Critical Observer

LIES YOU WILL HEAR AS THE ECONOMIC COLLAPSE PROGRESSES

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<h5 class="entry-subtitle" style="background-color: white; box-sizing: border-box; color: #333333; font-family: Oswald, sans-serif; font-size: 20px; font-weight: 500; line-height: 1.1; margin-bottom: 10px; margin-top: 5px;">
<span style="line-height: 1.1;">It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial implosion of 2008</span></h5>
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In the years since the derivatives disaster, there has been no end to the absurd and ludicrous propaganda coming out of mainstream financial outlets and as the situation in markets becomes worse, the propaganda will only increase.</div>
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This might seem counter-intuitive to many. You would think that the more obvious the economic collapse becomes, the more alternative analysts will be vindicated and the more awake and aware the average person will be. Not necessarily…</div>
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In fact, the mainstream spin machine is going into high speed the more negative data is exposed and absorbed into the markets. If you know your history, then you know that this is a common tactic by the establishment elite to string the public along with false hopes so that they do not prepare or take alternative measures while the system crumbles around their ears. At the onset of the Great Depression the same strategies were used. Consider if you’ve heard similar quotes to these in the mainstream news over the past couple months:</div>
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John Maynard Keynes in 1927: “We will not have any more crashes in our time.”</div>
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H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”</div>
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Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: “There may be a recession in stock prices, but not anything in the nature of a crash.” And on 17, 1929: “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”</div>
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W. McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”</div>
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Harvard Economic Society, Nov. 10, 1929: “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”</div>
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Here is the issue – as I have ALWAYS said, economic collapse is not a singular event, it is a process. The global economy has been in the process of collapse since 2008 and it never left that path. Those who were ignorant took government statistics at face value and the manipulated bull market as legitimate and refused to acknowledge the fundamentals. Now, with markets recently suffering one of the greatest freefalls since the 2008/2009 crash, they are witnessing the folly of their assumptions, but that does not mean they will accept them or apologize for them outright. If there is one lesson I have learned well during my time in the Liberty Movement, it is to never underestimate the power of normalcy bias.</div>
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There were plenty of “up days” in the markets during the Great Depression, and this kept the false dream of a quick recovery alive for a large percentage of the American population for many years. Expect numerous “stunning stock reversals” as the collapse of our era progresses, but always remember that it is the overall TREND that matters far more than any one positive or negative trading day (unless you open down 1000 points as we did on Monday), and even more important than the trends are the economic fundamentals.</div>
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The establishment has made every effort to hide the fundamentals from the public through far reaching misrepresentations of economic stats. However, the days of effective disinformation in terms of the financial system are coming to an end. As investors and the general public begin to absorb the reality that the global economy is indeed witnessing a vast crisis scenario and acknowledges real numbers over fraudulent numbers, the only recourse of central bankers and the governments they control is to convince the public that the crisis they are witnessing is not really a crisis. That is to say, the establishment will attempt to marginalize the collapse signals they can no longer hide as if such signals are of “minimal” importance.</div>
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Just as occurred during the onset of the Great Depression, the lies will be legion the closer we come to zero hour. Here are some of the lies you will likely hear as the collapse accelerates…</div>
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The Crisis Was Caused By Chinese Contagion</div>
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The hypocrisy inherent in this lie is truly astounding, to say the least, considering it is now being uttered by the same mainstream dirtbags who only months ago were claiming that China’s financial turmoil and stock market upset were inconsequential and would have “little to no effect” on Western markets.</div>
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I specifically recall these hilarious quotes from Barbara Rockefeller in July:</div>
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“Something else that doesn’t matter much is the Chinese equity meltdown—again. China may be big and powerful, but it lacks a retail base and fund managers experienced in price variations, never mind a true rout…”</div>
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“Doom-and-gloom types have been saying for a long time that we will get a stock market rout when the Fed finally does move to raise rates. But as we wrote last week, history doesn’t bear out the thesis, not that you can really count on history when the sample size is one or two data points…”</div>
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Yes, that is a bit embarrassing. One or two data points? There have been many central bank interventions in history. When has ANY central bank or any government ever used stimulus to manipulate markets through fiat infusion and zero interest fueled stock buybacks or given government the ability to monetize its own debt, and actually been successful in the endeavor? When has addicting markets to stimulus like a heroin dealer ever led to “recovery”? When has this kind of behavior ever NOT created massive fiscal bubbles, a steady degradation of the host society, or outright calamity?</div>
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Suddenly, according to the MSM, China’s economy does affect us. Not only that, but China is to blame for all the ills of the globally interdependent economic structure. And, the mere mention that the Fed might delay the end of near zero interest rates in September by a Federal Reserve stooge recently sent markets up 600 points after a week-long bloodbath; meaning, the potential for any interest rate increase no mater how small also has wider implications for markets.</div>
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The truth is, the crash in global stocks which will undoubtedly continue over the next several months despite any delays on ZIRP by the Fed is a product of universal decay in fiscal infrastructure. Nearly every single nation on this planet, every sovereign economy, has allowed central and international banks to poison every aspect of their respective systems with debt and manipulation. This is not a “contagion” problem, it is a systemic problem to every economy across the world.</div>
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China’s crash matters not because it is causing all other economies to crash. It matters because China is the largest importer/exporter in the world and it is a litmus test for the financial health of every other country. If China is failing, it means we are not consuming, and if we are not consuming, then we must be broke. China’s crash portends our own far worse economic conditions. THAT is why western markets have been crumbling along with China’s despite the assumptions of the mainstream.</div>
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China’s Rate Cuts Will Stop The Crash</div>
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No they won’t. China has cut rates five times since last November and this has done nothing to stem the tide of their market collapse. I’m not sure why anyone would think that a new rate cut would accomplish anything besides perhaps a brief respite from the continuing avalanche.</div>
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It’s Not A Crash, It’s Just The End Of A “Market Cycle”</div>
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This is the most ignorant non-explanation I think I have ever heard. There is no such thing as a “market cycle” when your markets are supported partially or fully by fiat manipulation. Our market is in no way a free market, thus, it cannot behave like a free market, and thus, it is a stunted market with no identifiable cycles.</div>
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Swings in markets of up to 5%-6% to the downside or upside (sometimes both in a single day) are not part of a normal cycle. They are a sign of cancerous volatility that comes from an economy on the brink of disaster.</div>
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The last few years have been seemingly endless market bliss in which any idiot day trader could not go wrong as long as he “bought the dip” while Fed monetary intervention stayed the course. This is also not normal, even in the so-called “new normal”. Yes, the current equities turmoil is an inevitable result of manipulated markets, false statistics, and misplaced hopes, but it is indeed a tangible crash in the making. It is in no way an example of a predictable and non-threatening “market cycle”, and the fact that mainstream talking heads and the people who parrot them had absolutely no clue it was coming is only further evidence of this.</div>
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The Fed Will Never Raise Rates</div>
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Don’t count on it. Public statements by globalist entities like the IMF on China, for example, have argued that their current crisis is merely part of the “new normal”; a future in which stagnant growth and reduced living standards is the way things are supposed to be. I expect the Fed will use the same exact argument to support the end of zero interest rates in the U.S., claiming that the decline of American wealth and living standards is a natural part of the new economic world order we are entering.</div>
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That’s right, mark my words, one day soon the Fed, the IMF, the BIS and others will attempt to convince the American people that the erosion of the economy and the loss of world reserve status is actually a “good thing”. They will claim that a strong dollar is the cause of all our economic pain and that a loss in value is necessary. In the meantime they will, of course, downplay the tragedies that will result as the shift toward dollar devaluation smashes down on the heads of the populace.</div>
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A rate hike may not occur in September. In fact, as I predicted in my last article, the Fed is already hinting at a delay in order to boost markets, or at least slow down the current carnage to a more manageable level. But, they WILL raise rates in the near term, likely before the end of this year after a few high tension meetings in which the financial world will sit anxiously waiting for the word on high. Why would they raise rates? Some people just don’t seem to grasp the fact that the job of the Federal Reserve is to destroy the American economic system, not protect it. Once you understand this dynamic then everything the central bank does makes perfect sense.</div>
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A rate increase will occur exactly because that is what is needed to further destabilize U.S. market psychology to make way for the “great economic reset” that the IMF and Christine Lagarde are so fond of promoting. Beyond this, many people seem to be forgetting that ZIRP is still operating, yet, volatility is trending negative anyway. Remember when everyone was ready to put on their ‘Dow 20,000′ hat, certain in the omnipotence of central bank stimulus and QE infinity? Yeah…clearly that was a pipe dream.</div>
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ZIRP has run it’s course. It is no longer feeding the markets as it once did and the fundamentals are too obvious to deny.</div>
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The globalists at the Bank for International Settlements in spring openly deemed the existence of low interest rate policies a potential trigger for crisis. Their statements correlate with the BIS tendency to “predict” terrible market events they helped to create while at the same time misrepresenting the reasons behind them.</div>
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The point is, ZIRP has done the job it was meant to do. There is no longer any reason for the Fed to leave it in place.</div>
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Get Ready For QE4</div>
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Again, don’t count on it. Or at the very least, don’t expect renewed QE to have any lasting effect on the market if it is initiated.</div>
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There is truly no point to the launch of a fourth QE program, but do expect that the Fed will plant the possibility in the media every once in a while to mislead investors. First, the Fed knows that it would be an open admission that the last three QE’s were an utter failure, and while their job is to dismantle the U.S. economy, I don’t think they are looking to take immediate blame for the whole mess. QE4 would be as much a disaster as the ECB’s last stimulus program was in Europe, not to mention the past several stimulus actions by the PBOC in China. I’ll say it one more time – fiat stimulus has a shelf life, and that shelf life is over for the entire globe. The days of artificially supported markets are nearly done and they are never coming back again.</div>
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I see little advantage for the Fed to bring QE4 into the picture. If the goal is to derail the dollar, that action is already well underway as the IMF carefully sets the stage for the Yuan to enter the SDR global currency basket next year, threatening the dollar’s world reserve status. China also continues to dump hundreds of billions in U.S. treasuries inevitably leading to a rush to a dump of treasuries by other nations. The dollar is a dead currency walking, and the Fed won’t even have to print Weimar Germany-style in order to kill it.</div>
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It’s Not As Bad As It Seems</div>
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Yes, it is exactly as bad as it seems if not worse. When the Dow can open 1000 points down on a Monday and China can lose all of its gains for 2015 in the span of a few weeks despite institutionalized stimulus measures lasting years, then something is very wrong. This is not a “hiccup”. This is not a correction which has already hit bottom. This is only the beginning of the end.</div>
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Stocks are not a predictive indicator. They do not follow positive or negative fundamentals. Stocks do not crash before or during the development of an ailing economy. Stocks crash after the economy has already gone comatose. Stocks crash when the system is no longer salvageable. Since 2008, nothing in the global financial structure has been salvaged and now the central banking edifice is either unable or unwilling (I believe both) to supply the tools to allow us even to pretend that it can be salvaged. We’re going to feel the hurt now, all while the establishment tells us the whole thing is in our heads.</div>
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LIES YOU WILL HEAR AS THE ECONOMIC COLLAPSE PROGRESSES

