Financial Markets and Economy
China Now Risks "Financial Crisis"; Loses Could Be "In The Trillions" BofA Says (Zero Hedge)
“Regarding the deleveraging process in the market, in our view the government started too late & without adequate preparation for the potential downside. We suspect because it didn’t know the true extent of shadow margin financing activities.”
Obstacles in Regulators’ Push to Reduce Leveraged Loans (NY Times)
In its effort to limit leveraged loans, the government is finding once again that regulating the financial industry is like a game of Whac-a-Mole, with new unregulated players popping up to fill the risky gaps.
Leveraged lending is associated most commonly with buyouts by private equity firms, which borrow significant sums to purchase public companies. Under the calculus of such deals, more debt usually translates into greater returns for the private equity firms.
But regulators, especially after the financial crisis, have perceived this lending as risky.
GUNDLACH: A 'Grexit' would be the beginning of the end of the euro (Business Insider)
Greece's ongoing and deteriorating banking crisis has made an exit from the eurozone, or a "Grexit," an increasingly attractive option for the financially beleaguered country.
During a webcast for investors on Tuesday, DoubleLine Funds' Jeffrey Gundlach argued that a grexit would be bullish for the value of the euro in the near-term.
But a grexit event would "open up Pandora's box," he said.
Presenting China's Plunge Protection Playbook (Zero Hedge)
Officials in Beijing are in the throes of Politburo panic after watching some $3 trillion in market value disappear into thin (and probably polluted) air over the last three weeks. Amid the turmoil, China has resorted to an eye-watering array of policy maneuvers, pronouncements, and plunge protection schemes aimed at arresting the slide.
Reach For Yield Before Counted As ‘Money Supply’ (Alhambra Partners)
The Federal Reserve under Alan Greenspan and then Ben Bernanke has escaped, largely, responsibility for the panic in 2008 mostly because there is no direct link between monetary policy and the housing bubble. The most stinging criticism that comes out of the era is Greenspan’s “ultra-low” interest rate setting for federal funds, but there is no smoking gun in the form of the “printing press” or bank “reserves.” In fact, bank reserves remain, somehow, the central focus of monetary policy even today when they should be taken for how big a mess the Fed created of the prior bubbles.
GUNDLACH: There's only one thing you can say about the Chinese stock market (Business Insider)
"It's not good."
According to DoubleLine Funds' Jeff Gundlach, that's really the only thing you can say about the boom and crash of the Chinese stock market.
Reis: Mall Vacancy Rate unchanged in Q2 (Calculated Risk)
Reis reported that the vacancy rate for regional malls was unchanged at 7.9% in Q2 2015. This is down from a cycle peak of 9.4% in Q3 2011.
For Neighborhood and Community malls (strip malls), the vacancy rate was unchanged at 10.1% in Q2. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011.
This week's collapse in oil prices has been months in the making (Business Insider)
The flop in oil prices this week has been several months in the making.
On Monday, West Texas Intermediate crude oil fell nearly 8% as part of a global sell off in virtually all assets after the Greece referendum results Sunday.
US Mint Runs Out Of Silver On Same Day Price Of Silver Plunges To 2015 Lows (Zero Hedge)
In the aftermath of the latest breakout of the Greek crisis, Europeans across the continent, not just in Greece (even though with capital controls, potential deposit confiscation and currency devaluation they would have benefited by far the most), scrambled to buy physical gold and silver.
Capitol Report: Greece buys hardly any stuff from U.S. anymore (Market Watch)
Greece, the birthplace of democracy, has never had deep economic ties to the United States, the world’s oldest-surviving democracy. And those ties are more flimsy than ever after repeated financial crises involving the small Mediterranean nation.
This has been one of the longest gold bear markets on record, but it's nowhere near the worst (Business Insider)
Gold prices are getting destroyed today, but that's just business as usual.
According to this chart from the financial blog The Short Side of Long, the gold market is now in its second-longest bear market in 40 years. It is closing in on 4 years since gold last topped at $1920 per ounce in September 2011, but the duration is still shorter than the drop from 1999 to 1993.
Small is ugly (Economist)
IF THE recent actions of China’s regulators are anything to judge by, its lenders need help. Over the past ten days alone, the central bank has pumped extra cash into the financial system, cut interest rates and lowered the portion of deposits banks must hold in reserve; the government has scrapped a ceiling on their loan-to-deposit ratios. The combined effect is to free more cash for banks to lend—a boost for banks seeking to improve the return on their assets as well as a prop for the sputtering economy and plunging stockmarket.
Here's a brief, somewhat disturbing stock market history lesson (Business Insider)
So far this year, stocks are about flat.
And while markets have been churning amid a poor start to the year in the US, a stock market crash in China, and almost non-stop headlines about the bailout negotiations in Greece, there has been a "stealth" correction — or decline of more than 10% — in some sectors of the US market.
China’s stock-market collapse is not over yet (Market Watch)
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.
Here's what happened during the last 10 US bear markets (Business Insider)
As the old saying goes, "Those who cannot remember the past are condemned to repeat it."
JP Morgan's review of global markets and economies included a look back at the past ten bear markets in US history, dating back to the Great Depression. To qualify, S&P 500 had to drop 20% off the all-time high.
