Posts Tagged ‘China Bubble’

China Now Second Largest Economy After the United States

China Now Second Largest Economy After the United States

Courtesy of Jr. Deputy Accountant 

Bubble? What bubble?

NYT:

After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.

The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.

The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.

Former chief economist for the International Monetary Fund and filthy Group of 30 operative Kenneth Rogoff is convinced there’s a bubble: “You’re starting to see that collapse in property and it’s going to hit the banking system,” said Rogoff, 57, who also serves on the Group of 30, a panel of central bankers, finance officials and academics led by former Federal Reserve Chairman Paul Volcker. “They have a lot of tools and some very competent management, but it’s not easy.” 

As opposed to #1 with no tools and completely incompetent management, right? I’m not naming names, I need not.

Marc Faber called a Chinese collapse in 9 to twelve months back in May, giving us a few more months to stock up on buttered popcorn and duck feet:

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

I doubt Tim Geithner actually feels China’s hot breath on his neck because last time I checked, our Zimbabwe Ben printing press was still in full working order and recognized by the global economy as all-powerful mover of the cheap money-hungry monster. 


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When Will China’s Bubble Burst?

When Will China’s Bubble Burst?

A sales agent waits for customer in front of the model of a property development at the 5th China (Shenzhen) Real Estate Fair, in the southern Chinese city of Shenzhen

Courtesy of Washington’s Blog

As Bloomberg notes, Marc Faber thinks China may crash in 9 to 12 months, and hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff are also warning of a crash.

Nouriel Roubini told Bloomberg:

In China, where property prices rose at a record pace in April and consumer prices climbed at the fastest rate in 18 months, the economy faces the risk of a “significant slowdown,” Roubini said.

“China should be tightening monetary policy, increasing interest rates and let its currency appreciate over time,” he said. “They are too slow, they are not doing it fast enough.”

On April 20th, BusinessWeek wrote:

China’s Shanghai Composite Index may drop as much as 6 percent after breaching the 250-day moving average for the first time in a year, Shenyin & Wanguo Securities Co. said.

The benchmark gauge plunged 4.8 percent to 2,980.3 yesterday, the most in eight months, on concern government measures to curb real estate speculation will slow economic growth. The index may extend losses until reaching the next support level of 2,803…

Yesterday, Calculated Risk noted that the Shanghai composite is continuing down: 

Keep an eye on the Shanghai index (in red). It appears China’s economy is slowing.

This graph shows the Shanghai SSE Composite Index and the S&P 500 (in blue).

The SSE Composite Index is at 2,622.67 mid-day – down about 300 points from 2 weeks ago. 

[Click here for full chart]

Vincent Fernando notes that Beijing property prices are starting to fall rapidly (and that Shanghai is next), as China clamps down on the property bubble.

As MarketWatch notes:

China’s economy is teetering on the edge of a major slowdown … according to a noted China strategist.

David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world’s third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge.

"We’ve got the beginnings of a credit-bubble collapse in China," said Roche, predicting the economy will likely cool from its stellar double-digit growth rate to a 6% annual expansion as a result.

While that may not sound bad, Roche believes the collateral damage from the cooling will be anything but mild, as the banking sector comes under pressure from cumulative


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Doug Noland: “There Is No Concern For Short-Term Funding Issues”

Doug Noland: “There Is No Concern For Short-Term Funding Issues”

Twelfth Key of Basil

Courtesy of JOHN RUBINO at Dollar Collapse

Prudent Bear’s Doug Noland was a must-read in the years leading up to the bursting of the housing bubble. Almost alone out there, he got not just the fact that we were heading off a cliff, but the exact mechanism of our demise: “Wall Street alchemy” was creating unlimited amounts of artificial securities that the marketplace was treating like money, which sent the effective global money supply through the roof and fueled a series of ever-bigger bubbles.

Once the crash came, Noland reined it in a bit and his articles fell off my automatic “Best of the Web” list. But now the bubble is back and so is Noland. His latest post dissects the current “recovery” and explains why we’re headed back into interesting times:

Deficits and Private Sector Credit

The bullish contingent is these days increasingly confident that there is much more to the recovery than a mere stimulus-induced “sugar high.” The marketplace now comfortably disregards bearish developments – and becomes further emboldened by “market resiliency”. The market this week brushed aside issues with Greece, China, Goldman and financial reform.