It is undeniable; the final collapse triggers are upon us, triggers alternative economists have been warning about since the initial impl...

Read Article »

WHAT IF THE “ECONOMIC COLLAPSE” IS AS RIGGED AS EVERYTHING ELSE?

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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6rr3R2NZ368uObl260FS9Gr2NtC6rOXEAibXFwN9dM1m7M_b0fb19h5TGjzIqzyy2xKbzWdKbmiVueJZD8YayBmHp2lqiPijKk8mHHBtmGF4xythIT1jpubpRwPSMY2hlM2nTEX91CMo/s1600/00000.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="330" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6rr3R2NZ368uObl260FS9Gr2NtC6rOXEAibXFwN9dM1m7M_b0fb19h5TGjzIqzyy2xKbzWdKbmiVueJZD8YayBmHp2lqiPijKk8mHHBtmGF4xythIT1jpubpRwPSMY2hlM2nTEX91CMo/s640/00000.jpg" width="640" /></a></div>
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<span style="color: #333333; font-family: inherit; font-size: small; font-weight: normal; line-height: 1.1;">A "crash" engineered to set up a buying opportunity for insiders. </span><span style="color: #333333; font-family: inherit; font-size: small; font-weight: normal; line-height: 1.1;">Take your pick–here’s three good reasons to engineer a “crash” that benefits the few at the expense of the many.</span></h2>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">There is an almost touching faith that markets are rigged when they loft higher, but unrigged when they crash. Who’s to say this crash isn’t rigged?</span> A few things about this “crash” (11% decline from all time highs now qualifies as a “crash”) don’t pass the sniff test.</span></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">Exhibit 1: VIX volatility Index soars to “the world is ending” levels when the S&P 500 drops a relatively modest 11%.</span> The VIX above 50 is historically associated with declines of 20% or more–double the current drop.</span></div>
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<span style="font-family: inherit;">When the VIX spiked above 50 in 2008, the market ended up down 57%. Now that’s a crash.</span></div>
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<img align="middle" alt="" border="0" class="img-responsive" src="http://www.oftwominds.com/photos2015/SPX8-25-15.gif" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" /></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">Exhibit 2: The VIX soared and the market cratered at the end of options expiration week (OEX), maximizing pain for the majority of punters.</span> Generally speaking, OEX weeks are up. The exceptions are <em style="box-sizing: border-box;">out of the blue lightning bolts</em> such as the collapse of a major investment bank.</span></div>
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<span style="font-family: inherit;">Was a modest devaluation in China’s yuan really that unexpected, given the yuan’s peg to the U.S. dollar which has risen 20% in the past year? Sorry, that doesn’t pass the sniff test.</span></div>
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<img align="middle" alt="" border="0" class="img-responsive" src="http://www.oftwominds.com/photos2015/vix8-25-15.png" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" /></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">Exhibit 3: When the VIX spiked above 30 in October 2014, signaling panic, the Federal Reserve unleashed the <em style="box-sizing: border-box;">Bullard Put</em></span>, i.e. the Fed’s willingness to unleash stimulus in the form of QE 4. Markets reversed sharply and the VIX collapsed.</span></div>
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<span style="font-family: inherit;">Now the VIX tops 50 and the Federal Reserve issues an absurd statement that it doesn’t respond to equity markets. Well then what was the Bullard Put in October, 2014? Mere coincidence? Sorry, that doesn’t pass the sniff test.</span></div>
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<span style="box-sizing: border-box;"><span style="font-family: inherit;">Why would “somebody” engineer a mini-crash and send volatility to “the world is ending” levels? There are a couple of possibilities.</span></span></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">1. The Shock Doctrine.</span> Naomi Klein’s landmark study of how manufactured crises are used to justify further consolidation of power, <a href="http://www.amazon.com/gp/product/0312427999/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=0312427999&linkCode=as2&tag=charleshughsm-20&linkId=I4KL3RWE6AJIZ227" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">The Shock Doctrine: The Rise of Disaster Capitalism</a>, provides a blueprint for how financial crises set the stage for policies that extend the power of central and private banks and various state-private sector players.</span></div>
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<span style="font-family: inherit;">A soaring VIX and sudden crash certainly softens up the system for the next policy squeeze.</span></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">2. A “crash” engineered to set up a buying opportunity for insiders.</span> When easy gains get scarce, what better way to skim a quick 10% than engineer a “crash,” scoop up shares dumped by panicked punters and momo-following HFT bots spooked by “the world is ending” VIX spike, and then reverse the “crash” with another round of happy talk?</span></div>
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<span style="font-family: inherit;"><span style="box-sizing: border-box;">3. Settling conflicts within the Deep State.</span> I have covered the Deep State for years, in a variety of contexts–for example:</span></div>
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<span style="font-family: inherit;"><a href="http://www.oftwominds.com/blogmar14/disunity-deep-state3-14.html" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">Is the Deep State Fracturing into Disunity?</a> (March 14, 2014)</span></div>
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<span style="font-family: inherit;"><a href="http://www.oftwominds.com/blogfeb14/dollar-deep-state2-14.html" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">The Dollar and the Deep State</a> (February 24, 2014)</span></div>
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<span style="font-family: inherit;"><a href="http://www.oftwominds.com/blogmay15/surplus-repression5-15.html" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">Surplus Repression and the Self-Defeating Deep State</a> (May 26, 2015)</span></div>
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<span style="font-family: inherit;">Without going into details that deserve a separate essay, we can speculate that key power centers with the Deep State have profoundly different views about Imperial priorities.</span></div>
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<span style="font-family: inherit;">One nexus of power engineers a trumped-up financial crisis (i.e. a convenient “crash”) to force the hand of opposing power centers. As I have speculated here before, the rising U.S. dollar is anathema to Wall Street and its apparatchiks, while a rising USD is the cat’s meow to those with a longer and more strategic view of dollar hegemony.</span></div>
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<span style="box-sizing: border-box;"><span style="font-family: inherit;">Take your pick–here’s three good reasons to engineer a “crash” that benefits the few at the expense of the many.</span></span></div>
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<span style="font-family: inherit;"><i style="box-sizing: border-box; line-height: 25.7142868041992px;">by</i><span style="line-height: 25.7142868041992px;"> </span><span style="box-sizing: border-box; line-height: 25.7142868041992px; text-transform: uppercase;">CHARLES HUGH SMITH | <a href="http://charleshughsmith.blogspot.com/2015/08/what-if-crash-is-as-rigged-as.html" style="background: transparent; border: none; box-sizing: border-box; color: black; outline: none; text-decoration: none;" target="_blank">OF TWO MINDS</a> </span><span style="line-height: 25.7142868041992px;">| </span><span style="box-sizing: border-box; line-height: 25.7142868041992px; text-transform: uppercase;">AUGUST 27, 2015</span></span></div>

WHAT IF THE “ECONOMIC COLLAPSE” IS AS RIGGED AS EVERYTHING ELSE?

A "crash" engineered to set up a buying opportunity for insiders. Take your pick–here’s three good reasons to engineer a “cras...

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Is The Federal Reserve Bank to blame for market crisis or is China?

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As stock markets continue their slide into negative territory, economists debate whether the problems lie in monetary mismanagement by the US Federal Reserve or with China’s domestic concerns “exporting pain” to others via its yuan devaluation.<br />
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Speaking to RT, economist Peter Schiff of Euro Pacific Capital Inc. said that there is a lot of “scapegoating” surrounding China and the yuan’s devaluation when it comes to the recent downward fortunes of global stock markets, but that the Federal Reserve is the more responsible culprit when it comes to any instability in the American economy.<br />
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“This is not about China. This problem is made in America. It’s all about the Fed. The Fed inflated this bubble and now they’re threatening to prick it. Everybody expects the Fed to actually raise interest rates,” Schiff said, after US stocks rallied early Tuesday before crashing in the final hour of trading.<br />
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He went on to say that he believes the possibility of the Fed raising rates is “a bluff,” and that doing so would trigger another financial crisis.<br />
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“If the Fed takes away the zero percent interest rates, this market is going to implode and we’re right back at recession… that is what is hurting markets around the world,” Schiff said. “It’s the fear of higher interest rates. That’s propping up the dollar, that’s depressing emerging markets, that’s depressing commodity markets.”<br />
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Critics of Schiff’s view claim the Fed isn’t to blame and that, in fact, the US government has not done enough to help boost the economy.<br />
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“The problem is that this has been a very weak recovery for the United States,” Mark Weisbrot from the Center for Economic and Policy Research told RT. “Our GDP is about 8.5 percent bigger than it was at the peak before the Great Recession,” he said, adding that this statistic represents very little growth.<br />
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By comparison, he said, China has grown by 80 percent and Europe has just recently caught up to its pre-recession peak. Specifically, Weisbrot singled out the European economy as the “much worse problem,” citing much higher unemployment rates there than in the US.<br />
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He said the Fed “has done its part” by keeping interest rates low and that America needs more infrastructure investment and stimulus to create another three or four million jobs.<br />
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Schiff, however, was adamant that the US hasn’t had “a real recovery.”<br />
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“The reason that the average American is worse off today than when the recovery began is because the Fed hasn’t allowed a recovery,” he said, adding that measures such as zero percent interest rates are “interfering” with a true recovery. Instead, less government, higher rates and a “real recession” are needed before recovery can occur, Schiff said.<br />
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This argument was challenged by Weisbrot, who said that allowing the recession to worsen wouldn’t have helped because the kinds of policies Schiff advocated for had been implemented in Europe and did not lead to better economic growth.<br />
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Regarding China’s role in the market turmoil, economist Max Wolff of Manhattan Venture Partners told RT that the yuan’s devaluation is a move that suggests China is still more interested in looking inward than focusing on the global economy.<br />
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“When the Chinese go for the devaluation, what they’re saying is, ‘We’re more concerned with our domestic employment and GDP picture, and we’re willing to make a good effort to export our pain to other people,’” he said. “What that means is that a leading global economy isn’t taking a leadership role; it’s really internally focused and it’s willing to export some pain in order to stabilize internally.”<br />
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This could suggest the situation in China may be worse than initially thought, he added. Beijing’s move has led other nations to follow suit and devalue their currencies in order to stay competitive, Wolff said, warning that any further devaluation could risk a continuing chain reaction.<br />
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At the same time, he noted that there are “real pockets of weakness” in the US economy, particularly since the bottom 75 to 80 percent of households still haven’t recovered from the 2008 crisis. “They’re not as strong as we’d like them to be going into a tough global moment,” Wolff said.<br />
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From: RT News

Is The Federal Reserve Bank to blame for market crisis or is China?

