July 7, 2015

Bits Bucket for July 7, 2015

Post off-topic ideas, links, and Craigslist finds here.

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Comment by frankie
2015-07-07 00:54:07

The sell-off on Chinese stocks continued on Tuesday despite government efforts to bolster the markets amid investor unease that premier Li Keqiang failed to mention the deepening crisis in a statement on the economy.

Before the market opened, Li said in comments on a government website that China had the confidence and ability to deal with challenges faced by its economy, but had nothing to say on the three-week plunge that has knocked around 30% off Chinese shares since mid-June.


Comment by frankie
2015-07-07 01:04:10

HONG KONG: Asian markets mostly recovered Tuesday from the previous day’s Greece-fuelled sell-off, but Shanghai sank again as analysts warned government measures to staunch a recent rout will likely not be enough.

The euro held its ground after Greece’s weekend vote against creditors’ austerity proposals, with dealers hoping contagion will be limited if a bailout reform deal cannot be reached.

Crude prices also edged up after taking a hammering Monday on demand fears owing to the Greek crisis and China’s struggles to stabilise its stock markets.

Tokyo rose 1.34 percent, Sydney added 1.75 percent, Hong Kong gained 0.62 percent, Taipei advanced 0.50 percent and Wellington put on 0.63 percent. Seoul lost 0.52 percent.

But Shanghai dived 3.21 percent at the open, after Monday’s uptick, before recovering to sit 1.45 percent lower.


MUMBAI: The benchmark sensex bounced back 115.97 points to close at 28,208.76 on late buying in some blue chips, led by healthcare, oil and gas, realty and FMCG sector stocks.

The markets recovered from its initial losses of over 317 points tracking weak Asian cues as Greek voters said ‘no’ to bailout terms as demanded by its creditors.

The sensex, which had recaptured the 28,000 level, resumed lower at 27,857.20, slipped further to hit the day’s low of 27,774.80.

However, it wiped off losses completely on the back of across-the-board buying at the fag end of the session and rebounded to the session’s high of 28,235.31 before ending at 28,208.76, a gain of 115.97 points, or 0.41 per cent.

It had gained 146.99 points in the previous session. Similarly, the 50-share Nifty regained the 8,500 mark by rising 37.25 points, or 0.44 per cent, to end the day at 8,522.15 after shuttling between 8,386.15 and 8,533.15.

For both indices, the readings were the highest close in nearly 2-1/2 months.


India as the new China, only a matter of time before someone starts singing that.

They can start by singing this

HYDERABAD: Taxi-hailing app Uber will invest $50 million in Hyderabad over the next five years to establish a facility that will house hundreds of its employees and would be its biggest international office.


Comment by frankie
2015-07-07 01:07:00

Shares on China’s benchmark index slid again, defying attempts by policy makers to halt the worst month-long fall in more than two decades.

Since Monday’s close, more than 200 companies have halted trading in their shares, joining a growing number of businesses trying to shield themselves from the market tumble.

According to the Securities Times, a paper published by the Shenzhen Stock Exchange, 760 companies — more than a quarter of all A-share listed companies on the Shanghai and Shenzhen exchanges — had suspended trading in the past week.


People concentrate on the very small mouse Greece, meanwhile the Elephant herd in the room tramples on.

Comment by AmazingRuss
2015-07-07 08:14:08

It’s only a flesh wound.

Comment by frankie
2015-07-07 01:09:53

Second quarter earnings for the world’s biggest smartphone maker, Samsung Electronics, are likely to miss expectations, the tech giant has said.

The South Korean company forecast that its operating profit from April to June is likely to fall 4% from a year ago to 6.9tn won ($6.13bn; £3.9bn), lower than forecasts of 7.2tn won.

Its sales also fell 8% to 48tn won, below expectations of 53tn won.

The company is struggling to see growth in a saturated smartphone market.


Bugger, bugger and bugger not looking good for my annuity. A long career of wage slavery lies ahead I fear.

Comment by In Colorado
2015-07-07 07:47:36

The company is struggling to see growth in a saturated smartphone market.

I wonder how many people are having second thoughts about plunking down $600 for a telephone?

Comment by frankie
2015-07-07 10:05:07

$600 I wish it is £600 here that is approximately $900.

Comment by In Colorado
2015-07-07 11:48:52

Why is that? The phones sold in the UK come from the same Foxconn sweatshops in China that make the ones sold in the USA. What’s keeping UK buyers from buying an unlocked iPhone from Amazon or some other e-tailer in the USA and having it shipped to the UK?

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Comment by Ethan in Northern VA
2015-07-07 14:41:38

The radios are set for different spectrums?

Not sure, I know that prevents me from getting an overseas Motorola Droid and running it on TMobile with HSPDA+/LTE.

Comment by Califoh20
2015-07-07 11:41:34

phones are all about “payments” now. ATT’s NEXT program, Iphone 6 is $25 mo. Sure $700, but only $25 a month.

Comment by In Colorado
2015-07-07 11:50:08

Do brittle smart phones even last that long?

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Comment by Califoh20
2015-07-07 13:25:13

ATT: and for $9 a mo, you get “insurance” with a $199 deductible! yipeee!

Comment by oxide
2015-07-07 12:16:48

Everything is all about “payments” now, and points, and rewards programs, and surveys, and other excuses to bother me. At this point, I feel like supporting Wal-Mart because it’s practically the only place I can walk in, buy something cash, and take it home and PWN it outright with no one the wiser.

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Comment by Califoh20
2015-07-07 13:28:02

BA and AMEX will give you 50k pts to use their credit card. 50k will get two people to Hawaii and back from LAX for only ~$40 in taxes. Some of the CC games are worth playing.

Of course, $25 if you want to check a bag.

Comment by Mafia Blocks
2015-07-07 23:15:58

“Everything is all about “payments” now,”

For empty pockets and debt donkeys it is.


Comment by Professor Bear
2015-07-07 01:25:33

Are the many support measures to stop China’s stock market panic working as planned?

Comment by Ben Jones
2015-07-07 04:45:57

‘On Tuesday, the Shanghai stock index opened 3.21 per cent lower, wiping out short-lived gains from a day earlier. The Financial Review reports trading has been halted in more than 25 per cent of Chinese listed shares — 700 mainly smaller stocks — in what appeared to be the latest move by the government to stop the rout.’

‘But some analysts were already questioning whether current levels were sustainable following a huge run-up in Chinese shares over the past year. “It’s coming to a point where you’re covering one bad policy with another,” Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management, told Bloomberg News.’

‘Regulators have reduced the number of planned share sales to ease fears of a glut.

Shares of some state companies including PetroChina Ltd., Asia’s biggest oil producer, and China’s four major state-owned commercial banks rose by close to 10 per cent. Trading of almost 900 other companies — out of a total of 2,802 on exchanges in Shanghai and the southern city of Shenzhen — fell by the maximum 10 per cent daily limit permitted by regulators, according to the financial news website Hexun.com.’

‘Millions of novice investors piled into the market as the Shanghai index rose more than 150 per cent beginning late last year. Some made big profits but the slump has left many with shares worth less than they paid and hoping for a rebound so they can sell.’

“I hope I can bow out of the stock market after I break even,” said Liu Yun, a Beijing schoolteacher who put 80,000 yuan ($17,210) into the market since last year and now has shares worth 62,000 yuan ($13,340).’

‘The reduction in the number of new public stock offerings announced Friday — to 10 in July from 28 previously planned — will hamper party plans for state companies to pay off debts with proceeds from share sales. Investor unease could hurt official efforts to encourage state companies to rely more on capital markets than on loans from state banks. Such anxiety also might set back government efforts to encourage the public to invest for retirement to ease demand for social spending in an ageing society.’

“I am down on the stock market for the coming two years,” said Yu Xing, CEO of a company in the eastern city of Nanjing that makes streaming content for websites. He said he has lost one-quarter of his 400,000 yuan ($86,040) investment since late last year.’

‘The decline has wiped out about 15 trillion yuan ($3.23 trillion) in market capitalisation. Dong Tianyu, a consultant in Shanghai, said he and his wife invested 50,000 yuan ($10,760) in stocks at the end of last year. They made a quick 50 per cent profit but that turned to a 10,000 yuan ($2,150) loss. Now, they are waiting for prices to rebound so they can sell.’

“I will sell once our shares come back to 50,000 yuan, and I will not consider investing again,” said Dong. “I am not optimistic about the stock market in the long run.”


Comment by palmetto
2015-07-07 04:52:24

“I will sell once our shares come back to 50,000 yuan, and I will not consider investing again,” said Dong. “I am not optimistic about the stock market in the long run.”

“I hope I can bow out of the stock market after I break even,” said Liu Yun, a Beijing schoolteacher”

Heh. Reminds me of underwater homeowners waiting for “the market to come back”.

Comment by palmetto
2015-07-07 05:24:19

Here’s an interesting nugget, can China keep Miami’s condo bubble from bursting:


Some of the comments are very revealing, a few of the posters had considered purchasing Miami condos after the crash and decided not to, due to the carrying costs involved. I think one said that even if the condo was mortgage free, the other costs were insane.

So, even if some Chinese do buy, what happens if they get tired of paying the monthly nut?

Probably a moot point anyway, given the situation at this moment in time.

Miami looks to be a day late and a dollar short with respect to the Chinese market.

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Comment by Bluto
2015-07-07 10:34:20

Aside from the carrying cost if a Florida developer can gain control of a complex and then 80% of unit owners vote for an apartment conversion the holdouts can be forced to sell at a loss even if they have been totally reliable on all payments.


Comment by Albuquerquedan
2015-07-07 06:02:58

Heh. Reminds me of underwater homeowners waiting for “the market to come back”.

Depending on the market many did get back to even. I think that many people did not read the fine print on the stock market rescue. The Chinese firms agreed to buy their shares when and if their share prices dropped below the close on Friday. The market is still higher than it was on the close of Friday. They intervened both Monday and Tuesday when the market was below the close. The intervention has hardly failed.

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Comment by Ben Jones
2015-07-07 06:10:14

‘The intervention has hardly failed’

I saw Bill Cosby say the same thing just now on TV.

Comment by Professor Bear
2015-07-07 06:19:31

Give up, dude. You can stick a fork in the Chinese stock market.

Comment by Albuquerquedan
2015-07-07 06:25:57

You were saying that about the Chinese housing market just a few months ago, you are my contrarian indicator since you are always wrong, a person just has to do the opposite of what you say to be right:


Comment by Professor Bear
2015-07-07 06:50:45

This is starting to remind me of how you steadfastly kept the faith in the Rasmussen poll prediction for a 2012 Romney win right up until the bitter end. The Greek crisis is creating the same kind of “perfect storm” situation for the Chinese stock market that Hurricane Sandy did for 2012 Republican election prospects.

All hope abandon, ye who enter here.

– Dante

Comment by Albuquerquedan
2015-07-07 06:57:00

The fact that after seeing all the posts that prove I never made a prediction and neither did Rasmussen on the election, that you still say I did just demonstrates that you are an ideologue on every issue incapable of being persuaded by the facts. You still believe that Obama does not deserve the blame for the Fed policy despite appointing the entire board. You just are incapable of learning.