Complacency abounds, in true Bubble fashion. The U.S. stock market dismisses that there could be meaningful ramifications from the unfolding Greek debt crisis. Chinese authorities’ recent determination to restrict mortgage Credit barely garners a headline. And while the Goldman allegations generate great interest and discussion, few believe they will have much general market impact. Financial reform, well, it’s an afterthought when the market is open. Market participants are enamored with the notion that the securities markets and real economy are now conjoined in the initial phase of a big bull cycle.

Cherry with wire whisk and icing sugar on table, close-up

Count me a subscriber of the “sugar high” thesis. The combination of double-digit (to GDP) deficits, protracted near-zero rates, and the Fed’s unprecedented Trillion-plus monetization has worked wonders. Government stimulus stabilized the Credit system, asset prices, system incomes and economic output. The bulls today believe that a new expansionary cycle has commenced, and fundamentals and prospects couldn’t be much more encouraging from their point of view. Surging stock prices have the optimists disregarding the possibility of a systemic addiction to massive government spending, ultra-low rates, and overabundant marketplace liquidity. Potential issues in the area of risk intermediation are not on the radar screen.

Yet, the sustainability of this recovery will be determined by private


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Market News

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Financial Markets and Economy

The world’s losers are revolting, and Brexit is only the beginning (Washington Post)

The world has enjoyed an unprecedented run of peace, prosperity and cooperation the last 25 years, but now that might be over. At least when it comes to those last two.

A Sober Economy Can Handle the Brexit Hit (Bloomberg View)

One of the main signs of the health of the global and U.S. economies is its ability to absorb a blow, and shake it off. At least tha...



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Zero Hedge

The Collapse Of Western Democracy

Courtesy of ZeroHedge. View original post here.

Authored by Paul Craig Roberts,

Democracy no longer exists in the West. In the US, powerful private interest groups, such as the military-security complex, Wall Street, the Israel Lobby, agribusiness and the extractive industries of energy, timber and mining, have long exercised more control over government than the people. But now even the semblance of democracy has been abandoned.

In the US Donald Trump has won the Republican presidential nomination. However, Republican convention delegates are ...



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Phil's Favorites

Driver In Fatal Self-Driving Tesla Crash Had Recently Posted Video Praising Car's Autopilot

Courtesy of ZeroHedge. View original post here.

Call it a case of tragic irony.

Earlier today, Tesla reported (with a one day delay so that perhaps its stock wouldn't get clobbered ahead of quarter end rebalancing) that a 40-year-old Ohio man, named Joshua Brown, was killed when his 2015 Model S drove under the trailer of an 18-wheeler on a highway near Williston, Florida, sending Tesla stock lower nearly 3%.

In its defense, Tesla said in a blog post that the autopilot didn’t notice the white side of the tractor trailer against a brightly lit...



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ValueWalk

John DeVoy, Former Baupost Director Hired By Loomis Sayles

By Jacob Wolinsky. Originally published at ValueWalk.

John DeVoy, a long time analyst at Seth Klarman’s Baupost Group has left the hedge fund for a position at Loomis Sayles. Devoy formerly worked at Loomis before spending close to ten years at the Boston based hedge fund. The news was announced via a press release from Loomis.  The statement says that DeVoy will be returning to the company “as a dedicated credit strategist for the flagship full discretion team.”

Also see Will Baupost Follow Its Own “North Star”

Baupost Group’s Seth Klarman Sees ’50 Shades of Value’

Devoy was a managing dir...



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Chart School

Moving Averages: June Month-End Update

Courtesy of Doug Short's Advisor Perspectives.

Valid until the market close on July 29, 2016

The S&P 500 closed June with a monthly gain of 0.09% which follows a gain of 1.53% last month. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETF MAs are signaling "invested". In the table, monthly closes that are within 2% of a signal are highlighted in yellow.

The Ivy Portfolio

The above table shows the current 10-month simple moving average (SMA) signal for each of the five ETFs featured in The Ivy Portfolio. We've also included a table of 12-month SMAs for the same ETFs for this popular alternative stra...



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Kimble Charting Solutions

Follow this leading indicator closely, resistance test in play

Courtesy of Chris Kimble.

Below compares the prices of Crude Oil and the New York Stock Exchange Index (NYSE) over the past couple of years.

Once Crude peaked in 2014, the NYSE Index make little upward movement after than, even though the trend for the prior few years was clearly up.

Over the past year (black rectangle box), the correlation has been quite high.

CLICK ON CHART TO ENLARGE

Are Crude Oil and the NYSE, both creating an inve...



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OpTrader

Swing trading portfolio - Week of June 27th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Mapping The Market

Thoughts on Brexit

I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.

For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....



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Digital Currencies

Bitcoin Tumbles 10%

Courtesy of ZeroHedge. View original post here.

One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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