As stock markets continue their slide into negative territory, economists debate whether the problems lie in monetary mismanagement by th...

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China's Stock Market Slips Once Again After Interest Rate Cut

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HONG KONG/SHANGHAI, Aug 26 (Reuters) - China's turbulent stock markets slipped again on Wednesday, as a double-barrelled blast of central bank stimulus failed to convince investors of Beijing's ability to jolt the world's second biggest economy out of its slowdown.<br />
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After watching share prices tumble around 25 percent in a little more than a week, the People's Bank of China re-entered the fray late on Tuesday, cutting interest rates and further loosening bank lending restrictions.<br />
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The response from China's two main stock indexes - never reliable barometers of the domestic economy - was typically erratic, lurching between gains and losses of more than 3 percent before ending the day modestly lower.<br />
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European markets had risen sharply immediately after the People's Bank of China's move on Tuesday, but U.S. indexes turned negative after an initial leap, setting the tone for a lackluster session in Asia on Wednesday.<br />
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"The whole market sentiment is still risk-off, which is why markets have taken the latest move from Beijing in their stride and believe more is needed to restore investor sentiment," said Grace Tam, global markets strategist at JP Morgan Asset Management in Hong Kong.<br />
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The CSI300 index of the biggest listed companies in Shanghai and Shenzhen closed down 0.6 percent, while the Shanghai Composite Index fell 1.3 percent.<br />
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Investors' caution was understandable, said Lim Say Boon, Chief Investment Officer at DBS Bank, as the policy moves would have little impact on consumption in a nation of savers, or investment in a country where government, not the "animal spirits of the private sector," takes the lead.<br />
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"What the market is waiting for (is) the 'big bazooka' of government spending," he wrote in a note.<br />
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There was also concern that the PBOC was simply playing catch-up. ANZ Bank noted that, even after four interest rate cuts since November, the negative producer price index (PPI) was keeping real borrowing costs elevated.<br />
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"With the PPI at minus 5.4 percent y/y in July, the real interest rate costs could be well above 10 percent," it said.<br />
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"We believe that the traditional monetary policy easing, such as cutting RRR (reserve requirement ratio) and lowering the interest rate, is not sufficient to mitigate the risks associated with China's highly leveraged economy," it added.<br />
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<b>SURPRISE DEVALUATION</b><br />
Concerns about China's economy intensified after factory activity shrank at its fastest pace in almost 6-1/2 years and the central bank unexpectedly devalued its yuan currency earlier this month.<br />
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There is, however, little evidence that the stock market mayhem has hit consumer spending so far. Confidence among Chinese consumers rose for the third consecutive month in August, according to a Westpac MNI survey, as household finances continued to improve.<br />
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OCBC Bank noted that cuts in the RRR were needed to ease the liquidity pressures created by capital outflows that had been exacerbated by the yuan devaluation. It said it expected at least another 100 basis point cut this year.<br />
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Japanese automaker Suzuki Motor Corp highlighted the problem manufacturers in China face, with its sales faltering as the economy slows. It said on Wednesday it needed to adjust its production capacity in the country, which was roughly twice what it could sell.<br />
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"Currently, there is still downward pressure on China's economic growth," the central bank acknowledged on Tuesday.<br />
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Investors are also concerned that China is growing at a much slower pace than the official 7 percent target for 2015.<br />
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Despite that, a majority of economists predict a continued deceleration - rather than a crash - for China's economy, and most dismiss comparisons with the 2008 global financial crisis or the 1997/98 crisis in Asia.<br />
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"The upshot is that there is no sign in the recent data of a deepening economic crisis," wrote analysts at Capital Economics. "With policy support gathering force, a rebound in growth still looks the most likely outturn for the next couple of quarters."

China's Stock Market Slips Once Again After Interest Rate Cut

HONG KONG/SHANGHAI, Aug 26 (Reuters) - China's turbulent stock markets slipped again on Wednesday, as a double-barrelled blast of cen...

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US stocks give up gains heading into the close

