China to spark 2016 economic collapse, according to Marc Faber

August 2015 – ECONOMICS – Financial turmoil in China could spread throughout the world, potentially leading to a U. S. stock market crash in 2016. At least, that’s the view of renounced market analyst Marc Faber. America ‘is essentially the last man standing.’ Faber told Maria Bartiromo on Fox Business earlier this week. ‘I think it will spill over to the U. S.’ (Source: Fox Business, August 20, 2015.) Despite the country’s recent central bank decision to devalue the yuan, crashes in the Chinese stock market seem to be endless. The country’s major indices – the Shanghai and Shenzhen markets – have declined more than 30% over the last six weeks. With that, investors have been expressing their concern that a weak currency and slowing economy could spur capital outflows. ‘We don’t know exactly why China began to weaken its currency. It could be because of massive capital outflows,’ Faber explained.

This post was published at UtopiatheCollapse on August 23, 2015.

US Equity Futures Are Crashing

Moments ago, without any specific catalyst, US equity futures just plunged when in thin, illiquid tape, a seller took out about 30 consecutive bid levels and as of last check, the ES was down as much as -48 to just 1923, or 2.5%, after being down a modest -13 minutes ago.
It is unclear just what is going on, or whether some prop desk or hedge fund just got tapped out, and/or how the Fed will react but the last time we had action like this, the Fed confused a liquidating SocGen trader for an economic collapse, and cut rates by 75 bps in January of 2008. This time it does not have that luxury.

This post was published at Zero Hedge on 08/23/2015 –.

S&P, DAX, FTSE – When Markets Talk, Pay Attention.

Unlike government supplied statistics, which are always favorably skewed to misrepresent the lies being told, markets do not lie, not even manipulated ones like the stock market, actually pick almost any market. We gave up on the S&P as our primary market coverage a few years ago, unable to abide by the then Permanent Open Market Operations that were the impetus behind keeping stocks propped up. Faux government support kept on building, but we could not abet and support being long to help out. Our absence never mattered, except in the loss of followers, but the reasons mattered to us.
We never pay any attention to market news, almost all of which is worthless. What bears paying the most attention to is the actual market itself, and when it ‘talks,’ in the form of developing market activity, we take heed.
Patiently, we have been waiting for the sell side, once a top is confirmed. It appears a top is forming. The protracted TR activity over the past year could be either re-accumulation, in preparation for going higher, or it could be distribution in preparation to go lower. The action has had more of the earmarks of distribution, but the false government support has skewed activity, preventing normal corrections from developing. That can only go on for so long, and it may be so long to that form of market interference.

This post was published at Edge Trader Plus on August 24, 2015.

$GCZ15 – December Gold (Last:1159.90)

We saw gold’s rise steepen last week as the tempo of the stock-market plunge picked up. Under the circumstances, shouldn’t Friday’s climactic selling on Wall Street have produced a corresponding surge in the price of gold? Instead, bullion futures rallied to a modest new high Thursday night, only to recede and go flat while investors verged on panic the following day. We’ll give gold the benefit of the doubt for now nonetheless, since the lesser charts remain bullish. But we should play close attention to the bearishly impulsive abc pattern that took shape on the hourly chart as the week drew to a close.

This post was published at Rick Ackerman on Sunday, August 23, 2015.

Correction or Omen? Dow plunges 531 points in global selloff

August 2015 – NEW YORK – Stocks plummeted on global-growth fears for a second straight day Friday in a plunge that dragged the Dow industrials into correction territory. The global market rout pummeled stocks and commodities as fresh evidence emerged that China’s economy is slowing, spooking investors. The Dow industrials lost 530.94 points, or 3.1%, to close at 16459.75, putting it in correction territory, as defined by a 10% decline from a recent high. The S&P 500 dropped 64.84 points, or 3.2%, to close at 1970.89. The Nasdaq Composite fell 3.5%, or 171.45 points, to 4706.04. The Dow’s more than 1,000-point drop this week was the largest weekly drop since the week ended Oct. 10, 2008.
U. S. oil prices also briefly dropped below $40 a barrel on Friday, a level not seen since the financial crisis. Signs of a sharp slowdown in the world’s second-largest economy have unnerved investors since Beijing surprised markets last week by devaluing its currency. Shares in the U. S., Asia and Europe have tumbled, along with commodity prices as investors fretted about waning Chinese demand just as supplies are surging. The market turmoil has some traders exercising caution.
‘You have a situation that’s tough to play,’ said Christopher Cady, a New York-based trader. He said he closed out bets toward the end of the week that U. S. stocks would fall. ‘Nimble…is the new black.’ The pan-European Stoxx Europe 600 ended the session 3.3% lower, closing out its biggest week of losses since August 2011. The index has now lost nearly 13% since its April peak, entering correction territory. Earlier, the Shanghai Composite Index tumbled 4.3%, hitting its lowest level since March, despite Beijing’s efforts to prop up the market in recent weeks. In Japan, the Nikkei fell 3% to a six-week low.

