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Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down
Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down
This was not supposed to happen.
After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!
The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg’s Richard Breslow: “fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day.” Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.
The last thing the communist party and the PBOC wanted was another massive sell off after having not only fired the “bazooka” but come up with a different bazooka to halt “malicious sellers” virtually every day, including threats of arrest.
Nobody was spared in the selloff and of the 1,114 stocks in the Shanghai Composite, 13 closed higher on Monday.
Here, courtesy of the WSJ, are some of the more amazing numbers of today’s selloff:
…click on the above link to read the rest of the article…
What the Heck Just Happened in the Global Markets?
What the Heck Just Happened in the Global Markets?
It was the kind of day that shouldn’t have happened. Somebody dropped the ball at CNBC, or something.
Thursday evening, after three morose days in US stock markets, Amazon came out and said it made a profit! OK, a teeny-weeny profit of $92 million, a barely perceptible 0.4% of sales, a rounding error for other thriving companies’ with $23 billion at the top line. But for Amazon, the mere fact that there wasn’t a minus-sign in front of it, for once, was huge.
Its shares soared 22% after hours. The company’s valuation jumped by $40 billion. CNBC exploded with excitement. And Friday should have been a huge day for stocks.
But oh my!
From the first minute on, Amazon’s shares lost steam, drifted lower throughout the day and gave up half of their afterhours gain. The S&P 500 and the NASDAQ lost over 1%, the Dow almost 1%.
It topped off a bad week:
- The Dow dropped 2.8%, its worst week since December 2014, broke its 200-day moving average, and is in the red for the year.
- The Dow Transportation index fell 2.8%, its worst week since March, and hit a 9-month low, down 12% for the year.
- The S&P 500 dropped 2.1%, its third worst week in 2015, and is up a mere 1% for the year.
- The Nasdaq dropped 2.2%, its worst week since March.
- The Russell 2000 swooned 3.1%, its worst week since October 2014
It didn’t help that Biotechs collapsed.
Biogen set the tone. It slashed its sales growth forecast for 2015 in half. Its multiple sclerosis drugs, its mainstay, are in trouble. Sales of Tecfidera, its main growth driver since its launch in 2013, ran smack-dab into reports linking it to brain infections. Sales of its injectable MS drug Tysabri and interferon-based MS drug Avonex both fell more than expected. And sales of Plegridy also disappointed. Shares of Biogen plunged 22%, wiping out $25 billion in stockholder wealth.
…click on the above link to read the rest of the article…
Losing Control
Losing Control
Markets are beginning to signal that policy makers are losing control. Many second-order-effects of the unprecedented and experimental global actions taken since the 2008 crisis are beginning to manifest. There are always causes and effects that develop; but they do so at different speeds. Many actions in recent years have prioritized ‘benefits today’ over ‘consequences tomorrow’. ‘Tomorrow’ is approaching ever more quickly. There is no ‘free lunch’.
Market damage and volatility due to policy interference, or due to the deliberate influence of security prices, are a shame. Markets should ideally operate with unencumbered fluidity. Markets should operate in a manner where adjustments to new information allow buyers and sellers to rapidly, and seamlessly, find a natural clearing price. Authorities and regulations should be like good referees in a soccer match; they provide the conditions for a fair match, and you rarely notice their presence.
- The beginning-of-the-end of official control happened earlier this year when the Swiss National Bank (SNB) retracted its currency-peg-promise, triggering a 40% move in the G-7 currency in 10 minutes.
- In early May, shortly after the SNB event and the launch of ECB QE and EU negative interest rate experiments, the EU bond market became dysfunctional. The absurdity of sustaining $4 trillion of negative rates came into focus. The German 10-year Bund moved from 0.05% to 0.75% in under a month.
- A series of Greek policy and troika bailout mistakes – actions that never resulted in a realistic and sustainable solution – are now culminating toward a tipping point (more tomorrow).