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NEW YORK (AP) — The latest on the global financial market turmoil (all times local): 3:42 p.m. U.S. stocks are giving up the gains shortly before the market close after a day in which they surged back on an interest-rate cut by China's central bank.<br />
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The Dow Jones industrial average was up three points, or 0.1 percent, at 15,886. The Standard & Poor's 500 index gained one point, or 0.1 percent, to 1,895. The Nasdaq composite rose 39 points, or 0.9 percent, to 4,565.<br />
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3:04 p.m.<br />
The price of oil logged its biggest gain in more than two months, as it rebounded from its lowest closing level in more than six years.<br />
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The price of U.S. crude rose $1.07, or 2.8 percent, to $39.31, its biggest one-day gain since June 9. Brent crude, a benchmark for international oils used by many U.S. refineries, gained 52 cents, or 1.2 percent, to $43.21.<br />
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Natural gas and heating oil prices also rose, and wholesale gasoline dropped.<br />
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2:13 p.m.<br />
U.S. stocks are paring their gains, after surging in early trading on news that China had cut interest rates to shore up its economy.<br />
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The Dow Jones industrial average rose 213 points, or 1.4 percent, to 16,088 as of 2: 18 p.m. Eastern time. It was up as much as 430 points earlier in the day.<br />
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The Standard & Poor's 500 index is up 27 points, or 1.5 percent, at 1,920 and the Nasdaq composite index gained 105 points, or 2.3 percent.<br />
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Metals have closed for the day;<br />
Gold fell $15.30 to $1,138.30 an ounce. Silver dropped 15.2 cents to $14.61 an ounce. Copper rose 5.5 cents to $2.31 per pound.<br />
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12:01 p.m.<br />
U.S. stocks are sharply higher in midday trading after China's central bank cut its key interest rate in a bid to boost growth in the world's second-largest economy. Concerns over a slowdown in China's economy rattled global markets on Monday.<br />
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The Dow Jones industrial average was up 333 points, or 2.1 percent, at 16,204 as of 12:01 p.m. Eastern Tuesday. The Standard & Poor's 500 index rose 43 points, or 2.2 percent. The Nasdaq composite gained 141, or 3.1 percent, to 4,668.<br />
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Oil also rose, but was still trading below $40 a barrel.<br />
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Treasury notes fell, pushing up the yield on the 10-year benchmark note to 2.10 percent.<br />
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Best Buy's stock surged 14 percent after it reported earnings that handily beat analysts' estimates. The consumer electronics chain benefited as shoppers picked up major appliances, large screen televisions and mobile phones.<br />
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11:14 a.m.<br />
The New York Stock Exchange invoked a rarely-used rule both on Monday and Tuesday to help ensure a smoother open to the stock market. "Rule 48" allows designated market-makers to forgo their obligation to circulate price indications before the opening bell. It is only used when there is the potential for extreme market volatility.<br />
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10:13 a.m.<br />
Stocks stay higher in the U.S. after a report shows that Americans stepped up their purchases of new homes in July, with sales surging in the Northeast.<br />
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The Commerce Department says new-home sales rose 5.4 percent last month to a seasonally adjusted annual rate of 507,000, recovering from a slide in purchases in June.<br />
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All 10 sectors in the S&P 500 index are higher, led by gains for technology stocks.<br />
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9:30 a.m.<br />
U.S. stocks jumped at the open after China's central bank cut interest rates to support its economy.<br />
The Dow Jones industrial average rose 296 points, or 1.9 percent, to 16,180.61, as of 9:45 a.m.<br />
Eastern time. The Standard & Poor's 500 index climbed 38 points, or 2 percent, to 1,932. The Nasdaq composite rose 109 points, or 2.4 percent, to 4,635.<br />
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Oil prices are up, but U.S. crude is still trading below $40 a barrel.<br />
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Treasury notes are falling, pushing up the yield on the 10-year benchmark not to 2.08 percent.<br />
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Best Buy was the biggest gainer in the S&P 500 index. The stock surged 16.4 percent after its fiscal second-quarter results handily beat analysts' estimates as shoppers picked up major appliances, large screen televisions and mobile phones<br />
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8:30 a.m.<br />
China's interest rate cuts will not be enough to ease concerns about the country's economy, says Kamel Mellahi, professor at Warwick Business School in Britain.<br />
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"The Chinese economy is going to be on this bumpy road for a while and it will have ebbs and flows that will no doubt have a serious impact on the global economy," he says.<br />
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The Chinese central bank cut its key interest rate and deposit rate on Tuesday after its main stock market plunged for a fourth day. The move boosted markets around the world.<br />
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Mellahi says that while the rate cuts may buoy markets in the short-term, the underlying causes of investors' concerns — the slowdown in the Chinese economy — will last for some time.<br />
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8:00 a.m.<br />
Wall Street futures are rallying further after China's central bank cut interest rates to support its economy.<br />
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Dow futures are up 600 points, or 3.8 percent, while the broader Standard & Poor's 500 futures are up 72.8 points, or 3.9 percent.<br />
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The jump follows a stomach-churning day on Monday, when the Dow plunged more than 1,000 points at one point before finishing down 588.40 points, or 3.6 percent. The Standard & Poor's 500 index slid 77.68 points, or 3.9 percent, into "correction" territory — jargon for a drop of at least 10 percent from a recent peak. The last market correction was nearly four years ago.<br />
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<br /></div>

US stocks give up gains heading into the close

NEW YORK (AP) — The latest on the global financial market turmoil (all times local): 3:42 p.m. U.S. stocks are giving up the gains shortly...

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The Fed Is Spooking the Markets Not China

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Fasten your seat belts, this ride is getting interesting. Last week the Dow Jones Industrial Average was down more than 1,000 points, notching its worst weekly performance in four years. The sell-off took the Dow Jones down more than 10% from its peak valuations, thereby constituting the first official correction in four years. One third of all S&P 500 companies are already in bear market territory, having declined more than 20% from their peaks. Scarier still, the selling intensified as the week drew to a close, with the Dow losing 530 points on Friday, after falling 350 points on Thursday. The new week is even worse, with the Dow dropping almost 1,100 points near the open today before cutting its losses significantly. However, no one should expect that this selling is over. The correction may soon morph into a full-fledged bear market if the Fed makes good on its supposed intentions to raise interest rates this year. Have no illusions, while most market observers are quick to blame the sell-off on China, this market was given life by the Fed, and the Fed is the only force that will keep it alive.<br />