Meanwhile this is interesting for the people that really are trying to figure out what is going on:


Comment by Professor Bear
2015-07-07 07:07:39

Today’s massive crash: China’s stock market

Tomorrow’s massive crash: China’s real estate market

Comment by Albuquerquedan
2015-07-07 07:10:04

This is an example on how the CAGW hoax can cause real environmental damage, just as the wind turbines kill endangered birds and solar can fry them, if you believe that co2 is a pollutant rather than a beneficial gas, you ignore a lot of real environmental damage, China will regret this and Obama encouraged it by his deal with China:


Comment by Professor Bear
2015-07-07 07:13:08

You can tell AlbuquerqueDan is getting desperate when he plays the Obama card.

Comment by Professor Bear
2015-07-07 07:25:02

Red flag warning!

Free exchange
China’s stockmarket crash
A red flag
Jul 7th 2015, 9:36 by S.R. | SHANGHAI

CHINA is certainly not the first country to try to prop up a falling stockmarket. The central banks of America, Europe and Japan have all shown form in buying shares after crashes and cutting interest rates to cheer up bloodied investors. But the circumstances and the manner of China’s intervention of the past ten days make it an outlier, worryingly so.

The trigger in China’s case is perplexing. Yes, the stockmarket is down a third over the past month, but that has simply taken it back to March levels; it is still up 80% over the last year. Growth, though slowing, has stabilised recently. Other asset markets are performing well. Property, long in the doldrums, is turning up. Money-market rates are low and steady, suggesting calm in the banking sector. The anticipated correction of over-valued stocks hardly seems cause for much anguish.

Yet China’s intervention has screamed of panic. Had the central bank stopped at cutting interest rates—justifiable support for the economy when inflation is so low—that would have been reasonable. Instead, there has been a spectacle of ever-more drastic actions to save the market. Regulators capped short selling. Pension funds pledged to buy more stocks. The government suspended initial public offerings, limiting the supply of shares to drive up the prices of those already listed. Brokers created a fund to buy shares, backed by central-bank cash. All the while, state media played cheerleader. Far from saving the market from drowning, the succession of life buoys only pushed it further under water. The CSI 300, an index of China’s biggest-listed companies, fell almost 10% over seven trading days after the rate cut. ChiNext, an index of high-growth companies that is often described as China’s Nasdaq, fell by 25%.

Theories have flourished about why the government has waded in so heavily. The apparent desperation is, some believe, a sign that officials see a looming economic collapse, and are trying to staunch the wound before social upheaval ensues. That story is intriguing, but it is not the most likely.

Lost in all the drama about the stockmarket is that it still plays a surprisingly small role in China. The free-float value of Chinese markets—the amount available for trading—is just about a third of GDP, compared with more than 100% in developed economies. Less than 15% of household financial assets are invested in the stockmarket: which is why soaring shares did little to boost consumption and crashing prices will do little to hurt it. Many stocks were bought on debt, and the unwinding of these loans helps explain why the government has been unable to stop the rout. But this financing is not a systemic risk; it is just about 1.5% of total assets in the banking system.

If economic stability is not in peril, why then the panic? The most compelling explanation is politics. The government has staked much credibility and prestige on the stockmarket. When the going was still good, the official press was chock-a-block with articles about how the rally reflected the economic reforms that Xi Jinping, China’s top leader, was set to push. Li Keqiang, the premier, said repeatedly that he wanted equity markets to provide a bigger share of corporate financing—comments, from punters’ perspective, not unlike waving a red cape in front of a bull. The sudden end to the rally is the first major dent in the public standing of the Xi-Li team. The botched attempts to stabilise the market only make them look weaker, giving succour to their critics.

Comment by Prime_Is_Contained
2015-07-07 07:37:20

The Chinese firms agreed to buy their shares when and if their share prices dropped below the close on Friday.

And where do they get the endless supply of cash with which to make these purchases?

Comment by Albuquerquedan
2015-07-07 07:47:37

They do not need an endless supply and how does any company even Apple get the money to buy back shares?

Comment by Albuquerquedan
2015-07-07 07:49:51

Comment by Professor Bear

2015-07-07 07:13:08

You can tell AlbuquerqueDan is getting desperate when he plays the Obama card.

And being the ideologue PB will do anything but answer the question on what blame Obama shares for the biggest transfer of wealth to the rich in the history of world due to monetary policy.

Comment by Professor Bear
2015-07-07 08:31:16

People who believe AlbuequerqueDan and their money are soon parted.

Crow for dinner again tonight!?

How Chinese Stocks Fell to Earth: ‘My Hairdresser Said It Was a Bull Market’
Having opened millions of brokerage accounts to play a rally, Chinese investors face big losses
Stock investors monitor prices in a brokerage house in Fuyang in central China’s Anhui province.
Photo: Associated Press
By Shen Hong
Updated July 6, 2015 4:11 a.m. ET

SHANGHAI—On a hot Sunday in mid-June, around 600 eager stock investors packed the largest ballroom at the Grand Hyatt in Lujiazui, Shanghai’s equivalent of Wall Street.

With Chinese stocks at a seven-year high, the investors had gathered to listen to a talk by one of China’s top fund managers, Wang Weidong, of Adding Investment. The crowd was so large, the air conditioning couldn’t keep up and hotel staffers brought in chairs and bottled water for the participants.

The Shanghai Composite Index had just hit a seven-plus-year high of 5178.19 that Friday—it closed at 5166.35 that day—and was up 162% from its low in 2014.

“The 4000 level was only the beginning of the bull market,” said Mr. Wang, citing one of a string of editorials in government-controlled media that predicted big returns. Mr. Wang ended his talk by telling the investors to cancel their holidays to ride the market. “They say the world is too big and I need to go and take a look,” he said. “I would say, the stock market is hot, so how can I leave it behind?”

Today the Shanghai index and smaller, more-volatile indexes in Shenzhen are off more than 25% from highs reached in June.

Even after the peak, new investors opened millions of brokerage accounts so they could play the rally. Sophie Wang, a 32-year-old college art teacher in Nanjing, said in a recent interview that she opened her first stock trading account two weeks ago and bought some shares on “the advice of my hairdresser.”

Ms. Wang said her holdings are down 32%. “I don’t really follow news on stocks that closely. My hairdresser said it was still a bull market and I needed to get in,” she said. She said she didn’t know what to do when the market started falling and she is still holding her shares.

Others have soured on the market after big losses. Anita Lu, a public relations executive in Shanghai, put most of her savings in Sichuan Goldstone Orient New Material Equipment Co. Ltd., a Chengdu-based pipe maker that trades on China’s small-cap ChiNext market. That was in late May when the stock was at 140 yuan ($22.86). She sold it last week at 44 yuan. “I will stay away from stocks as long as I can,” she said.

Comment by Prime_Is_Contained
2015-07-07 08:39:34

Apple doesn’t set an absolute price-target for their stock, below which they have publicly guaranteed that they will continue to buy. See the difference?

Comment by Albuquerquedan
2015-07-07 09:20:44

yes more transparency in China? Only the lucky few probably including people in the Congress and White House get to know where Apple buys.

Comment by Prime_Is_Contained
2015-07-07 09:35:24

LOLZ, I want some of what you are smoking…

No, Apple and other large companies in the US publicly announce the maximum AMOUNT of money that they will spend on repurchases. It is definitely not unlimited. And it is not a guarantee that they will purchase below a set price, in an attempt to set a floor on pricing. See the difference now?

Comment by Albuquerquedan
2015-07-07 11:01:22

Prime, I understand what you are saying a believe me I know what the law requires I have been involved in class action securities litigation but we are talking past each other. Yes, there is a difference but is our system really better considering the totality of the circumstances? Of course, private corporations do not announce it but is it necessarily wrong for the SOEs to be concerned not only with shareholder interests but national interests when their status as an SOE has historically given them access to things like preferential interest rates? I was being flippant but my point is valid that the secrecy in our system can be exploited by the corrupt to create crony capitalism and I believe we are there. They do things differently in China but that does not mean it is corrupt or wrong under their circumstances. How, is the little investor hurt by knowing exactly when a SOE will buy shares? I think what would hurt the small investor would be the big brokerage firms knowing that information and not the small investors.

Comment by Albuquerquedan
2015-07-07 11:39:23

Take for example Fannie Mae probably one of the closest things we have to a SOE. The U.S. government is taking all of its profits despite it having shareholders. It has more than given the Federal government back all of the money loaned to it with considerable interest. But the Obama administration is using it like a cash cow. Thus, China’s requirement that its SOEs step up and support the market looks very benign in comparison.

Comment by oxide
2015-07-07 12:25:37

Wait, how did we get from hydroelectric dams in China to Obama transferring wealth to the rich?

And I thought that you wanted Obama to transfer wealth to the rich? You wanted the US to employ supply-side economics (as if we don’t already), and supply-side transfers wealth to the rich, so shouldn’t you be praising Obama?

Yes, let’s all be like China. Their supply side is working so well that the workers are getting caught in suicide nets, anyone with money is fleeing to safe houses in California, and the government has to order the factories to shut down for a couple weeks just to hold a swim meet.

Comment by AmazingRuss
2015-07-07 13:05:39

Anything to divert attention from that ever-growing mound of crow on his plate…

Comment by Albuquerquedan
2015-07-07 13:08:40

Supply side has worked so well that they have gone from earning less than a dollar a day to having a per capita income that makes them a middle income nation by world standards although they would be poor by American standards. Your economics was and is being tried in Greece, I think there are more than a few suicides over there.

Comment by AmazingRuss
2015-07-07 16:31:08

Yet despite these bounteous incomes, only a very few of them can afford the massively oversupplied housing.

There’s a big pocket of nothing in the middle of the Chinese economy.

Comment by Professor Bear
2015-07-07 07:51:19

Cargo cultism is the new black.

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Comment by Blue Skye
2015-07-07 05:24:35

“hamper party plans for state companies to pay off debts…”

The math is problematic. How do you offload $10 Trillion of corporate debt on the working class (and their grandmothers) who have some fraction of the $1 Tr in total bank savings?

Comment by Ben Jones
2015-07-07 05:41:38

Oh dear, China bull yells fire:

‘Looking to bargain hunt the recent plunge in Chinese stocks—bid up in an “enormous speculative frenzy” over the past year—would be like “catching a falling knife,” former Morgan Stanley Asia Chairman Stephen Roach said Tuesday, just days after returning from a trip to China.’

‘Chinese stocks were volatile again overnight, but closed well off session lows, as investors remained doubtful of the efficacy of Beijing’s recent market rescue measures. “The bubble is bursting” and predicting the bottom is anyone’s guess, Roach told CNBC’s “Squawk Box”.


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Comment by Ben Jones
2015-07-07 06:17:21

“Where is the promised 120 billion yuan?” asked one retail investor from Hangzhou, who gave his surname as Liu. “It’s all going to blue chips. Don’t they know that retail investors are all trapped in the small caps? My stocks opened up 10 percent but closed down the (10 percent) limit!”

‘Traders are increasingly nervous about the unusually large number of Chinese companies asking for their shares to be suspended from trading, fearing that many of them are looking for excuses to duck out of the turmoil.’

‘About a quarter of the roughly 2,800 companies listed in Shanghai and Shenzhen had filed for a trading halt by the close on Monday, and on Tuesday the Securities Times said another 200 announced a suspension.’

‘Lei Mao, assistant professor of finance at Warwick Business School, said measures to support the market distorted the allocation of funds and trading behaviour and could create the conditions for further sharp falls. “Even an optimistic investor should not participate in the market for now,” he said.’


‘Where is the promised 120 billion yuan?’

‘Hey, you f-d up. You trusted us.’

