way. In this article, I want to look at a few of the ‘crashes’ that are already happening…
This is more of a ‘correction’ than a ‘crash’, but it is very noteworthy because it is happening to one of the most important U. S. stocks of all. The price of Apple stock has already broken through the 200 day moving average, and at this point it is down nearly 11 percent from the peak…

This post was published at The Economic Collapse Blog on August 3rd, 2015.

Layoffs Surge As Oil Price Outlook Remains Sober

Lately the leaders of some of the world’s biggest energy companies have been saying oil prices will remain depressed for some time – perhaps for the next five years – and now they’ve decided to cut their costs in the most painful way possible: massive job cuts.
Royal Dutch Shell announced July 30 that it expects to eliminate 6,500 positions. The announcement came the same day it reported that earnings in the second quarter were $3.4 billion, 33 percent lower than the $5.1 billion it made during the same period of 2014.
The same day, the British utility Centrica said it plans to cut fully 6,000 jobs and reduce the size of its division for producing oil and gas. The day before, Chevron Corp. of the United States expected to eliminate 1,500 positions.
And as oil producers struggle to rein in spending elsewhere in their operations, the pain is being shared by the oil service companies they rely on. The Italian energy contractor Saipem, for example, says it plans to cut 8,800 jobs in two years.
‘We have to be resilient in a world where oil prices remain low for some time,’ Shell CEO Ben van Beurden said in the statement. ‘These are challenging times for the industry, and we are responding with urgency and determination.’

This post was published at Zero Hedge on 08/03/2015.

Urban Carmel: Insiders Are Bullish While Outsiders Are Bearish

Summary: Corporate insiders are bullish equities at precisely the same moment that outside investors have become bearish. Other factors may intervene to drive the price of equities lower. But sentiment, at least short-term, is quite clearly biased in favor of higher prices. * * * There’s a marked divergence of opinions in the USSTOCK MARKETS at the moment.
On bearish side are equity investors. The ISE equity-only call/put ratio has closed below 100 in each of the last 3 days. This means equity investors are buying protection against falling share prices to an extreme degree. In other words, they are bearish and this is normally a positive for equity prices.
This ratio has only twice before closed below 100 three days in a row: mid-March and mid-November 2008. In both cases, the S&P was near a short-term low and rose over 10% in the weeks ahead. Both of those rallies later failed.

This post was published at Wall Street Examiner by Urban Carmel ‘ August 3, 2015.

Comex On The Edge? Paper Gold “Dilution” Hits A Record 124 For Every Ounce Of Physical

Over the few days, we got what was merely the latest confirmation that when it comes to sliding gold prices, consumers of physical gold just can’t get enough.
As the Times of India reported over the weekend, India’s gold imports shot up by 61% to 155 tonnes in the first two months of the current fiscal year “due to weak prices globally and the easing of restrictions by the Reserve Bank. In April-May of the last fiscal, gold imports had aggregated about 96 tonnes, an official said.”
This follows confirmations previously that with the price of gold sliding, physical demand has been through the roof, case in point: “US Mint Sells Most Physical Gold In Two Years On Same Day Gold Price Hits Five Year Low“, “Gold Bullion Demand Surges – Perth Mint and U. S. Mint Cannot Meet Demand“, “Gold Tumbles Despite UK Mint Seeing Europeans Rush To Buy Bullion” and so on. Indicatively, as of Friday, the US Mint had sold 170,000 ounces of gold bullion in July: the fifth highest on record, and we expect today’s month-end update to push that number even higher.

This post was published at Zero Hedge on 08/03/2015.

Why The Commodity Carnage Matters (In 1 Simple Chart)

How many more times will we be told that “it” doesn’t matter… or it is “transitory” with regard any and every flashing red warning signal from asset values that are not centrally manipulated with regard asset values that are ‘plunge protected’? Well to try and kill one of those myths off, we present the following chart… showing how a collapse in commodity prices is unequivocally bad for US equity markets…

This post was published at Zero Hedge on 08/03/2015.

China Stocks Open Marginally Higher As Regulators Unleash More ‘Measures’

Chinese stocks are opening flat to marginally higher – still lower from Friday’s close – despite the government unleashing yet more ‘measures’ in the name of stability. Having banned 5 accounts – reportedly including Fed-favorite Citadel – China is blaming excess market volatility on short-term short-sellers and has put in place curbs on short-selling that force traders to hold for at least one day. On the bright side, margin traders reduced exposure for the seventh day in a row, reducing outstanding balances to 5-month lows.. which leaves the median China stock trading at a remarkable 61x reported earnings (compared with 12x in Hong Kong).
As Bloomberg details,

This post was published at Zero Hedge on 08/03/2015.