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The Dow has now blown through the lows from October 2014, when fears over life without quantitative easing and zero percent interest rates had caused the markets to pull back about 5%. Back then when market fear began spreading, St. Louis Fed President James Bullard publically issued a few choice words which reassured the markets that the Fed stood ready to reignite the QE engines if the economy really needed a fresh dose of stimulus. By the end of the year the Dow had rallied 10%.<br />
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Amid last week’s carnage, Mr. Bullard was at it once again. But instead of throwing the market a much needed life preserver, he threw it an unwanted anchor. He offered that the economy was still strong enough to warrant a rate increase in September. He was careful to say, however, that the Fed is still “data dependent” and will therefore base its decision on information that will come out over the next three weeks. So after nearly seven years of zero percent interest rates, the most momentous decision the Fed has made since the Great Recession will be dictated by a few weekly data points that have yet to emerge. Haven’t seven years of data provided them enough information already? What’s next? Will they have to check the five-day forecast to insure that there will be no rain before they pull the trigger?<br />
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As I have been saying for years, the Fed has always known that the fragile economy created through stimulus might prove unable to survive even the most marginal of rate increases. But in order to instill confidence in the markets, it has pretended that it could. Wall Street has largely played along in the charade, insisting that rate increases were justified by an apparently strengthening economy and needed to restore normalcy to the financial markets.<br />
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But the recovery Wall Street had anticipated never arrived, and traders who had earlier demanded that the Fed get on with the show, have now panicked that the rate hikes are about to occur in the face of a weakening economy. As a result, we are seeing a redux of the 2013 “taper tantrum” when stocks sold off when the Fed announced that it would be winding down its QE purchases of bonds.<br />
The question now is how much further the markets will have to fall before the Fed comes to the rescue by calling off any threatened rate increase? What else could pull the markets out of the current nose dive?<br />
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Think about where we are. Stock valuations are extremely high and earnings are falling and the economy is clearly decelerating. The steady march upward in stock prices has been enabled by a wave of cheap financing and share buybacks. There are very few reasons to currently suspect that earnings, profits, and share prices will suddenly improve organically. This market is just about the Fed. After one of the longest uninterrupted bull runs in history, bearish investors have learned the hard way that they can’t fight the Fed. So why should they now expect to win when the Fed is posturing that its about to embark on a tightening cycle?<br />
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If the Fed were to do what it pretends it wants to do (embark on a tightening campaign that brings rates to about 2.0% in 18 months), and in the process ignore the carnage on Wall Street, I believe we would see a consistent sell off in which most of the gains made since 2009 would be surrendered. After all, how much of those gains came from bona fide improvements in the economy? It was all about the twin props of Quantitative Easing and zero percent interest rates. The Fed has already removed one of the props, and it’s no accident that the markets have gained no ground whatsoever in the eight months since the QE program was officially wound down.<br />
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As the market considers a world without the second prop, a free fall could ensue. Now that we have broken through the October 2014 lows, there is very little technical support that should come in to play. A free fall in stocks could be an existential threat to an already weak economy.  It should be clear the Janet Yellen-controlled Fed would not want to risk such a scenario. This is why I believe that if the sharp sell off in stocks continues, we will get a clear signal that rate hikes are off the table.<br />
Of course, even if it does throw us that bone, the Fed will pretend that the weakness was unexpected and that it does not come from within (but is caused by external forces coming from China and Europe). Using that excuse, it will attempt to prolong the bluff that its delay is just temporary. For now at least Wall Street is happy to play along with the blame China game. This ignores the fact that China has had much bigger sell offs in recent weeks that did not lead to follow-on losses on Wall Street. I think the problems in China are the same problems confronting other emerging economies, namely the fear of a Fed tightening cycle that would weaken U.S. demand, depress commodity prices while simultaneously sucking investment capital into the United States, and away from the emerging markets, as a result of higher domestic interest rates and the strengthening dollar.<br />
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But if a temporary halt in rate hike rhetoric is not enough to stem the tide, a more definitive repudiation may be needed. Such an admission should finally open some eyes on Wall Street about the true nature of the economy and the unjustified strength of the U.S. dollar. That already may be happening. The dollar index closed at 95 on Friday…down from a high of 98 two weeks prior. On Monday, the index blew through the 93.50 support level and dropped more than 3% in just one day, down to intraday low of 92.6. Who knows where it stops now?<br />
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Gold is rallying in the face of the crisis and has moved quickly back to $1,160, up around $80 in just two weeks. The bounce in gold must be causing extreme angst on Wall Street. Just two weeks ago, amid widening conviction that gold would fall below $1,000, it was revealed that hedge funds, for the first time, held net short positions on gold. Those trades are not working out. With the major currencies and gold now strengthening against the dollar, the greenback has had some success against far lesser rivals like the Thai baht and the Kazakhstan tenge. But these victories against currencies largely tied to commodities may be the last fights the dollar wins for a while, especially if Janet Yellen finally comes clean about the Fed’s inherent dovishness. Those currencies now falling the farthest may be the biggest gainers if the Fed shelves rate increases.<br />
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Some still cling to the belief that the Fed will deliver one or two token 25 basis point rate increase before year end. But this could expose the Fed to a bigger catastrophe than doing nothing at all. If it actually raises rates, and the crisis on Wall Street intensifies, further weakening an already slowing economy, the Fed would have to quickly reverse course and cut back to zero. This would put the Fed’s cluelessness and impotency into very sharp focus. From its perspective anything is better than that. If it does nothing, and the economy continues to slow, ultimately “requiring” additional stimulus, it will at least appear that its caution was justified.<br />
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Unfortunately for the Fed, it won’t be able to get away with doing nothing for too much longer. Events may soon force it to show its hand. Then perhaps some may notice that the Fed is holding absolutely nothing and has been bluffing the entire time.<br />
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Written by Peter Schiff • August 24, 2015

