Monday, June 29, 2015

Central Banks Scramble To Stabilize Crashing Markets: China Fails, Switzerland Succeeds (For Now)



http://www.zerohedge.com/news/2015-06-29/central-banks-scramble-stabilize-crashing-markets-china-fails-switzerland-succeeds-n

Central Banks Scramble To Stabilize Crashing Markets: China Fails, Switzerland Succeeds (For Now)
Tyler Durden's picture

Following a week in which the Chinese stock bubble popped and a weekend in which the Eurozone bubble followed, it was all up to central banks to stabilize the devstation that would follow should the Plunge Protection Team, now global, not show up.

And while US equities futures were looking grim overnight, China at least started off on the right foot, rising a little over 2% in early trading following China's scramble to stabilize markets as it knows the alternative could very well be (deadly) civil unrest.  And then something unexpected happened: the market did not follow the Chinese central bank script. In fact, as noted earlier, stocks plunged tumbling as much as limit down for CSI-300 futs, and the SHCOMP crashing the most since 1996.



This was not supposed to happen: in fact, with China unleashing the bazooka of the double rate cuts, it was virtually assured that at least China's stock would rise as the rest of the world tumbled on Greek worries. That it did not was the biggest red flag, far more so than what the Greek referendum reveals this weekend, as it means that after Sweden last week, now China has lost control!

According to Paul Chan, chief investment officer for Asia ex-Japan at Invesco in Hong Kong, "China’s fourth interest-rate cut since November failed to stabilize the stock market as it was seen as a stopgap measure to stem a slide in share prices rather than an effort to revive the economy." He added that "It seems like policy makers are more worried about the stock market than about the real economy. The economy is slowing down and they are so much behind the curve in terms of easing. 

But as the stock market corrected, they jumped in, putting in all the policies. It gives people a sense of panic."

That's about right: and now with rate cuts no longer stabilizing the market which as revealed was the PBOC's only real motive, the next and final option for the Chinese central bank is QE, just as we predicted.

But until we get then, there is a question: what happens in the interim. Because at the open, Europe looked in the abyss, and with no help coming from China, it did not like what it saw:
  • EURO STOXX 50 FUTURES FALL 7% AT MARKET OPEN
  • DAX FUTURES DOWN 5%. CAC DOWN -5.3%
  • GERMAN BONDS SURGE AT OPEN, 10-YEAR YIELD FALLS 20 BPS TO 0.72%
  • ITALIAN BONDS DECLINE WITH 10-YEAR YIELD RISING 57 BPS TO 2.72%
  • SPANISH 10-YEAR BONDS DECLINE WITH YIELD RISING 43 BPS TO 2.54%
And then the answer came from the Swiss National Bank, which stepped in to prevent the collapse just as Europe was opening. Because seemingly out of nowhere, a tremendous bid came in to lift the EURCHF, buying Euros (against the CHF and the USD) and selling Europe's last left safety currency.
We now know that it was the SNB, the same central bank which is the proud owner of well over $1 billion in Apple stock.
  • JORDAN: SNB INTERVENED IN FRANC OVER NIGHT
  • JORDAN: SITUATION OVER WEEKEND MADE INTERVENTION NECESSARY
End result:


As the SNB president admitted: “There was an increased demand for francs” over night, Thomas Jordan says at conference in Bern. “The SNB intervened in the market to stabilize it.”
In other words, without the SNB, the situation would have been truly dire.

And this is only on Monday night: we now have 5 more days of agonizing wait until we get to the Greek rerferendum, which may not even happen because as German FAZ reports Greece may not even have the funds to hold the Greferendum!

To be sure before the week is done every single other central bank will have a go at stabilizing the "market" although if everyone else decides to sell, the Chinese contagion will spread as central bank after central bank loses market intervention credibility. At that point, it will be time to really get the hell out of Dodge.