This post was published at UtopiatheCollapse on August 23, 2015.

In Desperation Move, China Allows State Pension Fund to invest up to 30% into Stock Market

The desperation of the Central Planners of the Communist Party in China (and on Wall Street) is beginning to shine through once again in 2008 fashion. Today, per the South China Morning Post, this bit of news spells out the panic in Beijing:
The State Council said on Sunday that it will allow China’s pension fund to invest up to 30 per cent of its total 3.5 trillion yuan in net assets in equities and stocks, a likely bid to support the flagging market that billions of yuan in injected liquidity over the past week has failed to revive.
The much anticipated move from the top decision-making body was aimed at boosting returns at the fund, which has so far been limited to low-yielding treasury notes and bank deposits, Xinhua news agency reported.

This post was published at John Galt Fla on 23/08/2015.

SocGen: “Markets Have Lost Faith In Monetary Policies”

Aside from a few skeptical strategists, SocGen’s economists such as Michala Marcussen, have been ever so happy to drink the Kool-Aid of a US, and global, recovery that never comes and of a rate hike which until a few weeks ago was “imminent”… and suddenly isn’t even though nothing in the US economy has supposedly deteriorated. Which is why we were very surprised to read a note from none other than Marcussen, in which the formerly hopiumy economist , confirms what we have always known: that sooner or later, everyone will admit the truth.
From SocGen
Less confidence in central bank puts As noted above, the most notable feature of recent market price action is that there has been no visible comfort taken on risky assets from the idea that central banks may step in with further liquidity injections to alleviate the situation. To our minds, this reflects two main points. First, the fact that the tremendous amounts of liquidity injected to date have produced less than spectacular economic results. Clearly, markets have lost faith in the ability of unorthodox monetary policies to kick start the economy over time. This also fits the findings of academic literature suggestion diminishing returns from subsequent rounds of QE. Second, central banks have clearly become more concerned about the potential risks to financial stability from indefinitely inflating asset prices, suggesting that they may be slower to step in.

This post was published at Zero Hedge on 08/23/2015.

Risk Appears Seriously Wounded

Submitted by Jeffrey Snider via Alhambra Investment Partners,
Stocks aren’t quite as immune to financial disruption in the middle of 2015 as they had been previously. The last major, comprehensive selloff was also in tandem with ‘dollar’ disorder back last October 15. This time, the motion was more erosion than ‘event’; at least until the past week. Just like crude oil, stocks lost their momentum back in early May (and broader index price indications dating back to last July and the first ‘dollar’ rumble) and had more or less been stuck like the yuan doing nothing until the open break recently.

This post was published at Zero Hedge on 08/23/2015.

Angry Chinese Investors Capture Head Of Metals Exchange In Predawn Hotel Raid

Meet Shan Jiuliang.

He’s the head of Fanya Metals Exchange and he was captured in a daring predawn raid in Shanghai on Saturday.
As FT notes, “Fanya is a forum for trading minor metals like indium and bismuth that has also functioned as a shadow banking conduit – not only leveraging metal deposited with the exchange as collateral for loans, but offering high interest investment products to retail investors.”
If that sounds familiar to you, it should. Just last week in “The 8 Trillion Black Swan: Is China’s Shadow Banking System About To Collapse?,” we took a fresh look at the dizzying array of wealth management products and collective trust products that are, together, a CNY17.2 trillion industry in China. Summarizing a (very) long and convoluted story, WMPs are marketed to investors through banks as a high yielding alternative to savings deposits. Investors aren’t often aware of exactly what they’re investing in or how risky it might be or that in many cases, issuers borrow short to lend long resulting in a perpetual case of maturity mismatch.
“A key issue is whether the presumption of implicit guarantees is upheld or the authorities allow failing WMPs to default and investors to experience losses arising from these products,” the RBA said in a report, to which we responded that in the event investors are forced to take losses, “the key issue is what those investors will do next.”

This post was published at Zero Hedge on 08/23/2015.

