Archive for 2015

Volatility, Confusion Reign As PBoC Intervenes: Chinese Stocks Surge Then Tumble

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

“Rainbows always appear after rains,” China’s state media said over the weekend, in a blatant attempt to create the conditions for a self-fulfilling prophecy when the country’s battered equity markets opened for trading on Monday. 

China’s brokers and mutual funds each took steps on Saturday to help stabilize the market which has collapsed 30% in just three weeks, thanks in part to a massive unwind in the shadowy world of backdoor margin lending.

On Sunday, the China Securities Regulatory Commission announced that China’s central bank is set to inject capital into China Securities Finance Corp which will in turn use the funds to help brokerages expand their businesses and reinvigorate stocks. Translation: China’s central bank is now underwriting brokers’ margin lending businesses. 

Now, the trading week is officially underway and the above-cited “rainbow” thesis is being put to the test early and often as panicked housewives and banana vendors looking to sell the rips battle the PBoC for control of an insanely volatile market.

As we noted earlier, it may now be too late to resurrect the bubble because the psychology has changed irreparably: “I didn’t sell at the peak because people all say the market will rise beyond 6,000 points,” Shao Qinglong, a public service worker who has already lost over a quarter of his capital investing in stocks, told Reuters, adding that all he is waiting for is for the market to recover enough for him to break even. “I’m now waiting for the market to rebound so that I can get out.”

True to form, the SHCOMP opened sharply higher in a bout of post-PBoC euphoria before diving just seconds later, stabilizing, and then proceeding to crash anew, erasing most of the opening gains in a matter of minutes.

One might have expected this. After all, the fact that the central bank was effectively forced to intervene over the weekend is precisely the opposite of something that would inspires confidence: a simple fact that not one central bank has grasped in the past 7 years.

After all, the more backstops and interventions are required, the more fragile and less “fundamental” any given market is.

Of course, the fact that throwing the kitchen sink at the problem has so far resulted in only a feeble…
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Greferendum Caption Contest: Two For The Price Of One

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

We were conflicted about today’s choice of a caption contest to summarize what was the most surreal day in modern European history: a day in which one nation voluntarily made the choice to take steps toward a severance of its ties with some 18 other nations through what was recently seen as an “irreversible” currency.

So here are the two choices for today’s caption contest: we leave it up to readers to decide which is more appropriate.

And:





Shades of Roosevelt: Greece Safety Box Controls; Cash in Hand is King

Courtesy of Mish.

Back in January, I warned Greek citizens to take money out of Greek banks. I also warned not put it in safe deposit boxes. Both comments were dead-on accurate.

Greece Safety Box Controls

Please consider Greeks Cannot Tap Cash in Safe Deposit Boxes Under Capital Controls.

Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place, a deputy finance minister told Greek television on Sunday.

Greece's government shut banks and imposed capital controls a week ago to prevent the country's banks from collapsing under the weight of mass withdrawals.

Deputy Finance Minister Nadia Valavani told Alpha TV that, as part of those measures, the government and banks had agreed at the time that people would also not be allowed to withdraw cash from safe deposit boxes.

Shades of Roosevelt

Anyone recall Roosevelt's Executive Order 6102 outlawing gold?

Executive Order 6102 is a United States presidential executive order signed on April 5, 1933, by President Franklin D. Roosevelt "forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States". The effect of the order, in conjunction with the statute under which it was issued, was to criminalize the possession of monetary gold by any individual, partnership, association or corporation.

According to a hoax, Roosevelt ordered all the safe deposit boxes in the country seized and searched for gold by an I.R.S. official.

In fact, safe deposit boxes held by individuals were not forcibly searched or seized under the order and the few prosecutions that occurred in the 1930s for gold "hoarding" were executed under different statutes. One of the few such cases occurred in 1936, when a safe deposit box containing over 10,000 troy ounces (310 kg) of gold belonging to Zelik Josefowitz, who was not a U.S. citizen, was seized with a search warrant as part of a tax evasion prosecution.