Comment by Blue Skye
2015-07-07 06:33:00

“blue chips”

Government owned entities.

Comment by Professor Bear
2015-07-07 06:56:20

‘Hey, you f-d up. You trusted us.’

You bring to mind a hilarious comic strip that appeared during the U.S. Subprime Crisis:

The Subprime Primer

Comment by Oddfellow
2015-07-07 06:56:44

what’s chinese for ‘trapped in the small caps’?

Comment by Blue Skye
2015-07-07 07:00:25


Comment by Professor Bear
2015-07-07 07:08:39

What’s Chinese for “lying, backpedaling and denial”?

Comment by tresho
2015-07-07 11:26:28

What’s Chinese for “lying, backpedaling and denial”?

Comment by Professor Bear
2015-07-07 12:00:49

Tresho, you’re awesome!

Comment by This is Just me
2015-07-07 13:59:32

I had not seen that comic strip,

Comment by Albuquerquedan
2015-07-07 11:50:18

The Chinese have a total of 21 trillion dollars in savings and I have linked it many times. You can’t be saving four to five trillion of your income every year and only have one trillion dollars to fall back on.

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Comment by Blue Skye
2015-07-07 12:08:31

Not true, and you’ve been called on this BS many times.

Comment by Professor Bear
2015-07-07 12:19:47

The persisence of the BS barrage in the face of an all out collapse of China’s stock market is undeniably impressive.

Comment by Albuquerquedan
2015-07-07 12:22:24

And I am still waiting for you to show me one link that says that they only have one trillion dollars in savings. Bloomberg and Reuters etc. say they do, I do believe that they may include some assets not normally called savings. I do not want to get into a semantics argument over “savings” but what is clearly true is they have at least 21 trillion dollars in assets to buy that ten trillion dollars in debt.

Comment by Albuquerquedan
2015-07-07 12:27:32

Just one person refute the article it is easy to say BS it does not take any intelligence at all. Provide a source, as I stated above I think they may have included some assets not normally called savings but they certainly have the assets to buy equity in the corporations to eliminate the debt:


Comment by Blue Skye
2015-07-07 16:00:39
Comment by Blue Skye
2015-07-07 17:25:59

The above from the Ministry of Truth.

A country with 20,000 Yuan per disposable income over the past “miracle” decade. 200 Tr yuan. The period before is insignificant. $30 Tr US. They did not save $27 Tr out of $30 Tr.

They had a $27 Tr debt expansion. That is not savings. Ironic though.

Comment by Professor Bear
2015-07-07 19:25:41

Note this was last night’s news. The latest Chinese market news is that the market is still dropping like a rock with no bottom in view yet.

El-Erian: Keep a close eye on Chinese stocks
Greg McKenna, Business Insider Australia
Jul. 6, 2015, 11:39 PM
Mohamed El-ErianYouTube / TEDx TalksMohamed El-Erian

Chinese authorities are throwing everything at Shanghai stocks in order to stop the bubble bursting and having wider social or economic consequences for the Chinese economy.

In a Facebook post this afternoon Allianz’s Mohamed El-Erian has given a clear warning to investors, and the Chinese government, that they need to watch how these measures perform in coming days.

El-Erian wrote:

Lots of people will (and should) be keeping a close eye on Chinese stocks this week, starting with the government.

In partnership with brokerage firms, the authorities opted for a big bang package over the weekend to stabilize what had been a volatile and rapidly correcting market (chart below from cnbc.com). This intervention reflects concerns about the risk of an adverse economic and social fallout.

The key, as El-Erian, and anyone who has seen how markets like to push against “lines in the sand” is that “it did not take long for markets on Monday to test the robustness of the measures. The same is happening at the start of Tuesday’s session.”

Indeed, the Shanghai composite is down 3.7% in trade this morning with the CSI300 off 5.19%.

Comment by mrquoi
2015-07-07 04:12:59

I haven’t checked in at the HBB in years. And good lord here it’s like 2007 all over again. WTF? I feel like Rip Van Winkle — who is loaning all the stupid money and what investors are sucking that up, again?

I just moved to Salt Lake City where teh stupid is in full force. Cruddy little bungalows in the burbs for $500K. Loads of live/work/urban condos which is silly for this town. Construction on every empty lot. Did everyone’s rich uncle die?

Anyone up for explaining how we are in this same mess again, slowly, because my brain is so close to exploding.

Comment by Combotechie
2015-07-07 06:14:16

“Anyone up for explaining how we are in this same mess again, slowly, because my brain is so close to exploding.”

Here’s my shot:

The PTB thinks it can save the economy if it can get schmucks to think they are wealthy because if schmucks think they are wealthy then they will behave as if they are wealthy, meaning they will spend as if they are wealthy.

If schmucks spend as if they are wealthy then there will be a lot of money “trickling down” through the economy, meaning there will be a lot of money flowing through the economy. If money flows through an economy it generally means the economy is healthy.

Schmucks can think they are wealthy if what they own goes up in price. They can also think they are wealthy if what they THINK they own goes up in price.

If a mortgage is floated to a schmuck on a house and the price of the house goes up then the schmuck will think he is wealthy because he thinks he owns the house. It doesn’t really matter if he is really wealthy or not, it only matters that he thinks he is wealthy because his behavior is based on what he thinks.

So the PTB want schmucks to think they are wealthy and their favorite way of doing this is to somehow make the prices of houses go up. And this is what they did.

Comment by Combotechie
2015-07-07 06:17:28

One way to control the way home buying schmucks think about what they own is to refer to them as “homeowners” (which they are not) instead of “homebuyers” (which they are).

Comment by salinasron
2015-07-07 10:02:19

“homebuyers” only if they pay cash otherwise they are bank property renters “banklessee”.

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Comment by Prime_Is_Contained
2015-07-07 10:34:34

otherwise they are bank property renters “banklessee”.

There is one significant difference: they either have to bear the losses (or gains, though that seems unlikely now), or walk away and take the hit to their credit-rating.

Comment by Combotechie
2015-07-07 06:39:01

Also …

Home prices are not “set”, instead the prices are “bid on”. Prices are bid up and they are bid down.

If prices are bid up then whoever owns a comp get to see the “value” of his house rise, he gets to see his wealth increase. This makes him happy and his happiness just may translate into spending - which is what the PTB want him to do.

But this bidding up (and bidding down) of prices is something that is done by strangers - strangers who have access to money.

If these strangers are of sound mind then the prices of what they buy will reflect this. But if these strangers have gone crazy then prices will reflect this also.

So one’s wealth as determined by the piece of his house could really - at root - be determined by people who are crazy.

Comment by Combotechie
2015-07-07 06:41:05

“people who are crazy” = “strangers who are crazy”

Strangers who are easily manipulated by the PTB.

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Comment by Combotechie
2015-07-07 06:54:43


“- strangers who have access to money” is not the same thing as saying strangers who HAVE money.

Having money and having access to money are two quite different things.

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Comment by salinasron
2015-07-07 10:08:32

““Anyone up for explaining how we are in this same mess again, slowly, because my brain is so close to exploding.”

So is mine but it’s building up a hatred against financial lending institutions and banks. We as a nation should be demanding that they hold the debt from bad lending and not pass it on to the rest of us. Let GS go the way of the dinosaurs!

Comment by Ol'Bubba
2015-07-07 05:21:17

At what point does investing in the Greek ETF (symbol is GREK) make sense?

It was down nearly 7.5% yesterday. For context, the Eurozone ETF (symbol: EZU) was down 3.16% and the developed markets EFT (symbol: EFA) was down 2.02%.

Comment by Professor Bear
2015-07-07 06:25:02

Try not to catch yourself a falling knife. I’d wait until there’s universal agreement that you’re going to lose money purchasing the Greek ETF before I would buy.

Comment by Ol'Bubba
2015-07-07 07:30:51

Good point. Greek banks also make up a substantial portion of the holdings of that particular ETF (along with a cement company and two soccer clubs).

Comment by Max Power
2015-07-07 11:34:40

No self respecting country can have an economy based on banks, construction and sports! Oh wait…

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Comment by Raymond K Hessel
2015-07-07 06:00:38

Chinese government is resorting to blantant intervention and panic measures to stop their Ponzi markets from completely cratering. This is getting downright amusing. Pop goes the bubble. Coming soon to a Ponzi market near you.


Comment by Professor Bear
2015-07-07 06:59:59

AlbuquerqueDan is working 24/7 to maximize the amusement level of the situation right here on the HBB!

Comment by Raymond K Hessel
2015-07-07 06:08:06

The Chinese government knows who is going to take the full force of bag holders’ wrath for having pumped up bubble markets and given people blind faith the government had their backs. This won’t end well.


Comment by Albuquerquedan
2015-07-07 06:09:12

I would like to know, did Obama deliberately mislead the oil markets yesterday to bail out his friends at Goldman Sachs? The market clearly thought a deal was done and Obama went out of his way to meet with top Democrats to persuade them to back a deal and I posted the link yesterday. GS has been desperate for months to cover its short positions filling the MSM with bogus stories to get oil down. So what is going on their is talk today that the deadline needs to be extended and many of the top ministers are going home usually a sign that a deal is not close. If it happens on the 9th it is no big deal but after the 9th the opposition has an additional month to block the deal and the deal is delayed by a month even if the opposition cannot block a deal.

Comment by Blue Skye
2015-07-07 06:36:43

Falling demand. Coal and Copper are sinking to new depths. Has nothing to do with Iran. It has to do with the train wreck that is China.

Comment by Albuquerquedan
2015-07-07 09:36:03

Then why did the Australian market do so well today? If China goes down Australia is toast.

Comment by Albuquerquedan
2015-07-07 06:15:14

While the Chinese are shutting down dirty old steel mills around Bejing they are planning on opening up new steel mills in the Western part of the country, you know the “ghost city” areas and presently opening steel mills elsewhere:

Updated: 2015-07-07 08:36

The successful trial run of the 2,030 mm cold rolling mill unit in Wuhan Iron and Steel Plant Fangchenggang Steel Base on June 28 marked Fangchenggang’s first step to becoming a steel city, reported Fangchenggang Daily.

The State Council claims the 2009 annexation and reorganization of Wuhan Iron and Steel (Group) Corp with iron and steel enterprises in Guangxi will construct a coastal super quality iron and steel base in Fangchenggang.

In recent years, Fangchenggang considered the base a major project to develop into a large-scale iron and steel base in West China.

With a total investment of 63.99 billion yuan ($10.31 billion) and an annual production scale of 2.1 million tons, the 2,030 mm cold rolling mill unit was completed and went into operation within 23 months, an “amazing speed,” foreign experts said.

The products will mainly be high-grade auto sheets and high-standard home appliance panels. The 980MPa above high strength automotive steel sheets have been authenticated by the Benz manufacturer, able to cover 96 percent of vehicle models in the world.

Fangchenggang’s steel-making project is planned for a scale of 10 million tons. The annual output of iron is to be 8.5 million tons, with 9.2 million tons of billet steel and rolled steel standing at 8.6 million tons.

Comment by Prime_Is_Contained
2015-07-07 08:17:48

Fangchenggang’s steel-making project is planned for a scale of 10 million tons.

Cause what the world really needs is more steel-making capacity??!?

Comment by Albuquerquedan
2015-07-07 08:30:47

There is always room for the low cost producer. That is why supply side economics leads to lower prices, I thought lower prices are a good thing?