A deeper look at markets, starting in Asia: PBoC cut interest rates for a 4th time in 7 months by 25bps with the lending rate lowered to 4.85% and the deposit rate lowered to 2.00%, while it also cut the RRR rate by 50bps for banks which lend to agricultural and small and medium sized businesses and by 300bps for Non-banking financial companies. (China Economic Net)

Asian equities plunged as participants react to the latest developments in the Greek crisis, while losses in the Nikkei 225 (-2.9%), ASX 200 (-2.2%) and Hang Seng (-2.6%) were exacerbated by weakness in financials. Shanghai Comp (-3.4%) yet again traded in erratic fashion, as the index entered bear market territory having fallen 20% from its June 12th highs, with the PBoC's decision over the weekend to cut interest rates by 25bps months failing to provide a sustained rally in the index. Finally, JGB prices jumped by 39 ticks with USTs rising by over a point as safe havens benefited from a widespread risk-off tone.

Weekend developments in Greece have dominated headlines and market moves this morning, with Greek PM Tsipras announcing a referendum on 5th July and imposing a bank holiday for the week. For a full roundup of developments in Greece please click here. This saw European equities (Euro Stoxx: -3.1 %) open the session in negative territory, with FTSE (-1.4%) and SMI (-1.0%) outperforming as the UK and Switzerland are not members of the Eurozone. On a sector specific basis, financials are lagging with some Italian banks failing to post as opening price.

While fixed income markets have seen Bunds trade around 175 ticks higher, fears of contagion have not been realised despite analysts at Goldman Sachs forecasting that Italian and Spanish spreads would widen by 150-175 bps against the German benchmark, but have instead widened by around 30bps and have come off their worst levels throughout the morning.

Ignoring Tsipras Plea For Calm,
Greeks Storm ATMs, Stores, Gas Stations


http://www.zerohedge.com/news/2015-06-28/ignoring-tsipras-plea-calm-greeks-storm-atms-stores-gas-stations

Ignoring Tsipras Plea For Calm, Greeks Storm ATMs, Stores, Gas Stations

Tyler Durden's picture
     
Just a few hours ago Greek PM Tsipras addressed his nation imploring then to "remain calm" and reassuring them that their "deposits were safe." It appears the Greeks did not believe him. Many were wondering where the Greek bank lines were for the past several months. Turns out the local depositors were merely waiting until just after the last minute to withdraw their funds... horde gas... and stack food. Greece, it appears is Venezuela - the new socialist paradise.
Tsipras implored: "Keep Calm...."


They did not listen...
Call that an ATM line...


The Bush Family Goes "All In" For Number Three
(With The Help Of Its Bankers)



What's not mentioned here is the Clinton's and Bush's are of the same political and banking faction, so if its a Jeb vs Hilary race, its essentially a one party election. The policies that really matter will be the same. -AK

http://www.zerohedge.com/news/2015-06-28/bush-family-goes-all-number-three-help-its-bankers

The Bush Family Goes "All In" For Number Three (With The Help Of Its Bankers)

Tyler Durden's picture

Submitted by Nomi Prins via TomDispatch.com,
Money, they say, makes the world go round. So how’s $10 billion for you? That’s a top-end estimate for the record-breaking spending in this 1% presidential election campaign season. But is “season” even the right word, now that such campaigns are essentially four-year events that seem always to be underway? In a political world stuffed with money, it’s little wonder that the campaign season floats on a sea of donations. In the case of Jeb Bush, he and his advisers have so far had a laser-focus on the electorate they felt mattered most: big donors. They held off the announcement of his candidacy until last week (though he clearly long knew he was running) so that they could blast out of the gates, dollars-wise, leaving the competition in their financial dust, before the exceedingly modest limits to non-super PAC campaign fundraising kicked in.

And give Jeb credit -- or rather consider him a credit to his father (the 41st president) and his brother (the 43rd), who had Iraq eternally on their minds. It wasn’t just that Jeb flubbed the Iraq Question when a reporter asked him recently (yes, he would do it all over again; no, he wouldn’t... well, hmmm...), but that Iraq is deeply embedded in the minds of his campaign team, too. His advisers dubbed the pre-announcement campaign they were going to launch to pull in the dollars a “shock-and-awe” operation in the spirit of the invasion of Iraq. Now, having sent in the ground troops, they clearly consider themselves at war. As the New York Times reported recently, the group's top strategist told donors that his super PAC "hopes to 'weaponize' its fund-raising total for the first six months of the year."