How China's media and risky trading fueled stock market crash (CNN)
On April 21, People's Daily, the mouthpiece of China's ruling Communist Party, made a bold prediction about the country's benchmark stock index.
Stocks usually go up (Business Insider)
As of Tuesday, the S&P 500 was down for the year, hitting it's lowest level since early March.
But as for where stocks finish this year, maybe you shouldn’t worry just yet.
Chinese households don't have much invested in the wild Chinese stock market (Business Insider)
The crash of China's red-hot stock market has been one of the biggest stories of the year. And market-watchers are worried about what the volatility could mean for China's consumers and businesses.
Bonds are rallying (Business Insider)
Uncertainty over Greece has money moving out of riskier assets like stocks andcommodities and into the safety of government debt.
China fears crash into gold, copper markets (CNN)
Copper plummeted to six-year lows as alarms continue to sound about China's economic and financial health.
Gold and silver are getting crushed (Business Insider)
Gold and silver are getting crushed.
On Tuesday morning, gold fell more than 1%, or about $15 an ounce, to around $1,157.30 – a three-month low.
Can Investors Find Value in the Greek Crisis? (24/7 Wall St)
Greece’s economy is in shambles. Unemployment persistently resides in the double-digit range. However, investors can benefit greatly from turmoil. Catastrophe breeds lower asset prices. However, those asset prices can also be justified. Let’s take a look at three exchange traded funds (ETFs) and a Greek bank to see if they are OK for investment.
Is the Move in Plug Power Sustainable? (24/7 Wall St)
Plug Power Inc. (NASDAQ: PLUG) is one of those few companies that is not going to have to worry about Greece on a day when they release solid news. That being said, they are far from being immune on most days to any market panic. With shares rising in the double-digit percentage after a big gap-up, 24/7 Wall St. wanted to see if the move is real or if it is just a news hype.
Politics
Most States Elect No Black Prosecutors (The Atlantic)
The overwhelming dominance of white men among district attorneys could have huge effects on charging, enforcement, and plea bargains.
It’s no mistake that the most enduring fictional prosecutors are white guys—whether they’re dignified older men like Jack McCoy or hotheaded, handsome younger ones like Dan Kaffee. Art doesn’t always imitate life, but here it does. According to a new survey, an overwhelming portion of the elected officials ultimately responsible for charging criminals, deciding what sentences to seek, and determining whether to allow them to strike plea bargains are white men.
Jeb Bush and Hillary Clinton support bankruptcy rights for Puerto Rico (CNN)
Puerto Rico has $73 billion in debt that it says it can't repay. Now it has two very powerful allies on its side: Jeb Bush and Hillary Clinton.
Both 2016 presidential candidates support giving Puerto Rico the same legal bankruptcy rights that states have. Puerto Rico's governor has been lobbying hard for that right.
Hillary Clinton Says She Is "Very Disappointed" in Donald Trump (Mother Jones)
In a new interview with CNN, Hillary Clinton weighed in on the continuing controversy over Donald Trump's presidential announcement speech in which he characterized Mexican immigrants crossing the border as criminals and "rapists."
"I am very disappointed in those comments," Clinton said. "I feel very bad and very disappointed with him and the Republican party for not responding immediately and saying 'enough stop it.'"
Technology
Honda Wants To Have An Electric Motorcycle On The Market By 2017 (Gizmodo)
Honda is out with its latest annual sustainability report, and tucked away in its mid-term environmental initiatives are plans to bring some electric motorcycles to market in the next two years. But Honda’s approach is tepid at best.
The lone line from the report reads: “Market electric motorcycles that meet local needs in developed (Japan: loaned) and emerging (China) countries”.
Health and Life Sciences
Brazil introduces new caesarean birth rules (BBC)
New rules have come into force in Brazil aimed at reducing the country's high number of caesarean births.
Eighty-five per cent of all births in Brazilian private hospitals are caesareans and in public hospitals the figure is 45%.
The new rules oblige doctors to inform women about the risks and ask them to sign a consent form before performing a caesarean.
Vitamin C linked to lower odds of early death (Futurity)
High vitamin C concentrations in the blood from eating fruit and vegetables are associated with a reduced risk of cardiovascular disease and early death, report researchers.
“We can see that those with the highest intake of fruit and vegetables have a 15 percent lower risk of developing cardiovascular disease and a 20 percent lower risk of early death compared with those who very rarely eat fruit and vegetables,” says Camilla Kobylecki, a medical doctor and PhD student in the clinical biochemistry department of Herlev and Gentofte Hospital.
Life on the Home Planet
Mozambique torches ivory, rhino horns to dramatize fight against poaching (CNN)
It made for a bizarre bonfire: thousands of pounds of ivory and hundreds of pounds of rhino horn doused with fuel and set alight Monday in the center of Maputo, the capital city of Mozambique.
The display was part of an effort by the country's government to demonstrate its commitment to fighting poaching — in particular, the illegal hunting of elephants and rhinoceroses.
Canadian wildfires wreak havoc as haze spreads across region – in pictures (The Guardian)
Wildfires raging across western Canada have spread haze over Vancouver and south into the US. Canada’s military has been called in to assist in the province of Saskatchewan where 112 active fires threaten several remote towns and have forced the evacuation of more than 13,000 people.