VIX ETF Surges Off Record Low Crushing Contango Cruisers

Following our discussion of perhaps the most successful (and/or most risky) trades of the last decade – that of shorting the front-month VIX – we were less than surprised that VXX -the VIX ETF has collapsed to new record-lows this morning. A snap higher in VIX has been met by an avalanche of vol selling and, as we discuss below, the accelerating contango as expirations loom has encouraged yet more to take on unlimited risk positions to pick up pennies in front of the steamroller. All the time “The Fed has your back,” it appears traders believe the steamroller driver has his foot on the brake… As if on cue – VIX has spiked and VXX surged.
Record lows for VXX – The VIX ETF..

This post was published at Zero Hedge on 08/03/2015.

Here Comes The Next Trillion-Dollar Bailout

As boxers like to say, it’s the punch you don’t see that knocks you out.
In a world where a growing part of the financial system is hidden from view and excluded from official statistics, those are words to remember.
A couple of examples from the 2008-2009 crisis:
Fannie Mae and Freddie Mac were private companies through which the federal government funneled a lot of mortgage debt and to which it granted a kind of de facto backing, though it asserted confidently that this would never be needed. When the real estate bubble (inflated in large part by Fannie and Freddie) popped, government – read taxpayers – had to assume responsibility for pretty much the whole $10 trillion US housing sector. Over-the-counter derivatives are largely hidden by bank and hedge fund accounting tricks, but when that market blew up in 2008 it turned out that AIG, the world’s biggest insurance company, had enough of the instruments to bring down the whole financial system. The result was another huge bailout with taxpayer cash. Since bubbles tend not to repeat in exactly the same form, it’s reasonable to assume that the next Fannie or AIG will be something very different – like state and local pension plans, which for years have been putting away too little to cover the coming wave of retirements and are now starting to beg for help:

This post was published at DollarCollapse on August 3, 2015.

SP 500 and NDX Futures Daily Charts – Stick Save

Stocks were slumping most of the day, but managed to take back much of their losses in the closing minutes.
There is no sustainable recovery.
There cannot be a recovery while the causes of our problems cannot be discussed frankly, for the reasons cited in this intraday commentary here.
We may wish to have one. The statisticians and pundits may paint a rosy picture of one. But most are now aware of the huge discrepancy between what is said and what is done. And their anger is being reflected in the political landscape.
Years of complacent looting and personal privilege have made the plutocrats tone deaf to the message.
The lack of reform of the financialized economy that caused the last two bubbles and crashes will most likely cause the next one as well.
The primary reason is the corrupting power of money in politics, academics, the media, and most of the higher level functions in a society. They are caught, complicit, in a credibility trap.
The contributing reason is the after effects of a sustained draining of income and wealth from the bottom 99% to the top, as a consequence of policy and injustice.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

This post was published at Jesses Crossroads Cafe on 03 AUGUST 2015.

S&P Dares To Go There: Downgrades European Union To Negative Outlook

Just a few short years after they dared to downgrade the US, S&P has unleashed their worst on Europe:
*EUROPEAN UNION OUTLOOK REVISED TO NEGATIVE FROM STABLE BY S&P *S&P: EU TO AA /NEGATIVE FROM AA /STABLE – FOREIGN CURRENCY LT We are sure this will be met by S&P office raids throughout Europe, litigation over somethhing or other, and denials broadly from any and every unelected member of EU’s elite… because “when it’s serious you have to lie.”
As Bloomberg reports,

This post was published at Zero Hedge on 08/03/2015.


Good evening Ladies and Gentlemen:
Here are the following closes for gold and SILVER TODAY:
Gold: $1089.40 down $5.50 cents (comex closing time)
Silver $14.52 down 23 cents.
In the access market 5:15 pm
Gold $1085.00
Silver: $14.50
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a good delivery day, registering 256 notices for 25,600 ounces and on Friday we had 16 notices for 80,000 oz . Silver saw 1 notice for 5,000 oz for Friday.
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 235.52 tonnes for a loss of 59 tonnes over that period.
In silver, the open interest fell by 1159 contracts. The total silver OI continues to remain extremely high, with today’s reading at 185,926 contracts In ounces, the OI is represented by .930 billion oz or 132% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative.
In SILVER WE had 16 notices served upon for 80,000 oz.
In gold, the total COMEX GOLD OI rests tonight at 435,095. We had 256 notices filed for 25,600 oz today.
We had no withdrawals in gold tonnage at the GLD today / thus the inventory rests tonight at 672.70 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no change in silver inventory at the SLV / Inventory rests at 326.829 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on August 3, 2015.