Comment by Prime_Is_Contained
2015-07-07 08:45:50

How will a new plant that costs $10 BILLION produce at a lower cost than a plant that is still relatively new, but has already amortized a good portion of its capex? Steel-making technology has not changed that much in the past decade.

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Comment by Albuquerquedan
2015-07-07 09:05:29

China during its early boom did things like cut up old U.S. plants from the 1940s and ship them to China. Geneva steel’s plant located in Utah County, Utah was just one of them. Now plants like that are closing due to rising wages and our being replaced with modern plants. We are not talking about a decade here we are talking about 70 years of innovation. Notice it is also making sheet steel and not rebar, just another example of China moving to internal consumer demand and not construction.

Comment by Albuquerquedan
2015-07-07 09:07:29


Comment by Albuquerquedan
2015-07-07 09:30:44

And it is occurring all over the country, more GDP with less energy being used:

Updated: 2015-07-07 10:52

Tianjin’s energy consumption per unit GDP decreased 6.41 percent in the first quarter of the year. The energy consumption for each ten thousand yuan ($1,611) of industrial growth decreased 9.9 percent in the first quarter and is estimated to decrease more than 3.5 percent in the first half of the year.

The city will continue to reduce energy use, according to the Energy Conservative Conference in Tianjin.

Tianjin will focus on supporting energy saving corporations and eliminating the weak ones. In this way, the city will rapidly adjust industrial structure. Moreover, the city will evaluate energy-intensive industries such as iron and steel, nonferrous metal, construction materials, petroleum and petrochemicals, and chemical engineering.

The city strictly monitors the elimination, shut down, relocation, and reconstruction of inefficient capacities. Tianjin is also eliminating furnaces and machines to earn more space for efficient corporations.

Focusing on manufacturing, construction, transportation, and public institutions, Tianjin is promoting energy conservation in the entire society.

In manufacturing, the city launched a plan for improving energy efficiency. Energy conservation pioneers lead events to draw corporations’ attention. Advanced standards in energy conservation have been enacted and implemented. Competition based on these standards has been launched to ensure that energy consumption per industrial growth unit decrease more than 3.5 percent by the end of 2015.

Construction will be modernized and energy efficiency from construction will be improved. Moreover, green architecture and environmentally friendly construction materials will be promoted. All construction companies will be required to strictly follow green construction standards. All newly constructed civilian architecture in 2015 must meet a 100 percent energy conservation standard. Energy consumption per unit construction area will decrease four percent this year.

The development of a comprehensive transportation system will be accelerated. The city will also emphasize public transportation. In addition, a thousand corporations will promote new energy as well as energy savings. Energy consumption in transportation will be reduced two percent this year.

The energy conservation campaigns are launched in public institutions to promote environmentally friendly institutions. The reconstruction of environmentally friendly lightings has been improved. It is expected that energy conservation per unit construction area will be reduced by 2.5 percent in 2015, and energy conservation per capita will be reduced by 3.2 percent.

Comment by Prime_Is_Contained
2015-07-07 09:38:26

China during its early boom did things like cut up old U.S. plants from the 1940s and ship them to China.

That was a LONG time ago! And they have built many more plants in the meantime—more along the mini-mill model that the US moved to 25-30 yrs ago. Can you provide evidence of which style is closing?

Comment by Califoh20
2015-07-07 11:56:28

They have all our 9/11 scrap, they got it very fast and it even included sprinkles of super-thermite.

Comment by Albuquerquedan
2015-07-07 12:33:32

And they have built many more plants in the meantime—more along the mini-mill model that the US moved to 25-30 yrs ago.

True but they did not close the older ones just added the new ones. That is how you maintain 10% growth.

Comment by Albuquerquedan
2015-07-07 06:20:34


Look at my steel article and check out the city and compare it to this article, btw a nuclear power plant is also being built in the city.

Comment by Ben Jones
2015-07-07 06:25:18

‘An investor from Jilin bought ten units in one project there. He didn’t want to miss the last train like what he had after the opening of the first and second-tier cities. Property prices in Fangchenggang had since increased from RMB200 psf to almost doubled in three years’ time.’

‘One by one the new projects are completed. But the place still looks empty. At where the Jilin investor bought, only one percent of the units have lights on at night. The new hotel is no better. Some rooms are rented out for commercial use.’

‘Nonetheless, for projects under construction, tour groups with investors from other provinces are still coming in droves to visit the sales galleries every day. Developers market Fangchenggang as the nearest city to the ASEAN–China Free Trade Area. But in reality, there are mainly heavy industries in the city.’

‘Situated along the coast, productions are from nuclear power, non-ferrous metal, and iron and steel industries. Because of overproduction of iron and steel in China, profit has dropped from 1,000 dollars to 43 cents per ton. Consequently, a large empty factory site is left behind.’

Comment by Albuquerquedan
2015-07-07 06:40:16

Remember Ben that is from February and my point is the jobs are coming to the city now.

Comment by Blue Skye
2015-07-07 06:41:12

“profit has dropped”

Exactly what shuts down old mills. If demand for steel wasn’t dropping off a cliff, the marginal producers would still be running balls to the wall.

I’m not looking forward to hearing how China handles the waste from Nuclear power plants…

Comment by Califoh20
2015-07-07 11:43:03

maybe China just needs to turn on the war machine to help their economy?? Take over North Korea or some Islands?

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Comment by RioRanchoRicardo
2015-07-07 16:32:32


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Comment by Albuquerquedan
2015-07-07 06:43:22

These are the plants that cannot compete with the Chinese or for that matter the Russians since the ruble plunged:

Updated: 2015-07-07 10:07

ArcelorMittal and other steel firms said Thursday they have laid off 10,000 workers in Mexico and warned that thousands more are at risk if the government fails to curb “unfair imports.”

The global steel giant and Mexican firms DeAcero, Altos Hornos de Mexico and Tubacero took out a full-page newspaper advertisement urging President Enrique Pena Nieto to impose temporary tariffs on countries with no trade deals with Mexico.

The companies also asked for new foreign trade measures to make sure the industry is protected.

“The gravity and velocity of the crisis affecting Mexican steel companies require the adoption of short-term actions that halt the current damage and protect the source of employment,” the ad says.

The companies said they have already shed 10,000 direct and 40,000 indirect jobs, and that they would have to lay off another 7,000 workers if no action is taken.

On Tuesday, thousands of people protested in the steel town of Monclova, in the northern state of Coahuila, over the layoffs by Altos Hornos de Mexico.

The economy ministry issued a statement this week saying it was analyzing with the industry association, Canacero, the “problem derived from the reduction in world demand, the overcapacity in the market, the drop in oil prices, the devaluation of the (Russian) ruble, and other (issues).”

“We have placed particular attention on the risks represented by imports of Chinese products,” the statement said, noting that 15 of 31 existing quotas are for steel from China.

Comment by redmondjp
2015-07-07 12:40:17

But don’t worry; those laid-off Mexican workers can simply move up north and find work in every Home Depot parking lot . . .

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Comment by Califoh20
2015-07-07 14:40:15

I have had great luck using day-laborers, never any white guys in line who dont look like meth addicts. Nothing wrong with working hard!

Comment by Blue Skye
2015-07-07 06:57:06

“Residential blocks are building higher, but people’s earning power are not getting any higher.

“Since the opening of the country, local government in different provinces are competing with each other for a higher GDP. They believe that GDP can be increased by building of new cities and residential projects. This results in a proliferation of both, but no one cares to do any town planning. There is a lack of industries to support the new cities which is difficult to attract residents from nearby areas to move there.”

Oh well.

Comment by Raymond K Hessel
2015-07-07 06:28:32

The Ruble is tanking along with oil as the Chinese margin calls go out. Will Russia be the next economic domino to fall?


Comment by measton
2015-07-07 19:59:15

I read an article today saying they were cutting off the free electricity and gas to ukranian rebel territory. Possibly a sign they are rethinking things.

Comment by Raymond K Hessel
2015-07-07 06:31:51

Comrad Pelosi’s permanent Democrat Supermajority is close to fruition in the People’s Republic of California. Forward, Soviet!


Comment by Professor Bear
2015-07-07 07:06:37

It’s shaping up as another “red numbers” day on Wall Street.

Bulletin S&P 500, Dow turn negative, erasing small early gains

Opinion: It’s not too late for stock investors to ‘sell in May’

Published: July 7, 2015 5:20 a.m. ET
The market is living up to its historical seasonal pattern
By Mark Hulbert

CHAPEL HILL, N.C. (MarketWatch) — I bet you’re kicking yourself for not “selling in May and going away.” That’s because the S&P 500 Index is now 1% lower than where it was on May Day.

In other words, you have nothing but lost sleep and red ink to show for being in the stock market since its six-month seasonal pattern turned negative at the end of April.

Fortunately, it may not be too late to reduce your equity portfolio’s riskiness. Some of the worst individual months in that unfavorable period still lie ahead of us.

The “sell in May and go away” seasonal pattern refers to the stock market’s historical tendency to perform best between Halloween and May Day (the “winter” months). The other six months are usually a bust. Unlike most seasonal patterns that Wall Street traders claim to detect in the market’s largely random gyrations, the “sell in May” pattern enjoys impressive statistical support.

One academic study, for example, found statistically significant evidence of this pattern’s existence in the histories of the more than 100 countries around the world that have stock markets. In the case of the United Kingdom, that meant the study analyzed data back to 1694. “While it may not be present in all countries, all the time, it most often is,” Ben Jacobsen, one of the study’s authors, told me. He is chairman in financial markets at the University of Edinburgh.

Many dismiss the “sell in May and go away” pattern as little more than the outcome of a silly data-mining exercise. After all, the Greek debt crisis, which is being blamed for the stock market’s weakness, has been brewing for the better part of a decade. It seems entirely random that it would come to a head in the summer than in the winter.

But I’m not convinced. As I argued last week, Greece is little more than a convenient excuse for a stock market that was ripe for a decline. If it weren’t for that country’s financial mess, commentators would have come up with some other after-the-fact rationale for why the market has been struggling.

In any case, the academic evidence in support for the “sell in May and go away” pattern is formidable and can’t be easily dismissed.

Is it too late?

The $64,000 question, in the event you didn’t reduce your equity exposure on May Day: Is it too late to do so now?

Comment by Professor Bear
2015-07-07 07:11:40

The prospect of $80/bbl oil by December 2015 is looking ever more bleak.

Markets | Tue Jul 7, 2015 9:52am EDT
Related: China, Greece
Oil steadies after huge selloff, outlook weak
LONDON | By Christopher Johnson
A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014.
Reuters/Thomas Peter

Oil steadied on Tuesday after one of its biggest selloffs this year but looked vulnerable to more falls after China’s stock market took another tumble and Greece moved closer to leaving the euro zone.

Investors kept a close eye on talks in Vienna over Tehran’s nuclear programme that could lead to increased exports of Iranian crude at a time of global oversupply.

Brent crude for August LCOc1 was unchanged at $56.54 a barrel by 1345 GMT (9:35 a.m. EDT), following a more than 6 percent drop in the previous session. On Monday, Brent briefly touched $56.38, its lowest since April 10.

U.S. crude CLc1 fell as low as $51.89, down 64 cents from its close on Monday and its lowest since mid-April.

Analysts said more oil price falls could be coming.

“After yesterday’s sharp and fierce selloff it is impossible to paint an even remotely bullish technical picture,” said Tamas Varga, analyst at brokerage PVM Oil Associates.