The money being talked about$80-$100 million raised in the first quarter of 2015 and $500 million by June. If reached, these figures would indeed represent shock-and-awe fundraising in the Republican presidential race. As of now, there’s no way of knowing whether they’re fantasy figures or not, but here's a clue to Jeb’s money-raising powers: according to the Washington Post, his advisers have been asking donors not to give more than a million dollars now; they are, that is, trying to cap donations for the moment. (As the Post's Chris Cillizza wrote,“The move reflects concerns among Bush advisers that accepting massive sums from a handful of uber-rich supporters could fuel a perception that the former governor is in their debt.”) And having spent just about every pre-announcement day for months doing fundraisers and scouring the country for money, while preserving the fiction that he might not be interested in the presidency, Jeb, according to the New York Times, bragged to a group of donors that “he believed his political action committee had raised more money in 100 days than any other modern Republican political operation.”

Let’s not forget, of course, that we’re not talking about anyone; we're talking about a Bush. We’re talking about the possibility of becoming number three (or rather Bush 45) in the Oval Office. We’re talking about what is, by now, a fabled money-shaking, money-making, money-raising machine of a family. We’re talking dynasty and when it comes to money and the Bushes (as with money and that other potential dynasty of our moment), no one knows more on the subject than Nomi Prins, former Wall Street exec and author of All the Presidents' Bankers: The Hidden Alliances That Drive American Power. In her now ongoing TomDispatch series on the political dynasties of our moment, fundraising, and the Big Banks, think of her latest post as an essential backgrounder on the election you have less and less to do with, in which Wall Street, the Koch brothers, Sheldon Adelson, and the rest of the crew do most of the essential voting with their wallets.

Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)



Chinese Stocks Crash Most In 19 Years, Re-Open Limit Down (Despite PBOC Hail Mary)




Submitted by Tyler Durden on 06/28/2015 23:22 -0400


Carnage...
*CHINA STOCK PANIC SELLING TO CONTINUE, CENTRAL CHINA ZHANG SAYS
This leave China's CSI-300 broad stock index futures up just 7% year-to-date...
*CHINA CSI 500 STOCK-INDEX FUTURES FALL BY MAXIMUM 10% LIMIT
*CHINA CSI 500 STOCK-INDEX FUTURES FALL BY LIMIT FOR 2ND DAY


*HKEX DROPS AS MUCH AS 7.3%, MOST SINCE SEPT. 2011
*SHANGHAI COMPOSITE INDEX EXTENDS DROP TO 7.5%
*SHANGHAI COMPOSITE HEADS FOR BIGGEST 3-DAY DROP SINCE 1996


Carnage-er...

*CHINA'S CSI 300 INDEX FALLS 3.4% TO 4,190.3 AT BREAK
*CHINA'S SHANGHAI COMPOSITE FALLS 3.8% TO 4,035.48 AT BREAK
*CHINA'S CSI 500 STOCK INDEX FUTURES EXTEND LOSSES TO 5.7%
*CHINEXT INDEX PLUNGES 7.8% FOR 3-DAY 20% SLIDE


After The People's Daily proclaimed... "investors were moved to tears" thanks to the PBOC's actions...
*FOUNDATIONS FOR A-SHARES ARE `SOLID': CHINA SECURITIES JOURNAL
*CHINA STOCK MARKET TO HAVE 30 YEARS `GOLDEN AGE': SEC. JOURNAL





The bounce is dead. CHINEXT - China's tech-heavy high beta 'Nasdaq' - is down 5-6% today, 19% in 3 days, and 33% from highs in early June...!


Greece referendum: did the euro just die at 4pm?


http://blogs.channel4.com/paul-mason-blog/greece-referendum-euro-die/3978

Sunday 28 Jun 2015

Greece referendum: did the euro just die at 4pm?

We’re staying in Europe! says the headline of the Greek liberal paper Kathimerini today.

While the far left government will pose the referendum as a vote for or against austerity, the right will say it’s an in-out vote for the single currency and the EU itself.

The problem is, at around 4pm on Saturday Europe changed. Faced with a proposal from the Greeks to extend the existing bailout until after 7 July, the Eurogroup refused.

At this point chairman Jeroen Dijsselbloem announced there would be “a meeting of the 18” – that is the Eurogroup without Greece. Asked how such a meeting could issue a communique he replied, according to a Greek witness “we can do what we like since we are an ad hoc body”.