The Fed Is Spooking the Markets Not China

Fasten your seat belts, this ride is getting interesting. Last week the Dow Jones Industrial Average was down more than 1,000 points, not...

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NYSE invokes Rule 48 again to smooth market open

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U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhem in Chinese markets and interest rate fears dominated markets.<br />
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The New York Stock Exchange invoked Rule 48 for the second day in a row, Dow Jones reported.<br />
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The exchange used the rule before Monday's open after futures for several major averages hit limit down. The last time the rule was used was during the financial crisis.<br />
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What is Rule 48? The goal of Rule 48 is to ensure orderly trading amid financial market turbulence. It's only used in the event that extremely high market volatility is likely to have a floor-wide impact on the ability of designated market makers (DMMs) to disseminate price indications before the bell.<br />
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Unlike a circuit breaker that stops stock trading, Rule 48 speeds up the opening by suspending the requirement that stock prices be announced at the market open. Those prices have to be approved by stock market floor managers before trading actually begins. Without that approval, stock trading can begin sooner.<br />
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Dow futures briefly rose more than 600 points in premarket trading, implying a more than 450-point bounce at the open and shrugging off deeper selling in China's mainland stock market.<br />
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From: CNBC News

NYSE invokes Rule 48 again to smooth market open

U.S. stock index futures pointed to a sharply higher open on Tuesday, recovering from the plunge seen in global stocks on Monday as mayhe...

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Dow closes down down 588 points

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NEW YORK — The Dow plunged as much as 1,000 points at the open on Monday — but it rebounded a bit and closed 588.47 points down at 4 p.m, representing the worst one-day loss since August 2011.<br />
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After recovering from those initial scary losses, the final drop was 3.58 percent.<br />
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Global fears about China’s economic slowdown are shaking stock markets around the world for a second week in a row. The wave of selling knocked the S&P 500 into correction mode for the first time since 2011.<br />
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Within minutes, the Dow plummeted as much as 1,089 points. That is the largest point loss ever during a trading day, surpassing the Flash Crash of 2010.<br />
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“We have not seen this level of full-blown panic in markets for quite some time,” said Peter Kenny, chief market strategist at Clear Pool Group, a financial technology firm.<br />
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However, Monday was not that bad compared to “Black Monday” in 1987. Yes, there’s a lot of panic, but the Dow tumbled a whopping 22.6 percent on October 19, 1987. On Monday, the Dow was only down about 6.6 percent at its worst point. If this were a true “Black Monday” like what happened in 1987, the Dow would have fallen 3,700 points.<br />
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While we are into correction territory, it’s not unexpected. At the moment, the Dow, S&P 500 and Nasdaq indexes — America’s “Big 3” — are all in correction mode. They peaked in the spring and have lost over 10 percent since then, meaning a correction. However, a lot of experts say America was overdue for a correction. They are natural — kind of like needing to tap the breaks on a bike or car sometimes.<br />
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It all started with Shanghai’s 8.5 percent drop<br />
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The dramatic selling began overseas. China’s Shanghai Composite plummeted 8.5 percent, wiping out all of its massive gains so far this year. Not only has an apparent bubble in Chinese equities popped, but the country’s economy may be slowing much faster than feared.<br />
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Last week’s big selloff gathered serious momentum after China said its manufacturing activity — a critical metric on growth — tumbled to a six-year low in July.<br />
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Fears of China contagion<br />
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China is the world’s second-biggest economy. Its explosive growth in the last two decades has been the engine for the global economy. Its enormous appetite for raw materials like oil, copper and iron ore fueled global growth, especially in emerging markets like Brazil that are rich in natural resources.<br />
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But that story has been completely derailed by China’s economic slowdown. Just how much China slows down matters greatly to investors around the world.<br />
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All U.S. stock market indexes are in correction<br />
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Fears about the health of China’s economy have ratcheted up to the point that the S&P 500, made up the largest U.S. companies, is now sitting in “correction” territory — a 10 percent decline from a recent peak.<br />
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Both the Dow and Nasdaq fell into correction mode on Friday, the first since 2011.<br />
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But stocks are up about 200 percent since crisis<br />
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It’s worth remembering that these steep losses come after a tremendous bull run for stocks.<br />
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The S&P 500 has skyrocketed 220 percent since bottoming out at 666 during the Great Recession in March 2009. At its lows on Monday, it was at 1,866.86.<br />
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Mohamed El-Erian, chief economic adviser at Allianz, believes longer term the correction will be a healthy thing for the market.<br />
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“It will bring financial markets closer to what’s justified by fundamentals. Therefore, there will be less of a risk of a financial collapse down the road,” El-Erian told CNN.<br />
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Oil continues downward march too<br />
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Crude oil plunged below $39 a barrel on Monday for the first time since 2009. A global economic slowdown is eating into demand for oil at a time when supplies remain extremely elevated.<br />
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Energy is still a substantial part of the U.S. economy and stock market. When oil prices slide this much, it means a lot of companies aren’t making money anymore. That hurts U.S. companies and many countries that depend heavily on profits from selling oil.<br />
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10-year yield below 2 percent<br />
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Another sign of fear: The 10-year Treasury yield slid below 2 percent on Monday. That’s the lowest level since April and a sign that investors are fleeing to the relative safety of American government debt.<br />
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It also signals that Wall Street believes the Federal Reserve may have to delay its expected interest rate hike from September until later in the year or even 2016.<br />
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Will the bull market survive?<br />
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Ed Yardeni, president of Yardeni Research, believes the selloff has created an opportunity for investors “with the stomach to jump in.”<br />
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“I think we’ll see the markets make a comeback. The fundamentals of the U.S. economy remain good, especially compared with everybody else,” Yardeni said.<br />
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That would mean the bull market that began more than six years ago will survive. The S&P 500 would need to close below 1,708 to be classified a bear market, which is defined as a 20 percent decline from a previous high. Currently, the S&P is at 1,934. Germany, on the other hand, tumbled into a bear market on Monday.<br />
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Bear market for Apple<br />
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Many of America’s favorite stocks are now in “bear market” territory, including Disney, Tesla and even Apple.<br />
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Apple CEO Tim Cook sought to ease investor anxiety. Cook told CNBC that Apple has experienced “strong growth” in China over the last two months. He said iPhone activations have actually “accelerated” in recent weeks and China continues to represent “unprecedented opportunity over the long term.”