“The downtrend should resume shortly.”

Comment by Professor Bear
2015-07-07 07:15:14

It’s dropping like a rock!

Bulletin August crude oil falls further, down 2.8% to $51.06 a barrel »

Comment by Albuquerquedan
2015-07-07 08:05:30

The U.S. is running a massive trade deficit and its exports are dropping like a rock, a higher dollar like we have today just makes it worse. It may drop commodities in the short term but even someone like you should figure out that the strength in the dollar is not sustainable.

Comment by Professor Bear
2015-07-07 09:33:44

“…even someone like you should figure out that the strength in the dollar is not sustainable.”

You mean not like the bull market in Chinese stocks?

Got it!

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Comment by Albuquerquedan
2015-07-07 09:39:14

I always said that the Chinese market rise was not sustainable and there would be a correction but that was 30% ago. When the facts change my opinion changes, when the facts change you are just oblivious.

Comment by Professor Bear
2015-07-07 11:36:13

You always said Rasmussen had the best polling track record until the Romney loss in 2012. At what point will you admit that you mistook the China stock market buildup to an epic crash for a sign of economic vitality?

Comment by Albuquerquedan
2015-07-07 13:11:21

Rasmussen was not wrong, he never called the election and his polling was well within the margin of error on election day.

Comment by Professor Bear
2015-07-07 07:26:08

China’s economy
Coming down to earth
Chinese growth is losing altitude. Will it be a soft or hard landing?
Apr 18th 2015 | ZHENGZHOU | From the print edition

WHEN “60 Minutes”, an American television news programme, visited a new district in the metropolis of Zhengzhou in 2013, it made it the poster-child for China’s property bubble. “We found what they call a ghost city,” said Lesley Stahl, the host. “Uninhabited for miles and miles and miles and miles.” Two years on, she would not be able to say the same. The empty streets where she stood have a steady stream of cars. Workers saunter out of offices at lunchtime. Laundry hangs in the windows of the subdivisions.

The new district (pictured), on the eastern side of Zhengzhou, a city of 9m in central China, took off when the provincial and city governments relocated many of their offices there. Then, high schools with university-sized campuses began admitting students, drawing families to the area. Last autumn one of the world’s biggest children’s hospitals opened, a gleaming facility with cheery colours and 1,100 beds. Chen Jinbo, one of the area’s earlier residents, bemoans the lost quiet of a few years ago. “Rush hour is a hassle now.”

Comment by palmetto
2015-07-07 07:50:12

“Chen Jinbo, one of the area’s earlier residents, bemoans the lost quiet of a few years ago. “Rush hour is a hassle now.”

I hear ya, buddy. Same in this area.

Comment by Can_Bubble
2015-07-07 07:33:02

I was out with a successful real estate broker in Toronto on Saturday. He said that a good staging for a house can easily add 30K to the final sale cost. No bubble here…


“The average price of a detached home in Toronto’s 416 region, so-named for its telephone area code, surged 14.2 per cent to $1.05-million.”

Comment by Mafia Blocks
2015-07-07 07:59:52

China can’t save the global economy but it sure is crushing it.

Look out below.

Comment by Professor Bear
2015-07-07 08:32:36

Will Chinese financial authorities succeed in their efforts to suspend economic reality?

Comment by Professor Bear
2015-07-07 08:34:17

Reminder: Don’t Borrow Money to Invest
Hamilton Nolan
7/07/15 10:18am

China’s stock market, the most high-flying in the world lately, is now mired in its inevitable crash. What rises too high shall fall again. In the long run, it will be okay. Unless you did something stupid.

In the past month, China’s stock market has lost about a quarter of its value—a bad loss. Even so, over the past year, the market is still up by more than 80%—a spectacular gain. So why is there so much panic about the market’s fall at the highest levels of the Chinese government? Who is really getting hurt here?

One clue: three months ago, “The China Household Finance Survey shows the average investor in the Shanghai equity rally didn’t graduate from high school.” And: “Individual investors own four-fifths of China’s stocks, a far higher proportion than in Western markets, where institutional investors predominate.” And: “A ninefold increase in so-called margin lending by brokerage firms over the past two years helped fuel the rally.”

The recent plunge in the Chinese stock market is of such great concern because the market’s rise was fueled by the very types of investors who can least afford to suffer a loss: individual people investing borrowed money. Borrowing money and investing it in a hot stock market is very similar to borrowing money to invest in a casino’s craps table because you’re on a hot streak. Sooner or later the hot streak will end, and you will lose, and—dang—now the people that lent you that money want you to pay it back. But you lose it.

Comment by Puggs
2015-07-07 09:36:30

Probably should extend that note to those who “bought” real estate for “cash” on margin.

Comment by Professor Bear
2015-07-07 11:39:24

I’m guessing it will be at least a few months before we start reading stories about the Chinese investors who made this mistake.

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Comment by Professor Bear
2015-07-07 08:36:49

Landing | Tue Jul 7, 2015 7:59am EDT
As China suspends reality, sit tight
July 7 | By James Saft

Only an excessively brave investor would bet that China’s increasingly desperate moves to prop up its stock market won’t work; only a fool would bet that they will.

The proper place for anyone with any choice in the matter is on the sidelines, watching with concern as China, faced with a rapid implosion in its stock market, attempts to overawe would-be sellers with a raft of powerful measures, all of them supportive of prices but injurious to the price-to-reality ratio.

With the Shanghai Composite Index having fallen close on 30 percent since June 12, Chinese authorities initiated a series of supporting measures, culminating with an announcement on Sunday that the central bank would provide unlimited, open-ended financing to a state-backed margin financing company for on-lending to those wishing to buy shares.

Some of this margin debt will flow to a group of 21 securities firms that have pledged 15 percent of their net assets, or $19 billion, to a stock market support fund. Initial public offerings have been suspended, apparently in hopes that investors who speculate on new issues will instead plow cash into existing ones.

These steps were only taken after China eased monetary policy and margin rules, both steps that failed to stem continued falls in equity indexes.

Authorities, having tired, it seems, of the concept of markets as being about opposing forces, have also turned their ire on short-sellers, vowing investigation into “manipulation,” (see the irony there?) while also taking steps to both limit and make more expensive bets that stocks will go down.

China is clearly trying to position itself as a de-facto buyer of last resort of its own capital markets. While there is a fig leaf between the central bank and stock buying in that money is being on-lent for stock purchasing, much of the money is flowing to institutions that depend on official goodwill and can be counted on to fulfill official expectations.

Comment by Prime_Is_Contained
2015-07-07 09:40:50

culminating with an announcement on Sunday that the central bank would provide unlimited, open-ended financing to a state-backed margin financing company for on-lending to those wishing to buy shares.

Unlimited central-bank-backed cash for margin investing: the holy grail of capitalism!!!

Comment by Professor Bear
2015-07-07 12:30:00

The Chinese government went all-in with intervention, and the market tumbled in response — epic fail!

It ain’t turtles all the way down no more.

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Comment by Professor Bear
2015-07-07 12:36:51

P.S. Apparently the Chinese stock market is too big to rescue.

Comment by Professor Bear
2015-07-07 08:38:25

Why Chinese Market Crash Is a Bigger Peril Than Grexit
NDTV | Written By: Varun Sinha |
Updated On: July 07, 2015 20:53 (IST)

The possibility of Greece’s exit from eurozone (Grexit) has dominated headlines across the world, with many analysts saying that the potential event could unleash a contagion that will create turmoil in global financial markets. But most financial markets, including India’s, held on despite the “no” vote in Greece, announced on Monday. There’s increasing realization that the volatility in Chinese markets is a bigger concern because of huge size of China’s economy. China’s stock markets have shed nearly $3 trillion in market value in the last three weeks, which is more than 10 times Greece’s gross domestic product of $237 billion in 2014.

Here’s your 10-point cheat-sheet to the story:

1) Chinese stocks were back to their losing ways on Tuesday, days after the government unleashed additional measures to arrest the slide in equities that threatens to destabilize the world’s second-biggest economy. China’s main index - the Shanghai Composite - has crashed around 28 per cent from 5,166 to 3,728 in just three weeks since June 16. Chinese markets, which had topped $10 trillion in market capitalization for the first time last month, have now shed nearly 1.5 times India’s GDP ($2 trillion) in the last three weeks.

Comment by Professor Bear
2015-07-07 08:40:17

China’s Stock Market Plunge: How Did it Happen?
Agence France Presse | Updated On: July 07, 2015 14:42 (IST)
Shanghai: Chinese stocks resumed falling on Tuesday despite the government unveiling an unprecedented package of measures to boost the flagging market after a spectacular bull-run reversed course in June.

Why did the market surge?

China’s stock market surge started in late 2014 despite the economy experiencing its slowest growth in 24 years.

The borrowing-fuelled rally began after the central bank cut interest rates on November 21 for the first time in more than two years, and the launch of a scheme linking trading between the Shanghai and Hong Kong stock exchanges.

The rally continued in 2015 with the benchmark Shanghai index climbing to the symbolic 5,000-point level in early June, driven higher by margin trading, through which investors only need to deposit a small proportion of the value of their trades, generating bigger profits but also potentially exposing them to bigger losses.

When it peaked on June 12 it had risen more than 150 per cent over the previous 12 months.

Why did it fall?

On the same day as the market reached its peak, China’s securities regulator said it would tighten rules on margin trading for individual investors. The following day, the China Securities Regulatory Commission (CSRC) also banned trading with funds borrowed outside the margin trading system.

When markets reopened investors started to take profits on worries of over-valued stock prices and increasing market risk.

The de-leveraging process soon became uncontrollable, resulting in Shanghai plunging almost 30 percent over three weeks. Market sentiment worsened as investors who traded on margin were forced to liquidate their stock holdings to make payment.

What’s being done to support the market?

The Shanghai index plunged 7.4 per cent on June 26 and the next day China’s central bank announced cuts in both interest rates and the reserve requirement ratio — the amount of money banks must put aside.

The market regulator then announced a relaxation of margin trading rules and reduced stock transaction fees.

Soon after the government announced proposals to let social security pension funds enter the stock market.

The CSRC cut back on the number of initial public offerings (IPOs), then went a step further by halting them for the near future.

China’s central bank said it would provide funds through the state-backed China Securities Finance Co. to “protect the stability of the securities market”, while the 21 largest brokerages said they would invest at least 120 billion yuan ($19.3 billion) in so-called “blue chip” exchange traded funds (ETFs).

What happens next?

Comment by Professor Bear
2015-07-07 08:43:24

Jul 3 2015 at 1:00 PM
Updated Jul 3 2015 at 2:30 PM
Stockmarket is China’s new gambling addiction
For China’s 90 million share traders, the market is the best casino outside of Macau. But many weren’t prepared for the Shanghai Composite’s recent wild ride, writes Lisa Murray.
by Lisa Murray

Charlie Zhang had to win the lottery before he could buy his first parcel of shares.

It was 1992 and he was walking along Nanjing Road on the way to work when he saw people selling “lottery tickets” outside one of Shanghai’s most famous landmarks, the Jingan Temple.

Shut down in 1949 after the Communist Party came to power in China, the Shanghai Stock Exchange had reopened just over a year earlier. Chinese leader Deng Xiaoping had given his blessing to both the Shanghai exchange and its smaller counterpart in the southern city of Shenzhen as part of the country’s economic “opening”, and after a four-decade hiatus there were plenty of people lining up to take part in this new capitalist experiment.