In Australia, part IV of the Banking Act 1959 allows the Commonwealth government to seize private citizens' gold in return for paper money where the Governor-General "is satisfied that it is expedient so to do, for the protection of the currency or of the public credit of the Commonwealth."


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Hillary Ropes Off “Everyday” Reporters, Creates Media Spectacle

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

In case anyone forgot, Hillary Clinton — whose demands for a keynote speech appearance include a quarter of a million dollars, a private jet (“a Gulfstream 450 or larger), and $1,000 for a stenographer — is running for “everyday Americans.” 

Presumably, these are the “folks” who make up the 83% of American workers classified by the BLS as “non supervisory” and probably include those whose job it is to report the news, which is why we were surprised (not really) to see that when it comes to “everyday” reporters, covering a Clinton rally means being herded along like cattle inside a moving rope pen which looks to have been designed to separate the former First Lady from ‘the rest of us’:

*  *  *

The media has predictably had a field day with the images. It’s not yet clear what impact the debacle will have on Clinton’s ability to “rope in” voters so to speak.





IOUs It Is: Why Greece May Have A Problem Printing “Rogue” Euro Banknotes

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Previously we reported that in a heretofore unknown exchange, Varoufakis told Telegraph’s Evans-Pritchard that “if necessary we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago.” Shortly thereafter, SocGen released a note in which it confirmed largely what the Greek finmin may have said, namely that “Greece is likely to issue a form of parallel currency.”

Here is SocGen’s argument:

Greece is likely to issue a form of parallel currency:

  • Indeed, the Greek government is already running a primary budget deficit and no other form of funding will be available in the coming weeks. It is worth noting that if the ECB was to decide to reduce or stop allowing Greek banks to roll-over Greek TBills, the issuance of IOUs would become even more crucial for the government.
  • On top of that, we believe that the IOUs may also be used to help alleviate the financial stresses on Greek banks, such as the issuance of promissory notes in IOU terms in return for the redenomination in IOUs of part of banks’ liabilities (including time deposits above a specified amount). In this case, the IOUs would most likely end up as the new Greek currency. Indeed, living with closed banks and frozen deposits cannot last long. The government would eventually offer (with a discount) the chance to convert blocked time-deposits in euros into cash deposits in IOUs. The government would just have to print new banknotes and coins to allow free deposit withdrawals.

The idea of a parallel currency is not uncommon. In particular, IOUs have been used during periods of financial and economic stress, with extreme examples as some US states and Argentina (the latter eventually ending up with a massive devaluation of the peso).

The academic literature presents several forms of parallel currency, with some creating a new form of securities, backed by the government’s ability to pay back its debt (e.g. California in 2009) and others backed by future taxes (similar to a tax credit).

Unlike the former, the second category would have the advantage of not increasing the amount of debt owed by the Greek government. For example, the Greek government could pay part (let’s say 30%) of civil servant wages, benefits and pensioners in IOUs and part


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China “Crosses Rubicon” With Stock Bailout; BofA Says PBoC Risks “Hurting Its Credibility”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Earlier today in “Panic: China Central Bank Steps In To Bailout Stocks As Underwater Traders Pray For A Rebound,” we noted (without much surprise) that the PBoC has officially taken the plunge. Late on Sunday, the China Securities Regulatory Commission announced that China’s central bank is set to inject capital into China Securities Finance Corp which will in turn use the funds to help brokerages expand their businesses and reinvigorate stocks. Translation: China’s central bank is now underwriting brokers’ margin lending businesses. 

Although Beijing will surely contend that this does not amount to Chinese QE because the central bank isn’t actually adding equities to its balance sheet (or at least as far as we know), it certainly sounds as though the PBoC is now set to directly fund leveraged stock purchases by retail clients and if that doesn’t count as using the central bank’s balance sheet to monetize risk assets then we don’t know what does. 

The move came after a consortium of brokers agreed on Saturday to commit 15% of their collective net assets to propping up China’s flagging stock market. The amount of support sums to just $19 billion and will be allocated to blue chip stocks, meaning, in no uncertain terms, that the initiative will be woefully inadequate to combat the rapid unwind of hundreds of billions of off-the-books margin trading. 