Dow closes down down 588 points

NEW YORK — The Dow plunged as much as 1,000 points at the open on Monday — but it rebounded a bit and closed 588.47 points down at 4 p.m,...

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THE DERIVATIVES MARKET IS BEGINNING TO CRACK

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Here is just a small sampling of a non bank entity taking a huge loss on a derivatives position. On Friday Metlife reported profit down 21%.The loss amounted to 593 million on derivatives that went the wrong way. Reuters is reporting that the<br />
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 top 5 American banks have a 200 trillion dollar exposure offshore<br />
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that they parked in 2014.This very morning,the Canadian papers are reporting that the 6 biggest banks carry over 100 billion of gross credit exposure to the oil and gas sector and defaults may ensue. Now might be the time to get some money out of the bank…<br />
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How Wall Street got around derivatives rules imposed by the CFTC after the financial crisis<br />
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The lobbying blitz helped win a ruling from the CFTC that left U.S. banks’ overseas operations largely outside the jurisdiction of U.S. regulators. After that rule passed, U.S. banks simply shipped more trades overseas. By December of 2014, certain U.S. swaps markets had seen 95 percent of their trading volume disappear in less than two years.<br />
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While many swaps trades are now booked abroad, some people in the markets believe the risk remains firmly on U.S. shores. They say the big American banks are still on the hook for swaps they’re parking offshore with subsidiaries.<br />
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This worries some regulators, who fear that Washington, in turn, will be on the hook for another bailout if these “too big to fail” banks are hit by a fresh shock – such as a rash of defaults in a recession.<br />
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“These are the shadows that do you in during a crisis, when there is almost always that link back to the core money center banks at home,” said Simon Johnson, an adviser to the Federal Deposit Insurance Corporation, which regulates government insured banks, and a former chief economist at the IMF.<br />
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by INVESTMENT WATCH | AUGUST 24, 2015

THE DERIVATIVES MARKET IS BEGINNING TO CRACK

Here is just a small sampling of a non bank entity taking a huge loss on a derivatives position. On Friday Metlife reported profit down 2...

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ANALYST: “WE ARE NOW IN A FULL ON MARKET CRASH”

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Financial analyst Clive P. Maund asserts that we are now witnessing a “full on market crash” and that the Dow could see drops of up to a thousand points on a daily basis.<br />
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The Dow Jones lost 6% last week, tumbling more than 1,000 points, the worst fall since 2008, but according to technical analyst Maund, that is only the beginning. With fringe investors only just realizing the delusion of establishment financial media claims that the collapse was just a temporary “correction,” the rush to the exit will now become a stampede.<br />
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“When a market tips into a crash on a Friday, what typically happens is that the thousands or even millions of investors who believed the mainstream media and didn’t see it coming spend the weekend “stewing” over their investments – and many of them decide to bail out come Monday,” writes Maund.<br />
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“Thus we may see a massive down day tomorrow, possibly the worst of the crash phase, and it would not be that surprising to see the Dow Jones Industrials drop by 800 – 1000 points in one day, perhaps even more. Remember that the Dow Jones Industrials “only” dropped 3% on Friday, which is no big deal by the standards of past crashes,” he adds.<br />
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Maund predicts several days of high volume selling, noting that the market is currently in “full blown panic mode,” before a more measured decline confirms the emergence of a bear market downtrend. A self-perpetuating “Mexican wave” of losses will continue to spread globally for a few days, writes Maund.<br />
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Meanwhile, this morning’s continued collapse in Asia has sent the “fear index,” which monitors volatility in S & P stocks, exploding to its highest level since 2011.<br />
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Business Insider’s Henry Blodget says that stocks need to “drop of 40%-50% from the recent high” merely to “get back to historically average levels of valuation and performance.”<br />
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Even as investors resort to panic selling, some sectors of the establishment financial media are still clinging on to the delusion that we’re in a bull market.<br />
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CNBC is encouraging people to pour more money into the stock market, claiming that the collapse is merely a “dull year,” while Bloomberg is calling it a mere “correction”.<br />
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When this kind of blind faith begins to take hold, you know the bottom is about to drop out.<br />
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By <b>Paul Joseph Watson of InfoWars.com</b>

ANALYST: “WE ARE NOW IN A FULL ON MARKET CRASH”

Financial analyst Clive P. Maund asserts that we are now witnessing a “full on market crash” and that the Dow could see drops of up to a ...