The problem for authorities was too many buyers. Demand was high and stocks were few, causing fights to break out in the queues of would-be-investors outside the exchanges. So the authorities decided to set up a new system for buying shares.

They started selling numbered tickets, or “share purchase certificates”, for 30 yuan ($6.30) a piece. If your number was drawn, you could then go into a lottery to buy shares.

Zhang bought 20 tickets outside the Jingan Temple that day. “I was lucky,” he says now. “I was able to buy 1000 shares in a textile machinery company and with the money I made on those, I bought more shares.”

Within three years his 20,000 yuan investment had increased tenfold and he has been in and out of the market ever since.

Zhang is just one of China’s more than 90 million retail investors; they now outnumber Communist Party members. Unlike in other countries, investors like Zhang dominate trade on China’s tightly controlled exchanges, accounting for as much as 90 per cent of daily turnover.

But not everyone has been at it as long as the retired tour guide. About 40 million of China’s retail investors only started trading this year, and they have been on a wild ride.

Comment by Professor Bear
2015-07-07 08:54:48

Stocks Tumble Around World as Commodities Sink; Treasuries Gain
by Jeremy Herron and Stephen Kirkland
July 6, 2015 — 4:14 PM PDT
Updated on July 7, 2015 — 8:12 AM PDT

Stocks from developed nations to emerging markets tumbled after a selloff in Chinese equities sparked a rout in commodities. Investors sought the relative safety of the dollar and Treasuries as Greek debt talks continued.

The Standard & Poor’s 500 Index lost 0.9 percent at 11:11 a.m. in New York and the Stoxx Europe 600 Index fell 1.3 percent. The MSCI Emerging Markets Index sank 1.8 percent as commodities from oil to industrial metals dropped. U.S. traded Chinese equities extended their plunge to 21 percent this year. The yield on 10-year Treasuries slid nine basis points to 2.20 percent. The euro weakened to a five-week low.

Chinese shares traded in Hong Kong entered a bear market even as the government moved to stem the rout. The drop fueled concern demand for commodities will weaken. Uncertainty prevailed Tuesday in Greece’s debt crisis, with Greek Prime Minister Alexis Tsipras in Brussels for what could be a last chance to secure a rescue from European leaders and keep his country in the euro.

“Just when we are prepared for a better economy and higher rates we find ourselves focusing on global macro stories,” said Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading LLC. “It’s not all Greece, it’s China, too, and when you combine the two, then you get what we have today.”

Comment by Puggs
2015-07-07 08:57:46

Wifey just got a stock tip at Pretty Nail.

Comment by Califoh20
2015-07-07 11:47:34

LOL! Was it. “do not short China?” from a young Vietnamese girl?

Comment by Puggs
2015-07-07 16:30:38


Comment by Trickle Up Not Down
2015-07-07 09:05:21

A year ago the oil ETF USO was at $38. Today it’s at $17.50, a massive 54% haircut. Just 5 weeks ago the ETF HAO, which holds Chinese small caps, was at $36. Today it’s at $24, a 33% loss. As Mr. Rogers would say, “Can you say “c r a t e r” boys and girls?”

Comment by Professor Bear
2015-07-07 12:16:12


Comment by Trickle Up Not Down
2015-07-07 13:11:11

Mr Rogers: “Very good Little Bear. Now can you say, “Margin Call?”

… and speaking of margin, didn’t somebody post here that the Chinese investors were using considerable amounts of margin? If that’s true, that will accelerate the decline as margin calls force immediate indiscriminate selling.

Comment by Prime_Is_Contained
2015-07-07 09:13:58

Bill, you mentioned bitreserve in yesterday’s Bits Bucket; do you really trust them to keep your bitcoin safe? I know you have talked a lot about air-gapped storage here, so that would really surprise me…

Comment by Blue Skye
2015-07-07 09:46:25

A safe made of air?

Comment by Professor Bear
2015-07-07 11:42:43

Money woven from a whimsical blend of electrons and imagination?

Comment by tresho
Comment by Professor Bear
2015-07-07 12:42:21

One less Republican presidential hopeful to crowd the stage at the candidate debates…

Comment by Califoh20
2015-07-07 11:39:43

(FXP) China Short up another 10% today. Is anyone else shorting China?

Comment by Professor Bear
2015-07-07 12:07:05

The China crash is working wonders to improve commodities affordability!

Comment by Professor Bear
2015-07-07 12:14:23

Selling gold is a great way to raise cash for covering margin calls!

Maet Extra
Copper sinks to 2009 levels as China worries weigh
By Myra P. Saefong
Published: July 7, 2015 1:44 p.m. ET
Analyst: if copper can’t rise back above $2.45, $1.95 may be next
Copper prices are at 2009 levels.

Copper prices are trading at levels they haven’t seen since 2009 and with China’s failure to fully stem its equity-market descent, the carnage may be just a prelude for the industrial metal.

“It’s not just copper that’s suffering today — it’s a broad-based selloff across all the metals, based primarily over the turmoil in Chinese equity markets,” said Brien Lundin, editor of Gold Newsletter.

Read: Gold sinks below $1,150

Comment by AbsoluteBeginner
2015-07-07 12:53:26

Silver is dipping too. How low can they go?

Comment by Professor Bear
2015-07-07 12:54:40

PS For readers who were born yesterday, 2009 was at the bottom of the worst financial collapse since the 1930s.

Comment by Professor Bear
2015-07-07 13:05:36

Has the dry bulk shipping industry staged a recovery since the Baltic Dry Index reached its all-time record low this past spring?

Or was that more of a leading indicator of a collapse in demand for dry bulk shipments?

Comment by Professor Bear
2015-07-07 13:51:07

World Coal
Dry bulk shipping hit by Chinese slowdown

A 38% drop in Chinese coal exports in the first four months of the year has hit the dry bulk shipping market, despite high rates of demolition and a sharp rise in Indian coal imports, according to the latest market review from BIMCO.

“It is small consolation that Indian coal imports may go up by 20 million t, when Chinese imports drop by 30 million t for the second year running,” said the report.

The Baltic Dry Index (BDI), which provides a daily assessment of shipping rates, bottomed out at 509 in February after starting the year at 771. Despite some recovery since then, it remains at historically low levels and only a couple of occasions has it been about 600.

“The momentous imbalance between supply and demand continues to worsen in spite of a noteworthy 10 yr low supply growth rate,” said BIMCO. “As the demand growth for dry bulk seaborne transportation seems to weaken too, potentially even on a permanent basis as China changes gear, the industry must adapt to become profitable again. Wait-and-see strategies may turn out to take too long.”

Written by Jonathan Rowland.
Published on 16/06/2015

Comment by Professor Bear
2015-07-07 13:58:19

Hellenic Ship News
Iron ore price fall a sign China’s economic might waning
in Commodity News 06/07/2015

Iron ore prices dropped to the lowest in more than two months, sending shivers through the mining industry and heightening worries that Chinese economic activity is slowing just as ore piles up at its ports.

China uses more than a billion tonnes of iron ore a year to make steel – 14 times the consumption of the United States – but Beijing’s efforts to shift the economy to consumer-led growth means steel consumption is peaking faster than expected.

“It’s clear China can no longer consume all the iron ore that’s out there, so something’s got to give,” said James Wilson, a sector analyst for Morgans Financial in Perth.

Comment by Professor Bear
2015-07-07 13:10:16

Now that oil prices are plummeting along with other comodities prices, even as a flood of crude continues to be pumped out of the ground, does it still pencil out to store oil at sea in massive tanker ships?

Comment by frankie
2015-07-07 14:17:21

Well if you’ve got nothing else to do with the ships, I’d guess yes it does.

Comment by Professor Bear
2015-07-07 14:55:01

Iran Prepares Sale Of 44-M BBL Crude Oil Stored At Sea
in International Shipping News 23/06/2015

Iran is storing as much as 44-M bbl of Crude Oil on supertankers at Sea as it prepares for a sales drive if a nuclear deal can be sealed.

Iran and the 5P+1 world powers are seeking to overcome last differences by 30 June deadline to reach a deal over Iran’s disputed nuclear program.

In the meantime, Iran is parking Crude Oil off its coast, mainly on tankers belonging to its national carrier NITC.

“The 1st thing they will try and do is offload a lot of that storage. Oil Minister Bijan Zanganeh has warned OPEC to make room for us. In other words, we are going to sell this oil at any price,” said a former official at the state-run National Iranian Oil Co.

“Floating storage is there to be put onto the market as soon as possible after some sort of agreement,” said the former official who now runs an energy consultancy in the UK.

Iran, once OPEC’s 2nd-largest producer after Saudi Arabia, is seeking to clear space for its gradual return to the market after years in which Western sanctions have cut its Crude Oil exports to as little as 1-M BPD.

It actually makes sense for Iran to go in fairly hard in order to reclaim market share and hope that high cost producers above them are inched out quicker.

Comment by Professor Bear
2015-07-07 15:04:19

OilPrice dot com
The No. 1 Choice for Oil and Energy News
Bearish News For Oil Growing By The Day
By Nick Cunningham
Posted on Thu, 02 July 2015 21:24

Oil hit its lowest point in two months on July 1, falling on a combination of market turmoil and bearish oil figures.

WTI dipped below $57 and Brent dropped to around $62 per barrel, breaking out of a narrow range within which the two benchmarks have been trading for several months.

The ongoing crisis in Greece is weighing on global markets. The Greek government has called a referendum set for July 5th that will largely test the Greek public’s desire to endure more austerity or else risk a more uncertain path. Greece’s creditors have declined to negotiate an extension of the bailout package until after the referendum, and EU member states led by Germany have suggested the vote would be tantamount to a decision on whether or not Greece would remain in the Eurozone. Meanwhile, Greece’s banks are closed for the week, and tempers will likely flare as the days pass with people unable to withdraw cash.

The crisis is causing broader worries over the stability of global markets. Although Greece is a small country, and makes up only a fraction of the Eurozone’s GDP, the markets are keeping a wary eye on the ongoing predicament, watching for any signs that the euro itself could be affected. All of this is dragging down stock markets and oil prices.

A second major factor that suddenly pushed down oil prices is the latest EIA figures released on July 1, which showed a very surprising uptick in the level of crude oil storage. Oil inventories climbed by 2.4 million barrels, the first increase in two months. Since mid-April, the U.S. has begun drawing down its record high inventory levels, with refineries working their way through the glut and producers leveling off their production.

The unexpected increase in oil in storage levels has dampened hopes that a bull market could be just around the corner. The glut is apparently not over just yet.

Comment by Professor Bear
2015-07-07 15:33:37

allAfrica dot com
4 July 2015
Nigeria: Oil Glut Rages, No Market for Nigerian Crude
By Sonny Atumah

With the Yom Kippur War of 1973, the United States banned the export of crude oil to any part of the globe except refined petroleum products. For memory sake the Yom Kippur War also known as the Arab -Israeli War elicited an embargo of oil by Arab members of the Organisation of Petroleum Exporting Countries (OPEC) on October 17, 1973 against the United States for its support of Israel during the war.

The decision was in retaliation for the US decision to re-supply the Israeli military. Between 1973 and 1974 when the embargo lasted, oil prices almost quadrupled with skyrocketing costs of goods and services in the United States. Canada, Japan, the Netherlands, the United Kingdom, Portugal, former Rhodesia and apartheid South Africa were all victims of that oil embargo.