And so, the fate of the market now lies squarely in the hands of the PBoC who, as BofAML notes, may have just “crossed the Rubicon.” 

As we argued before, the A-share market may not bottom until the government, possibly via the PBoC, becomes the buyer of the last resort. It seems that the government might have just taken the first step in that direction on Sunday night with PBoC’s promise to provide liquidity support to stabilize the market. We expect the A-share market to rebound somewhat in coming days, especially large cap names. If that happens, we suggest investors sell into the rally, especially brokers. Fundamentally, with SHCOMP ex. banks trading at 31x trailing 12-month earnings, the market appears very expensive to us. We assess that there is still a fairly high chance that market may fall sharply again at certain point over the next few months, unless the PBoC makes an open-ended commitment to support the market. 

What


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The Big Fat Greek ‘No’

The Greeks said 'NO.' 61% voted against accepting the latest bailout package offered to them by their European creditors. Here's a tour of the many thoughts about what's next for Greece.  

[Picture Source: Drudge Report Headline]

Greece Says 'NO'; Thousands Celebrate; Emergency Summit Called (Business Insider)

The landslide victory for the "No" campaign is a major surprise. Athens exploded in celebration over the result, with thousands streaming into Syntagma Square, waving Greek flags, chanting, and setting off fireworks. 

But the party could be short-lived. A "No" (Oxi) vote will mean that Greece will likely default on almost all its remaining debt, maybe exit the EU, abandon the euro and re-adopt its old currency, the drachma. That would plunge Greece into even more economic turmoil as it would become an international pariah, largely cut off from the credit markets countries need to finance themselves. 

Ending Greece's Bleeding (Paul Krugman, NY Times)

Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.

Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.

More Headlines:

Greece votes No — now what? (FT.com)

No vote puts Greece’s euro future in doubt (FT.com)

Jubilation in Syntagma tinged with fear (FT.com)

Greek banks prepare plan to raid deposits to avert collapse (FT.com)

Sugar, flour, rice: panicked Greeks stock up on essentials (Yahoo Finance)

Greeks Reject Austerity, Setting Up Euro Showdown (Bloomberg)

How Bad Is
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Another Fun Monday

Courtesy of John Rubino.

Last week began with crosscurrents that made it hard to predict. See On Monday, It’s China Versus Greece.

This week is starting with no such ambiguity. The Greeks had their vote and tossed a resounding “NO” at their European creditors. And the markets are not happy:

S&P 500 futures fall hard on Greek vote

U.S. stock futures opened sharply lower Sunday night after the Greek people voted resoundingly to reject proposals from their European creditors. S&P 500 futures fell 1.5 percent in early trading after 6 p.m. ET (2200 GMT).

Once the magnitude of the Greek vote became clear, the euro began falling against other major currencies, and European stock futures sank (led by a 4 percent decline for the benchmark German DAX).

DAX futures July 2015

Because it’s still early on Sunday, a lot of futures markets have yet to open. But when they do it will be with a bang. So expect, along with plunging European and US stocks, extreme currency swings, lower oil prices and surging equities volatility.

And then comes the real excitement. The Greek vote wasn’t legally binding but it does free the country’s leaders to toss around some big threats come Monday. Here’s a typically evocative headline from Zero Hedge: Greece Contemplates Nuclear Options, May Print Euros, Implement Parellel Currency, Nationalize Banks.

This is a story with legs, of course, but as always it’s important to understand that Greece isn’t the issue. It is to the global financial system what who takes out the trash is to an unhappily married couple: Not the central problem but a perfectly acceptable excuse for a catastrophic conflict. The real problems are in the quadrillion dollar derivatives market, the debt/GDP trends of five or six major countries, income inequality in the US and elsewhere, and the Chinese shadow banking system. Greece might be where it starts but those other places are where it will end.