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MARKET CRASH: FREIGHT RATES FROM ASIA TO EUROPE CRASH 60% IN THREE WEEKS

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<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
<strong style="box-sizing: border-box;">Three weeks ago, when <a href="http://www.zerohedge.com/news/2015-08-02/something-just-snapped-container-freight-rates-asia-europe-crash-23-one-week" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">we last looked </a>at the collapse in trade along what may be the most trafficked route involving China, i.e., from Asia to Northern Europe, we noted that while that particular shipping freight rate Europe had crashed some 23% on just one week, there was some good news: at least the Baltic Dry index was still inexplicably rising, and at last check it was hovering just above 1,100.</strong></div>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
That is no longer the case, and just as with everything else in recent months, the Baltic Dry dead cat bounce is now over, with the BDIY topping out just above 1200 on August 4, and now back in triple digit territory, rapidly sliding back to the reality of recent record lows which a few months ago we suggested hinted that much more is wrong with global trade, and the global economy, than artificially manipulated stock markets would admit.</div>
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<a data-slb-active="1" href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015-08-23_9-02-48%20BDIY.jpg" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank"><img alt="" class="img-responsive" height="270" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/08/2015-08-23_9-02-48%20BDIY_0.jpg" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" width="501" /></a></div>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
More importantly, a major source of confusion appears to have been resolved. Recall that as <a href="http://www.zerohedge.com/news/2015-08-02/something-just-snapped-container-freight-rates-asia-europe-crash-23-one-week" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; outline: none; text-decoration: none;" target="_blank">we noted on August 3</a>, “many were wondering how it was possible that with accelerating deterioration across all Chinese asset classes, not to mention the bursting of various asset bubbles, could global shippers demand increasingly higher freight rates, an indication of either a tight transportation market or a jump in commodity demand, neither of which seemed credible. We may have the answer.”</div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, Times New Roman, Times, serif;"><span style="font-size: 13px; line-height: 18.2000007629395px;">We did. To wit: “Should the dead cat bounce in shipping rates indeed be over, and if the accelerate slide continues at the current pace, not only will shippers mothball key transit lanes, but the biggest concern for global economy, the unprecedented slowdown in world trade volumes, which we flagged a week ago, will be not only confirmed but is likely to unleash yet another global recession.“</span></span></div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">As expected, on Friday, we got confirmation that the BDIY has indeed become a lagging indicator to actual demand, when Reuters reported in its latest weekly update using data from the Shanghai Containerized Freight Index, that key shipping freight rates for transporting containers from ports in Asia to Northern Europe fell by 26.7 percent to $469 per 20-foot container (TEU) in the week ended on Friday.</span></div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">The collapse in rates is nothing short of a bloodbath: “it was the third consecutive week of falling freight rates on the world’s busiest route and rates are now nearly 60 percent lower than three weeks ago.</span></div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">Freight rates on the world’s busiest shipping route have tanked this year due to overcapacity in available vessels and sluggish demand in goods to be transported. Rates generally deemed profitable for shipping companies on the route are at about $800-$1,000 per TEU.</span></div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">Other Europe-focused freight rates did even worse, with container freight rates from Asia to ports in the Mediterranean plunging 32.1%, while those to the US West and East coast slid by 7.9% and 9.9%, respectively.</span></div>
<div style="background-color: white; box-sizing: border-box; margin-bottom: 10px;">
<span style="color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px;">This should not come as a surprise: it was back in March when we first reported that “Global Trade Volume Tumbles Most Since 2011; Biggest Value Plunge Since Lehman.”</span></div>
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<a data-slb-active="1" href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/global%20trade%20USD.jpg" style="background: transparent; border: none; box-sizing: border-box; color: #025ab4; margin-left: 1em; margin-right: 1em; outline-offset: -2px; outline: -webkit-focus-ring-color auto 5px;" target="_blank"><img alt="" class="img-responsive" height="322" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/03/global%20trade%20USD_0.jpg" style="border: none; box-sizing: border-box; display: block; height: auto; max-width: 100%; outline: none; vertical-align: middle;" width="509" /></a></div>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
<span style="line-height: 18.2000007629395px;"><br /></span></div>
<div style="background-color: white; box-sizing: border-box; color: #333333; font-family: Georgia, 'Times New Roman', Times, serif; font-size: 13px; line-height: 18.2000007629395px; margin-bottom: 10px;">
<span style="line-height: 18.2000007629395px;">It took the no longer discounting “market” about 6 months to figure this out. As for the culprit, no question who is at fault.</span></div>

MARKET CRASH: FREIGHT RATES FROM ASIA TO EUROPE CRASH 60% IN THREE WEEKS

Three weeks ago, when we last looked at the collapse in trade along what may be the most trafficked route involving China, i.e., from ...

Read Article »

Dow Jones Plummets as China's Stock Market Crashes

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U.S stocks plunged Monday, with the Dow Jones Industrial Average plummeting more than 1,000 points following a global stock sell-off across European and Asian markets as fears escalated about China’s slowing economy. All three major indexes are on course for one of their worst opens since the financial crisis of 2008.<br />
<br />
The sharp U.S. stock downturn was anticipated after futures pointed to Monday mayhem. Dow futures plunged more than 800 points before the U.S. markets opened, as fears of a major Chinese economic downturn escalated across global markets. European markets extended losses in afternoon trade Monday, with the pan-European Stoxx 600 index down nearly 5 percent. Japan’s Nikkei 225 index dropped 4.6 percent to finish at its lowest closing level since February 23. China’s benchmark Shanghai Composite recorded its biggest one-day percentage loss since 2007, closing down 8.5 percent, dubbed “Black Monday” by China’s state media.<br />
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The Dow Jones Industrial Average (INDEXDJX:.DJI) tumbled 1,089 points, or 6 percent, to 15,370.33. The S&P 500 index (INDEXSP:.INX) lost more than 100 points, or 5 percent, to 1,867.01. And the Nasdaq composite (INDEXNASDAQ:.IXIC) dropped 412 points, or nearly 9 percent, to 4,292.14.<br />
<br />
The stock rout began with China's posting of numbers that showed factory production in the world’s second-largest economy shrank in August at its fastest rate in more than six years. The numbers fuel concerns that China’s sudden slowing will have far-reaching effects around the world.<br />
<br />
All 10 sectors in the S&P 500 traded lower, led by a more than 6 percent decline in consumer staples and technology stocks. Healthcare and consumer discretionary stocks dropped more than 5 percent.<br />
<br />
Meanwhile, all 30 stocks in the Dow traded sharply lower, led by a 5 percent decline from The Coca-Cola Co. (NYSE:KO), while Cisco Systems Inc. (NASDAQ:CSCO) and McDonald's Corporation(NYSE:MCD) lost more than 4 percent.<br />
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The yield on the U.S. 10-year Treasury slid further Monday to 1.97 percent from 2.045 percent Friday amid growing uncertainty about global economic growth. When investor confidence is low, the price on the 10-year goes up as there is more demand for Treasurys as a safe investment, and yields subsequently fall.<br />
<br />
The U.S. dollar fell against major currencies amid growing uncertainty of whether the U.S. Federal Reserve may wait even longer than planned after September to raise interest rates.<br />
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U.S. oil prices extended losses Monday, tumbling 4 percent to trade below $30 after tallying an eighth straight weekly decline last week, the longest weekly losing streak in nearly 30 years. U.S. crude oil has lost around 17 percent from its opening price at the start of the month.<br />
<br />
West Texas Intermediate crude, the benchmark for U.S. oil prices, fell 4 percent to $38.69 per barrel for October delivery on the New York Mercantile Exchange. On the London ICE Futures Exchange, Brent crude, the global benchmark for oil prices, dropped nearly 3.5 percent to $43.87.<br />
<br />
From: International Business Times

Dow Jones Plummets as China's Stock Market Crashes

U.S stocks plunged Monday, with the Dow Jones Industrial Average plummeting more than 1,000 points following a global stock sell-off acro...

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