Is it time to Panic because the DJIA was down almost 6% Last Week?

The world went into full hysteria mode last week trying to decipher the meaning of the Federal Reserve minutes on Wednesday, and selling off into the close on Friday with just under a 6% decline on the major indices for the week. Is this time to panic? CNBS doesn’t think so.
In fact few if any financial programs I took the time to watch or listen to (so you don’t have to) mentioned the words panic, recession, or bear market. Much like their counterparts in Europe, Asia, and the Middle East in fact the theme was to buy the dips once again and that ‘oh, this was the inevitable correction.’

This post was published at John Galt Fla on August 23, 2015.

“Savage Speed” – A Look Inside Market Crash Statistics

Submitted by Salil Mehta via Statistical Ideas blog,
It was surely a frightening week in global financial markets. The largest 500 American stocks (S&P) dropped 6%. China’s Shanghai Stock Exchange (SSE) doubled this risk, as it dropped 12%. Now there is an overall fear in the markets that we have not seen in years. While these perilous risk statistics should not be something new, the surprising jolt this week provides a renewed opportunity to review crash measures within a broader context, to boldly target your portfolio.
Let’s look at the worst weekly loss for the S&P, in each month from 2007 through August 14 (or right up until last week). Geometrically approximated for symmetry. We see in blue that the distribution of this monthly “worst weekly loss” has generally been similar to the same ranked values from the past couple of years (2103/2014). Now towards the bottom of the chart we can better ascertain that the more severe “worst weekly losses”, were even worse in the years earlier than this (so 2007 through 2012).
We’ll prove out these numerical measurements here, but if you are dispassionate about the mathematics then don’t fear. Please just skim what is immediately below -and head straight to the first illustration afterwards- to continue reading. In October 2008, the worst weekly risk was -20% (this makes October the 24th worst month for “worst weekly loss” of 24 months in 2007/2008). Hence it is plotted in red ~98 percentile at the bottom of the vertical axis below. Not perfectly the 100th percentile (0% rank) due to probability math. Also in the same 2007/2008 series, the next worst month for the “worst weekly loss” statistic was the following month of November. That month saw a -9% change and being 2nd worst out of 24 means being ranked about 4% higher on the vertical axis, from where the -20% data is shown:
2/24 (for second worst of 24) – 1/24 (for worst of 24) = 1/24 ~4% more favorable rank
Similarly all of the axis tick marks, for all of the complete 2-year periods shown, are ~4% apart on this inverse distribution axis (i.e., 98%, 94%, 90%, etc.) For 2015, up until this month of August there were 7 months, and the worst weekly loss of them was January’s -3% change. The lowest blue data shown represents that month (and 7th worst of 7 months is ~93 percentile at the bottom of the vertical axis). To summarize, the worst ~6% of months (100%-94 percentile) in 2007/2008 was about -9% and much worse than for 20015 where it was about -3%.

This post was published at Zero Hedge on 08/23/2015.

Lebanon Premier warns of economic collapse amid political crisis

August 2015 – BEIRUT, Lebanon – Lebanese Prime Minister Tammam Salam said the government may be unable to pay wages next month amid a political crisis that has left the country without a president or a functioning parliament. The impasse may also prevent the government from selling bonds, affecting the country’s credit rating, Salam told a news conference in Beirut on Sunday, a day after dozens were wounded when a protest against growing piles of garbage turned violent. ‘The garbage crisis is what broke the camel’s back, but the story is much bigger than this,’ Salam said. ‘Did you know that because of the failure to take decisions, we may not be able to pay the salaries of a large number of public sector employees?’ The inability to service the public debt through bond sales could push Lebanon’s rating down to the ranks of the ‘failed states,’ Salam said. Lebanon is rated B- at Standard & Poor’s, six levels below investment grade.

This post was published at UtopiatheCollapse on August 23, 2015.

“Long, Slow, And Painful”: Barclays Documents The End Of The Commodities Supercycle

Emerging markets will remain in focus this week as the world watches anxiously to see if China’s move to devalue the yuan will ultimately transform an already precarious situation into an outright crisis.
Slowing demand from China has been the major concern for commodity exporters and indeed, wide open capital markets (thanks to ultra accommodative monetary policies across the globe) have served to keep struggling producers afloat, perpetuating a global deflationary supply glut.
Saudi Arabia’s attempt to squeeze the US shale complex has only exacerbated the problem, as persistently low crude prices put further pressure on the commodities space as well as on the FX reserves of oil producing countries. When China devalued the yuan, it validated the suspicions of those who had assumed that the country’s economy was in far worse shape than anyone at the NBS was willing to admit. Additionally, it marked a new escalation in the global currency wars and threatens to undermine the export competitiveness of many an emerging economy.