- Chinese authorities that have allowed and encouraged an equity bubble to manifest (and other central banks for that matter) are starting to see how ‘bubble blowing’ typically ends. Other central banks are hopefully watching. Chinese equities have lost $3.2 trillion in value in 30 days. To put this into perspective, this is equivalent to the entire stock market capitalization of Germany and France combined.
…click on the above link to read the rest of the article…
Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)
Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)
Carnage…
- *CHINA STOCK PANIC SELLING TO CONTINUE, CENTRAL CHINA ZHANG SAYS
This leave China’s CSI-300 broad stock index futures up just 7% year-to-date…
- *CHINA CSI 500 STOCK-INDEX FUTURES FALL BY MAXIMUM 10% LIMIT
- *CHINA CSI 500 STOCK-INDEX FUTURES FALL BY LIMIT FOR 2ND DAY
- *HKEX DROPS AS MUCH AS 7.3%, MOST SINCE SEPT. 2011
- *SHANGHAI COMPOSITE INDEX EXTENDS DROP TO 7.5%
- *SHANGHAI COMPOSITE HEADS FOR BIGGEST 3-DAY DROP SINCE 1996
Carnage-er…
- *CHINA’S CSI 300 INDEX FALLS 3.4% TO 4,190.3 AT BREAK
- *CHINA’S SHANGHAI COMPOSITE FALLS 3.8% TO 4,035.48 AT BREAK
- *CHINA’S CSI 500 STOCK INDEX FUTURES EXTEND LOSSES TO 5.7%
- *CHINEXT INDEX PLUNGES 7.8% FOR 3-DAY 20% SLIDE
After The People’s Daily proclaimed… “investors were moved to tears” thanks to the PBOC’s actions…
- *FOUNDATIONS FOR A-SHARES ARE `SOLID’: CHINA SECURITIES JOURNAL
- *CHINA STOCK MARKET TO HAVE 30 YEARS `GOLDEN AGE’: SEC. JOURNAL
…click on the above link to read the rest of the article…
“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”
“Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming”
Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn’t want you to seeas “people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time.” The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar – Bernanke “took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning.” The air is coming out of the bubble, they warn, “Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming…”
Full transcript below:
Mike: I was in Puerto Rico a little while back and Peter Schiff invited me over to his house and we were just amazed at how we are exactly on the same page when it comes to everything economically. And so he just made a trip out to California near my offices and we decided we’d get together and discuss some of this stuff. So on your travels Peter lately you were just at a show you were speaking. Where were you at?
Peter: I was in Las Vegas. It’s great to see you again Mike. I was speaking to a very main stream audience of hedge fund managers at an annual conference there. And what was very interesting is even though the audience was, as I said, very main stream, and I was on a panel with a lot of very high profile, main stream individuals, the only person that really got applause was me.
…click on the above link to read the rest of the article or view the interview…
11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis
11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis
Well, the Nasdaq finally did it. It has climbed all the way back to where it was at the peak of the dotcom bubble. Back in March 2000, the Nasdaq set an all-time record high of 5,048.62. On Thursday, after all these years, that all-time record was finally eclipsed. The Nasdaq closed at 5056.06, and Wall Street greatly rejoiced. So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later. Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong. Just like the last two times, what we are witnessing is an irrational financial bubble. Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst. And even now there are signs of economic trouble bubbling to the surface all around us. The following are 11 signs that we are entering the next phase of the global economic crisis…
#1 It is being projected that half of all fracking companies in the United States will be “dead or sold” by the end of this year.
#2 The rig count just continues to fall as the U.S. oil industry implodes. Incredibly, the number of rigs in operation in the United States has fallen for 19 weeks in a row.
#3 McDonald’s has announced that it will be closing 700 “poor performing” restaurants in 2015. Why would McDonald’s be doing this if the economy was actually getting better?
#4 As I wrote about the other day, we could be right on the verge of a Greek debt default. In fact, we learned on Thursday that the Greek government has been “running on empty” for months…
…click on the above link to read the rest of the article…