In Nigeria, it was the period of the oil boom when crude price rose from $17 to $55 per barrel; remember the popular Udoji Salary Award and how “we never knew what to do with money”? Different strokes for different folks you may say; it is all about petrodollar which we enjoyed then. We are now on the reverse gear; paying back in the petroleum crossfire between the Arabs and America. We seem to be hawking our crude for buyers in Europe.

Since that war, Saudi Arabia gained much wealth and power, and for about four decades the United States had a cut throat competition with this oil heavy weight and OPEC leader, Saudi Arabia. Saudi Arabia became a price giver while America became a price taker. That devastating blow dealt on America empowered them to put on their thinking caps on how best to solve the problem of over reliance on crude oil imports.

President Richard Nixon in response in November 1973 promised the nation that America would be energy independent in 10 years but that was not to be until recently. With the United States reaching their petroleum peak in the early 1970s, the Federal government invested heavily in supply alternatives.

Research appeared to have given America a breakthrough in unconventional oil in what is now the shale oil and gas revolution. The effort yielded the technology of hydraulic fracturing and horizontal drilling to shale gas formations. With the shale revolutions experts are now viewing America as the’ new Saudi Arabia’ as far as oil and gas is concerned.

President Barack Obama in the State of the Union Address to Congress in 2012 echoed this when he said: “We have a supply of natural gas that can last America nearly 100 years.” President Obama had in 2013 said: “we should strengthen our position as the top natural gas producer because, in the medium term, at least, it not only can provide safe, cheap power, but it can also help reduce our carbon emissions”

Energy expert Daniel Yergin in a contribution to the Politico Magazine said that: The increase in US oil production since just 2008 is greater than the entire output of Nigeria, one of the OPEC producers and more than Iran’s entire exports prior to the sanctions that have sliced its exports levels roughly in half since 2011. Indeed without the increase in US oil production, it is very hard to see how the oil sanctions on Iran could have worked”.

Comment by Albuquerquedan
2015-07-07 13:29:54

Greeks are finding out the leftists lie. The banks did not open today as promised and it is highly unlikely they will open soon unless the Greek leaders accept the very deal that was rejected by the Greek people. Of course, due to the promise that a better deal would be negotiated. It sounds kind of familiar, if you like your Euro you can keep your Euro and the deal will be cheaper for you.


Comment by Califoh20
2015-07-07 14:46:37

I dont think of bankers as being liberals. Usually they are linked with the 1%-rs benefiting from crony capitalism. The leftist are fighting FOR the people, with less corp welfare!

Comment by AmazingRuss
2015-07-07 16:32:52

No, no. You see the leftists are responsible for all evils… from concentration of wealth to jock itch. It’s convenient. You don’t have to think, and you can just keep that finger pointed in the same direction while you shriek betrayal.

Comment by Clubber Lang
2015-07-07 16:53:19

Most of the worlds elite bankers are Globalist Progressives.

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Comment by AmazingRuss
2015-07-07 17:13:38

…and they also shed their human skins at night and breathe dryer lint.

Comment by measton
2015-07-07 20:10:06

Most of the worlds elite bankers are Globalist Progressives.

Bankers are progressives??? So they are for taxing the elite and spreading the wealth??? Who knew

Comment by AmazingRuss
2015-07-07 20:42:21

They can also shoot lasers from their eyes, but they don’t do it because they are so nice.

Comment by Neuromance
2015-07-07 17:05:46

The Greeks had to puzzle out which was the less bad of their bad choices. They had no good choices.

They have 11 million people and about 350 billion dollars of debt in a currency they do not control.

Comment by Professor Bear
2015-07-07 15:41:34

Is it safe at this point to assume the China stock market crash is mostly over?

Comment by Professor Bear
2015-07-07 15:48:18

Marketwatch dot com
Emerging Markets Report
China’s stock-market collapse is not over yet
By Sue Chang
Published: July 7, 2015 4:19 p.m. ET

The collapse in China’s stock market is far from over despite the Shanghai Composite Index having fallen nearly 30% in about a month and experts are urging investors to bail out while there is time.

“We continue to advise investors to consider not holding individual positions in Chinese stocks but advocate for fully diversified exposure to emerging-market equities,” Peter Donisanu global research analyst at Wells Fargo Investment Institute said in a report to investors.

The Shanghai Composite (SHCOMP, -1.29%) closed at 3,727.12 on Tuesday, slumping from its seven-year high close of 5,166.35 on June 12. The Shanghai Composite Index has sunk almost 30% in less than a month.

The selloff in Chinese securities was triggered by a move by Chinese authorities in early June to tighten margin-trading and short-selling rules, making it more difficult for investors to borrow money to play the stock market.

A perception that the Chinese government has not responded appropriately to a slowdown in the economy is also weighing on sentiment.

Further undermining confidence is a consensus that the runup in China’s stock market over the past several months was not driven by economic fundamentals but speculation.

Marc Chandler, global head of currency strategy at Brown Brothers Harriman, blamed “government cheerleading” and easy money via loose monetary policy as the two main culprits behind the stock-market bubble.

With the Shanghai benchmark having crashed below 4,099, which J.P. Morgan had earlier pegged as a short-term support level, analysts now believe there is very little to halt a further decline in the index.

“We anticipate further downside risk for Chinese equities,” said Donisanu. “It would not be unreasonable to anticipate China’s current bear market to extend beyond the 30% range.”

Stephen Roach, former chairman of Morgan Stanley Asia, concurred with the grim outlook.

“The bubble is bursting. Who knows where it’s going in terms of the downside,” he said during an interview with CNBC.

Comment by Blue Skye
2015-07-07 18:28:40

The irony is that we may be told it is over despite a complete meltdown. Halted trading on any stock that is going down. Delist the collapsing debt junky companies. CCP stock buybacks on their own banks and SOEs to keep the index up at very little cost. Rosy reports all around while another few Trillion is lost by Mom & Pop. Household savings of nearly a decade just gone poof through the magic of leverage.

Never fear, Dan says they’ve got more money saved than the entire world has!

Comment by Professor Bear
2015-07-07 19:45:28

They seem capable of losing money on bad investments faster than anyone else on the planet.

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Comment by Raymond K Hessel
Comment by Raymond K Hessel
Comment by Raymond K Hessel
2015-07-07 19:07:54


The Shanghai Stock Exchange closed down 1.3% on Tuesday, which seemed benign after its three-week, near-30% crash that saw $3.2 trillion go up in smoke. It calmed the nerves in the West; a further collapse has been averted by astute government and central bank action.

But the index was down only 1.3% because government entities, government controlled institutions, mutual funds, 21 of the largest brokerages, pension funds, the largest companies themselves, and whoever else has to follow government wishes had been buying shares of the largest companies, such as state-controlled oil companies and banks. Buying kicked in seriously toward the end of the trading day after the index had been down 4.3% earlier. With their large weight in the index, these gainers propped up the overall index. But beneath the surface, it was brutal.
The Shenzhen Stock Exchange index, where smaller and medium-size companies are traded, plunged 5.3%; the ChiNext index, where tech companies and small caps are concentrated, plummeted 5.7%.

Comment by Professor Bear
2015-07-07 19:09:49

How much farther do the almighty Chinese financial authorities plan to let the Shanghai market index plummet before finally propping it back up to 4500?

Comment by Professor Bear
2015-07-07 19:11:42

Today at 9:32 pm ET
Breaking Shanghai Composite down 7.5% at 3,446.53

Comment by Ben Jones
2015-07-07 19:24:46

Look at the line at the end of the graph:



Comment by Ben Jones
2015-07-07 19:28:08

What’s really crazy is this is in spite of the government throwing even the kitchen sink at keeping it up.

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Comment by Professor Bear
2015-07-07 19:40:42

It seems the force of the market’s collapse was sufficient to break the back of the giant turtle that normally props it up.

Comment by Ben Jones
2015-07-07 19:45:27

And that may be as significant or more than this stupidest of bubbles has collapsed. I’ve often wondered if the China collapse would bring the whole thing down.

Comment by Professor Bear
2015-07-07 19:32:11

How far has the Shanghai index dropped since Dan assured all who read here that it was headed straight back to 4500? I’m starting to wonder if he’s secretly trying to make the crash worse, as his prediction skills are too immense for him to deliberately miss by this much.

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Comment by Ben Jones
2015-07-07 19:36:10

Dan? Dan?


Comment by Professor Bear
2015-07-07 19:49:27

For the record, what day is this in China? Their markets have recently sold off so many times that I have lost track.

Comment by Ben Jones
2015-07-07 19:59:45

Comment by Albuquerquedan 2015-07-07 06:02:58

‘The intervention has hardly failed.’

Those were the days. Wait, that was this morning!

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Comment by Raymond K Hessel
2015-07-07 19:13:42

Looks like Goldman Sachs is up to its old tricks of setting up the retail muppets who take its “advice” for the slaughter.


Comment by Raymond K Hessel
Comment by Ben Jones
2015-07-07 19:39:36

Yeah, I read this afternoon the “guvment” has suspended over 3000 stocks. Imagine what the losses will be when they open those up? Or maybe it’ll be like the empty cities. “We created those stocks for future use.”

Comment by phony scandals
2015-07-07 19:59:03

Over 20% of listed China stocks now in trading halt
By Laura He

Published: July 7, 2015 7:15 p.m. ET

HONG KONG (MarketWatch) — Amid a heavy market selloff, 203 mainland-China-traded companies announced separately Tuesday that trading in their shares had been suspended.

This brought the total number of shares in trading halt over the past seven days to 651, or about 23% of the entire pool of 2,808 listed stocks, the Securities Daily reported Tuesday.

Many of the companies didn’t reveal the reasons behind the trading suspensions, though some cited reasons including the consideration of unspecified significant events, asset restructuring, or private share placements, the report said.

Many market observers saw the exodus into trading halts as a way for companies to protect their stocks from the current sharp drop for Chinese markets, according to the report. The Shanghai Composite Index SHCOMP, -4.46% having plunged 12.1% last week, though it was up 1.1% for the current week to date as of Tuesday’s close.

Reuters reported separately that the companies would face fines if they were discovered to have requested trading suspensions without good reason.


Comment by Professor Bear
2015-07-07 19:57:15

‘PBOC Promises “Liquidity Support”‘

Any thoughts on how much longer they are going to hold off before stepping into the market with promised liquidity support?

Comment by Ben Jones
2015-07-07 20:03:43

‘Shanghai and Hong Kong shares plunged, while U.S. equity-index futures dropped amid concern that China’s share rout may spread to the wider economy. Investors are flocking to assets that offer some safety as China’s stock rout and Greece’s possible exit from the euro roil global markets. About 45 percent of China’s listed companies are suspended, leading traders to sell what they can.’

“China’s stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and a liquidity crunch,” Zheng Ge, an analyst at Wanda Futures Co., said by phone in Beijing.’


Comment by Professor Bear
2015-07-07 20:38:40

“China’s stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and a liquidity crunch,”

No signs yet of panic on Wall Street. In fact, it seems that the symbiosis is broken, with the Chinese and U.S. stock markets decoupled.

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Comment by Professor Bear
2015-07-07 20:43:18

These stories are getting repetitively boring.

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Comment by Califoh20
2015-07-07 19:49:38

China crashing hard right now. China is trying to freeze trading to prevent collapse. Yeah! that is a great idea!!

