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.





 
 
 

Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Phil's Favorites

Divisive economics

 

Guest author David Brin — scientist, technology consultant, best-selling author and futurist — explores the records of Democrats and Republicans on the US economy in the following post. For David's latest posts, visit the CONTRARY BRIN blog. For his books and short stories, visit his web...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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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.

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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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