This post was published at Zero Hedge on 08/23/2015 –.

An Analysis of Trump

I was unfamiliar with this blogger, thezman, until I saw this piece at Doug Ross’ Journal. The very first paragraph captured my attention because it captured my thoughts better than I have been able. The reservations regarding living to see the end of the absurd destruction that civilization is hurdling towards was especially relevant and consistent with my own. The analysis of Trump and the reaction of others is also consistent.
For equal-opportunity political haters like myself, this election is a juicy time. For politicians it is apt to be as dangerous to the political class as were the protests of the 1960s. Thezman’s exellent piece follows:
Something’s Happening Here I must admit I have enjoyed the Trump-a-palooza this summer. The truth is, I have thrown in the towel on America so I don’t think our elections mean very much. It’s just a question about how fast we intend to drive into the abyss. Being old I should be rooting for slow as that means I can reach escape velocity before it gets ugly. On the other hand, life is for living and sticking around long enough to see the collapse has its attractions.
I can go either way so the elections are just entertainment at this point.

This post was published at Economic Noise on August 23, 2015.

Why the Bear of 2015 Is Different from the Bear of 2008

Are there any conditions now that are actually better than those of 2008? It’s tempting to see similarities in last week’s global stock market mini-crash and the monumental meltdown that almost took down the Global Financial System in 2008-2009. The dizzying drop invites comparison to the last Bear Market that took the S&P 500 from 1,565 in October 2007 to 667 on March 9, 2009.
But this Bear is beginning in circumstances quite different from 2007-08. Let’s list a few of the differences: 1. Then: Markets and central banks feared inflation, as WTIC oil had hit $133 per barrel in the summer of 2008. Now: As oil tests the $40/barrel level, markets and central banks fear deflation. 2. Then: China had a relatively modest $7 trillion in total debt, considerably less than 100% of GDP. now: China’s debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, an astonishing 282% of gross domestic product (GDP) 3. Then: Central banks had a full toolbox of unprecedented monetary surprises to unleash on the market: TARP, TARF, BARF (OK, that one is made up) rescue packages and credit guarantees, quantitative easing (QE), zero interest rate policy (ZIRP) and direct purchases of mortgages, to name just the top few.

This post was published at Charles Hugh Smith on SUNDAY, AUGUST 23, 2015.

Crude Snaps Below $40 : Gartman Stopped Out Of Oil Long

It was inevitable.
As we reported first on Friday, the best contrarian indicator the market has ever known, perhaps even better than the legendary FX titan, Tom Stolper, Dennis Gartman recommended clients invest their monopoly money alongside his, in a short gold, long crude trade: one which has lost about 5%on both legs in 24 hours. To wit:
CRUDE OIL PRICES ARE LOWER BUT WE ARE CHANGING OUR VIEW ON PRICES for having been overtly and rather relentlessly… and very publically… bearish, we are this morning turning bullish of crude oil and we are turning so because the term structure shifts mandate that we do so…. We do not make this statement lightly for this is a material shift in our view of the energy market… a very material shift. * * *
Amidst the carnage of the global stock markets this morning and even in light of the sustained bear market in crude oil, the narrowing of the contangos in Brent and WTI brings us to become a buyer of crude as noted at length above. We’ll buy a unit of crude oil, split between Brent and WTI, upon receipt of this commentary. We shall, for the moment, give these prices the latitude to move 3% against us, hoping that we can tighten that up when we return Monday.

This post was published at Zero Hedge on 08/23/2015 –.

Caught On Tape: Massive Explosion At US Weapons Depot In Japan

Explosions and implosions have become an everyday occurrence of late in Asia.
Midway through the month the explosion of carry trades stemming from China’s devaluation of the yuan resulted in an untold number of “casualties” (figuratively speaking). Two days later, a tragic explosion at the Chinese port of Tianjin took the lives of 121 people and injured over 700 more. Next, Sakurajimathreatened to erupt in Japan triggering fears of a nuclear meltdown at Sendai. Then, the Malaysian ringgit imploded along with trade in Indonesia and finally, on Saturday, a second chemical explosion rocked China killing one worker at a plant in Shandong.

This post was published at Zero Hedge on 08/23/2015.