More from Bloomberg.com: Chinese Trade Halts Freeze $1.4 Trillion of Shares Amid Rout

Investors are flocking to assets that offer some safety as China’s stock rout and Greece’s possible exit from the euro roil global markets. About 45 percent of China’s listed companies are suspended, leading traders to sell what they can. With Federal Reserve meeting minutes due Wednesday, the twin crises have prompted some investors to push back estimates for when U.S. rates may rise.

Comment by Professor Bear
2015-07-07 20:01:50

“China is trying to freeze trading to prevent collapse.”

Isn’t that a great recipe for sending prices into a free fall? I guess it’s no big deal so long as nobody can tell how far prices have fallen.

Comment by Professor Bear
2015-07-07 20:07:37

Dumb question of the day: With ginormous losses on Chinese stocks continuing to accumulate, how much margin debt is coming due, and how will the collection process work out against a backdrop of ongoing market mayhem?

Comment by Professor Bear
2015-07-07 20:18:34

Margin calls
China’s stock collapse still has a ways to go
Gwynn Guilford
3 hours ago
DATE IMPORTED:July 06, 2015
An investor takes notes as he watches a board showing stock prices at a brokerage office in Beijing, China, July 6, 2015. China’s key stock indexes showed signs of stabilizing on Monday, rising close to 3 percent, in response to unprecedented rescue measures announced over the weekend.
REUTERS/Kim Kyung-Hoon
It’s only going to get worse. (Reuters/Kim Kyung-Hoon)

The Shanghai Composite Index fell 1.3% on July 7, days after the Chinese government vowed to prop the benchmark index up. It has a lot farther to fall, says Victor Shih, professor at University of California, San Diego.

“[E]ven with a government rescue, it could be quite some time before the backlog of existing sell orders are cleared,” Shih tells Quartz. “This will continue to out downward pressure on the market.”

The markets’ fall has a lot to do with the murky world of Chinese margin trading, which skyrocketed in 2014:

In general, margin finance allows investors to borrow from brokerages to boost their stock bets, usually using the underlying shares they purchase with these loans as a deposit. This magnifies gains and losses. If the stock goes up, the investor pockets the additional profit, minus commission to his broker, after he sells But if the stock drops, he has to pay back the borrowed cash and swallow his losses.

When stocks drop enough that brokerages get twitchy about ever being able to get their loans back, they demand that their clients pony up more money or stocks as a deposit. If these “margin calls” force enough liquidation at the same time, it can create a cascade of falling share prices, that in turn spark more margin calls.

In China’s case, a lot of that margin finance flowed into the most speculative part of the market, super-volatile small-cap stocks, says UCSD’s Shih—the stocks that have been tanking the hardest.

China tries to prevent margin call disasters with a rule suspending a stock from trading for a day once it’s lost 10%. But that does not actually solve the problem—it just stalls it.

“When the stocks began to sell off, margin calls rolled in,” says Shih. “However, because of the rule… margin lenders could not liquidate positions in many cases.” Even though not all the positions have been sold out, stocks are down to practically where they were before the recent several-month bubble.

Comment by Professor Bear
2015-07-07 20:47:30

Market Pulse
China stocks dive in panic selling
By Laura He
Published: July 7, 2015 10:56 p.m. ET

HONG KONG (MarketWatch) — Chinese stocks plunged rapidly out of the Wednesday open, with the Shanghai Composite Index SHCOMP, -4.45% starting down 7% and extending the loss to 8.2%, before recovering slightly to 4.8%. The selloff came despite a rare pledge by the People’s Bank of China as the markets opened that it would closely watch stock movements and continue to use multiple ways to support the state-backed margin-finance entity — China Securities Finance Corp. (CSF) — in order to safeguard the stability of the markets and “hold the line against systemic and regional financial risks.” The central bank’s statement came on the heels of a new slate of measures Wednesday by China’s central government to stem recent panic selling, with the CSF vowing to step up efforts buy small- and mid-cap stocks and provide “ample liquidity” to China’s brokerage firms, among other moves. Hong Kong stocks were also dragged sharply lower by the sharp fall on the mainland, as the benchmark Hang Seng Index HSI, -4.44% fell 3.3%, and the Hang Seng China Enterprises Index HSCEI, -5.69% dropped 4.2%. Major mainland banks suffered especially heavy losses, with China Minsheng Banking Corp. 1988, -9.91% 600016, -3.45% CMAKY, -6.96% sinking 7.2%, Industrial & Commercial Bank of China Ltd. 1398, -7.39% IDCBF, -6.63% 601398, -4.36% slumping 6.1%, and Bank of Communications Co. 3328, -7.03% BKFCF, -13.08% 601328, -5.62% sliding 5.6%. Likewise, securities firms continued their recent dive, as Southwest Securities International Ltd. 0812, -24.22% 600369, -10.02% crashed almost 22%, Shenwan Hongyuan H.K. Ltd. 0218, -18.93% 000166, -8.40% skidded more than 13%, China Everbright Ltd. 0165, -10.46% CEVIF, -5.80% tumbled 12%, and Citic Securities Co. 6030, -11.75% CIIHF, -0.27% dropped more than 10%. Haitong Securities Co. 6837, -13.25% 600837, -3.82% was suspended from trading, not citing specific reasons. Various reports said state-owned investment fund Haixia Capital Management had sold its entire stake in Haitong Securities after Tuesday’s close at a deep discount, booking a $330 million loss, in a suspected move to raise cash to help save the mainland Chinese markets.

Comment by Professor Bear
2015-07-07 22:39:03

I showed my wife the story in the dead tree edition of the Wall Street Journal about the Chinese hairdresser who confers stock market investment advice. She reminded me that her own hairdresser is also a real estate investor who occasionally offers unsolicited suggestions about buying SFRs as investment properties. However, no stock-market investing tips have thus far been offered.

Comment by Professor Bear
2015-07-07 22:42:45

This market is kicking out some BIG negative numbers!

Comment by Professor Bear
2015-07-07 22:44:19

Marketwatch dot com
Cross-listed Chinese shares slide in New York
By Francine McKenna
Published: July 7, 2015 10:37 a.m. ET
Tugboat with Pudong, China’s financial center, in the background in Shanghai. Pudong houses Lujiazui Finance and Trade Zone and the Shanghai Stock Exchange.

Chinese companies cross-listed on the Shanghai Stock Exchange and U.S. exchanges traded sharply lower Tuesday following the ongoing heavy market selloff in China.

Those shares include Sinopec SHI, -11.68% , Yanzhou Coal YZC, -8.64% , China Petroleum SNP, -2.34% , Guangshen Railway GSH, -4.24% , China Life LFC, -5.23% , Aluminum Corp of China ACH, -9.37% , and Petrochina PTR, -1.84%

The Securities Daily reported more than 23% of shares on China exchanges have suspended trading in the last seven days in an attempt to stem the rout. Market observers see the trading halts as a way for companies to shield their shares from collapse of Chinese markets, according to the report. None of the cross-listed shares have been halted in China.

The Shanghai Composite Index SHCOMP, -4.18% was down 12.1% last week and the BNY Mellon China Select ADR Index BKTCN, -3.49% a reflection of all China shares listed on U.S. exchanges, was also down.

Comment by Professor Bear
2015-07-07 22:45:52

Is there a Chinese character for “toast”?

Comment by Professor Bear
2015-07-07 22:54:18

Caixin Online
Opinion: China’s government had no reason to intervene in the stock market
By Ling Huawei
Published: July 7, 2015 10:32 p.m. ET

BEIJING (Caixin Online) — Over the past three weeks, the benchmark index for China’s A-share (yuan-denominated) market has plunged by more than 30%, despite government efforts to break the fall.

Questions abound as investors and analysts debate whether and how the government should intervene.

Those advocating a bailout argue that China is nearing a financial crisis if it lets the rout continue, and that the government should learn from the lesson of the U.S., which some argue did not act fast enough to prevent the bankruptcy of Lehman Brothers. They also say the government should set up an investment fund, with capital provided by the central bank, to buy stocks until the market rallies again.

These voices have been so loud that it is difficult for regulators to ignore them. A series of measures have been implemented to shore up investor confidence, but critics say they are inconsistent and prove that policy makers lost their bearings.

The bottom line is this: Only a systemic risk that threatens financial stability justifies a government bailout.

The European Central Bank defines financial stability as “a condition in which the financial system — intermediaries, markets and market infrastructures — can withstand shocks without major disruption in financial intermediation and in the effective allocation of savings to productive investment.”

By this definition, the A-share market is not jeopardizing China’s financial stability yet because it has not caused big trouble for major financial institutions. Securities firms are still safe, although they have lent about 2 trillion yuan ($320 billion) to investors through margin-trading and short-selling.

Some people worry that banks’ bad loans may increase. Banks have indeed channeled an estimated 1.5 trillion yuan from wealth-management products to the stock market through structured financial derivatives called “umbrella trusts,” but these funds are relatively safe because investors who borrowed the money to buy stocks would absorb losses first.

Banks are also implicated in another way because they have lent about 1 trillion yuan to companies who used their stock as collateral. When the prices of those stocks fall, the value of the collateral shrinks too. But for most banks this will not affect their balance sheet unless the share price of the company falls by more than 60%.

Overall, major financial institutions — especially banks — are still safe despite the recent turbulence. The people who lost the most, and then asked for a bailout the loudest, bet too aggressively on leveraged buys and did not hedge against risk.

Unfortunately, the securities regulator has again given in to pressure and taken measures that do not suit its role.

On Saturday, representatives of 21 securities firms were summoned to the Beijing headquarters of the China Securities Regulatory Commission (CSRC). Soon afterward these companies announced they would use their own capital, some 120 billion yuan, to buy exchange-traded funds linked to blue-chip stocks on the Shenzhen and Shanghai bourses. They also promised not to sell any of their holdings until the benchmark Shanghai Composite Index (SHCOMP, -4.13%) recovered to at least 4,500 points.

These are clearly not market-driven decisions. Anyone with common sense knows that 120 billion yuan will not be enough to reverse the market’s fall. And the intervention raises a thorny question: Who takes the blame if the securities firms suffer losses because they had to make investments against their better judgment?

Comment by Professor Bear
2015-07-07 23:41:35

The Wall Street Journal
China’s Stock Plunge Is Scarier Than Greece
There are four basic signs of a bubble, and the Chinese stock market is on the extreme end of all four.
A stock-market display in Shanghai, China, July 6.
Photo: Pei Xin/Zuma Press
By Ruchir Sharma
July 7, 2015 7:23 p.m. ET

China’s state-sponsored stock-market rally is unraveling, with potentially dangerous consequences. The first major sign that all wasn’t going according to script came on June 15. Chinese had awakened expecting big gains because it was President Xi Jinping’s birthday, but the Shanghai market fell more than 2%. One deeply indebted day trader committed suicide by jumping out a window, his net worth wiped out by the collapse of a single stock that he had borrowed heavily to purchase. The market has since fallen by another 25%—and some fear that prices could go much lower.

In most countries, no one thinks there is a link between a leader’s birthday and the market. That such a theory prevails in China reflects the widespread belief that Beijing’s authoritarian government can produce any economic outcome it wants. Now trust in China’s ability to command and control the economy is faltering. If trust collapses, the global repercussions could be more severe than those from the Greek debt crisis.

Comment by rj chicago
2015-07-08 13:41:52

Just occurred to me that with the WH awash in rainbow colors there a couple of weeks ago it makes sense now what Obama means by ‘leading from behind’ (with Reggie Love). Oooops I am a hater!!

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