Visit John’s Dollar Collapse blog here





Greferendum Results In Landslide “No” Victory

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Update 2: with virtually all polling completed, the final result is 61.3% No, 38.7% Yes – a whopping rejection of Troika hegemony which may also be the final nail in any negotiations between Greece and the Eurogroup.

Update: The Greek interior ministry vendor Singular Logic projects that “No” vote will prevail with over 61% of vote in Greek referendum.

It would seem that the Troika’s fearmongering campaign backfired:

And:

Earlier:

It seems the early forecasts showing the No vote in the lead were right: according to the Ministry of the Interior, with over 90% of the vote counted, the “No’s” have it with well over 61% of the vote.

Keep track of the votes as they come in live at the following page:

Source: ekloges





S&P Futures Tumble 1.5% At Open: ES Down 33

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The number everyone’s been waiting for all afternoon is finally here: moments ago ES opened for trading after the holiday weekend and it’s not pretty, down 1.5% to 2035 in early illiquid trading. Expect many wild gyrations especially if China, which is set to open in three hours, is unable to halt its market crash having now thrown everything and the kitchen sink at the relentless selling.

The SNB is already in place, ready to sell CHF and buy every EUR it can get its hands on to avoid another embarrassing incident:

And here is Brent, sliding under $60 for the first time since April:

We hope the NY Fed and its less than arms length Citadel ES spoofing relationship, or at least the SNB, will be up to the task of pushing futures higher as the overnight session progresses to preserve the artificial sense that “all is well” in a world that may never be the same again.





 
 
 

Phil's Favorites

Congress is considering privacy legislation - be afraid

 

Congress is considering privacy legislation – be afraid

Courtesy of Jeff Sovern, St. John's University

Supreme Court Justice Louis Brandeis called privacy the “right to be let alone.” Perhaps Congress should give states trying to protect consumer data the same right.

For years, a gridlocked Congress ignored privacy, apart from occasionally scolding companies such as Equifax and Marriott after their major data breaches. In its absence, ...



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Zero Hedge

Key Events This Week: Trade War, EU Elections, Durables, PMIs And Fed Minutes

Courtesy of ZeroHedge

Looking at this week's key events, Deutsche Bank's Craig Nicol writes that while the unpredictable nature of US-China trade developments will likely continue to be the main focus for markets again next week, we also have the European Parliament elections circus to look forward to as well as various survey reports including the flash May PMIs which may offer some insight into the impact of trade escalation on economic data. The FOMC and ECB meeting minutes are also due, along with a heavy calendar of Fed officials speaking.

The European Parliament elections will kick off next Thursday with voting continuing into the weekend across the continent, with results expected on Sunday. With the elections surrounded by internal and external challenges for the EU, members di...



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Kimble Charting Solutions

Will S&P 500 Double Top Derail The Rally?

Courtesy of Chris Kimble.

The rally off the December stock market lows has been strong, to say the least. The S&P 500 rallied 25 percent before hitting and testing the 2018 high.

The old highs proved to be formidable resistance and ushered in some volatility in May… and a 5 percent pullback.

In today’s 2-pack, we look at that resistance level – could that be a double top? We can see similar patterns develop on the S&P 500 Index and its Equal Weight counterpart.

Both indexes are testing short-term Fibonacci retracement levels of the recent decline at point (2).

What takes place here after potential double top highs will be important. Stay tuned...



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Insider Scoop

60 Biggest Movers From Friday

Courtesy of Benzinga.

Gainers
  • Fastly, Inc. (NYSE: FSLY) shares jumped 50 percent to close at $23.99 on Friday. Fastly priced its 11.25 million share IPO at $16 per share.
  • Outlook Therapeutics, Inc. (NASDAQ: OTLK) shares climbed 37.3 percent to close at $2.10 on Friday after the stock rose over 68 percent Thursday following an Oppenheimer initiation at Outperform with a price target of $12.
  • Cray Inc. (NASDAQ: CRAY) shares rose 22.5 percent to close at $36.52 after Hewlett Packard Enterpri...


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Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.

...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

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

 

DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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