US Economy Has Stalled, Economic Collapse Momentum Accelerates – Episode 733a

The following video was published by X22Report on Aug 3, 2015
Greek stock market reopened. S&P downgrades the Euro zone. Energy companies are laying off because of oil price drop. Spending slows and is the weakest since Feb. Manufacturing declines, the economy is collapsing. GM sales implodes but the government steps in to purchase the autos. Construction spending declines, new construction comes to a screeching halt. IMF changes its mind and says the continuation of sanctions will hurt the Russian economy. The US will issue more green cards than three states combined.

Gold Daily and Silver Weekly Charts – Claims Per Ounce to New High of 121:1

As you can see from the first chart below, the number of potential claims per deliverable ounce on the Comex has risen to a new record high of 121 to 1.
That can be corrected by higher prices for bullion that will prompt more legitimate sellers of actual bullion to take their stored gold and put it in the ‘registered’ for delivery category.
Or the trading desks of the banks and funds can continue to pummel the price with paper short selling, in the hopes of knocking down the open interest and the longs.
In the short term a fraud is relatively easy to sustain if you can compromise the ‘cops on the beat’ and you have powerful friends in the game with you.
In the longer term all such schemes collapse. But con men and other criminal sorts are rarely thinking about the longer term consequences.
And it is the character of our time that those who say they are all for reform and vigilantly seek out injustice in their own small area will so often not only ignore, but join in on the taunts and misery of others less fortunate, who are suffering their own injustices from the same perpetrators. It is all too easy to do if you act out of the self-interest, with your mind, and not for what is right out of a principled stand for what is just, with your heart.

This post was published at Jesses Crossroads Cafe on 03 AUGUST 2015.

This Chart Shows How The Fed Fiddles On Inflation While The Middle Class Burns

There are a lot of ways to define ‘inflation.’ There are a lot of ways to measure ‘inflation.’
Economists, the Fed, and Wall Street define ‘inflation’ to apply only to consumption goods, things we actually use and consume. Hence the name ‘Consumer Price Index.’ The purpose of the CPI was never really to measure ‘inflation’ however. Its purpose was to index government benefits and contracts. In the good old days, when people got cost of living increases in their paychecks, businesses also used it also to index wages. Younger workers today don’t know what that means. It’s ancient history.
The price of the roof over our head doesn’t count as a consumption good. When skyrocketing house prices caused government indexed pay and benefits to rise too fast in the late 1970s, the BLS stopped counting housing prices in 1982, coming up with the excuse that houses were not consumption goods.
Since then the BLS and the Fed considered housing an asset, and replaced house prices in the CPI with the made-up Owner’s Equivalent Rent (OER). That bogus stat is suppressed by a method which ends up with rent increases mimicking CPI in a circular process. So rents in CPI never rise at the actual rate at which they are rising in the marketplace. And the OER never comes close to the rate at which house prices are rising.

This post was published at Wall Street Examiner by Lee Adler ‘ August 3, 2015.

First Default By U.S. Commonwealth In History: Puerto Rico Fails To Make Required Debt Payment

Over the weekend Puerto Rico was supposed to make a modest principal and interest payment of some $58 million due on Public Finance Corp. bonds, which however few expected would be satisfied. As a reminder, on Friday, Victor Suarez, the chief of staff for Governor Alejandro Garcia Padilla, said during a press conference in San Juan that the government simply does not have the money.
Moments ago Melba Acosta, president of the Government Development Bank, confirmed as much, when he announced that only $628,000 of the $58 million payment, or just about 1%, had been paid.
Below is the full statement from Acosta on the service of PFC Bonds:

This post was published at Zero Hedge on 08/03/2015.

The Best And Worst Performing Assets In July And 2015 YTD

For commodities July was the cruelest month: whether driven by Chinese weakness or just algos frontrunning hedge fund liquidations, July was the worst month for commodities since the great oil crash of late 2014, but nowhere was it worse than oil, which entered into a bear market – its second in under one year – with WTI sliding 21%, its worst month since October 2008, while Brent suffered its biggest monthly decline in 2015. In fact one could be hard pressed to debate who had it worse: Chinese farmers stuck with underwater positions in an insanely volatile market, or commodity bulls.
But it wasn’t just commodities vs everything else: as Deutsche Bank observes, July proved to be an eventful month for markets (and volatile for some) as we saw a diverging performance between DM and EM. The carnage in China and commodities was a key highlight in otherwise what was a fairly positive month for DM credit, rates and equities.
Here are the details:

This post was published at Zero Hedge on 08/03/2015.