The Brussels press corps dutifully reported that the Greeks had “walked out”. But if the Greek account is right, what happened at that moment was the psychological breakpoint of the Euro.

The political willpower had already ebbed. The Greeks haggled over the fiscal details all week but were minded to sign an €8bn austerity package if it could be sold as (a) redistributional and (b) accompanied by a promise to discuss restructuring the debt.

What changed? By Thursday morning it was the lenders’ document that was the basis of discussions with the Greeks allowed to propose amendments. But when the elected ministers of the Eurogroup saw what the EC, IMF and ECB had proposed they rowed back.

“We can’t get this through our own parliaments” they said: it’s too soft.

Since Alexis Tsipras would have struggled to get any compromise through the Greek parliament, what triggered the breakdown is – in fact – democracy.

So bleak has Europe become, so lacking in solidarity, that an agreement worked on for weeks, embodying further austerity for the Greeks and further financial solidarity by the rest, could not pass through either side.

It was this that led to what Greeks call the “rupture”. The currency arrangements of Europe no longer fit the democratic wishes of its people.

And it is not the only breakdown of solidarity. The Schengen agreement on free movement is breaking down as the European powers refuse to absorb the refugees arriving in Greece and Spain.

So what next? The Greek strategy is to attempt to go on negotiating with its lenders, through back channels, in order to resume negotiations with a strengthened hand next Monday. Whatever they say in public, the institutions, too, will try to prepare a compromise – either for Tsipras to sign or for the next prime minister if he falls.

Today’s ECB meeting is critical. There are already calls from the group of countries around Germany to cut off aid to the Greek banks today, triggering the collapse of its banking system. If that happens it will be the second phase of psychological breakdown of the Euro – in which the institution charged with maintaining financial stability and bank solvency actually creates the opposite.

It will represent the effective capture of the ECB by elected politicians, and will puncture the illusion that it is an “independent” central bank governing a unified currency.

Either way, Greeks are in for a week of financial pain and chaos. But anybody who thinks they can predict the outcome is wrong.

The normal receptors for information do not work in Greece. The press and TV are owned by billionaires. Not unusual, but in Greeece there’s no regulation, so the incessant talk channels – which pay no tax, and no licence fees for the airwaves – will simply churn out a bleach-blond version of what their bosses want to hear.

Most Greeks, including all those inclined to vote No in the referendum, have mentally switched off from the mainstream media.

Instead this will be a battle of rumour, emotion, mass rallies and iconic speeches.

By posing the question: do you accept the deal offered by the creditors, Alexis Tsipras tosses a handgrenade into the right and centre right. The old coalition government fell because it could not accept a much tougher deal.

Many of the technocrats and young professionals who have thronged to the pro-Euro rallies, which will now become the Yes camp, are sickened to be surrounded by cashmere wearing oligarchs – the very people the young centrists think ripped the country off and built the debt mountain.

If the week starts with chaos, and gets more chaotic as the ECB grinds the banks to pulp, the outcome of the election will depend on who Greeks blame. That in turn will depend on the deeply memetic conversations taking place in the kafeneions, vineyards, hotel staff canteens.

But both sides will, effectively, be voting for options that don’t exist.

Tsipras told his voters Syriza could negotiate an end to austerity and debt relief within the Euro. He and Varoufakis believed this: because the Italian PM Matteo Renzi had told them it was possible; and Hollande, and also the US State Department. The hard left of his own party were existentially anti-Euro, and pro Moscow, and he was determined to prove them wrong. So it’s been a hard swallow for Tsipras to make this break.

But his new position: vote No and strenghten our hand in pursuit of an austerity-lite deal within the Euro, may no longer be based on possibility. If the ECB is just a cypher for what 18 parliaments will pass, and the Commission powerless, and if north European public opinion hardens against Greece, then the best a No vote might produce is an offer from Brussels and Berlin to fund a “velvet exit” – ie a controlled and subsidised return to a national currency.

No less delusional is the position of the Greek right. When they say “We want Europe” what they mean is: we want Europe to go on ignoring corruption, tax evasion and oligarchy on a grand scale, and to go on crashing our economy at the expense of the poor. We want, in effect, says the Yes campaign, the Europe that caused the problem.

Though they’ll join the Yes movement, many Western-educated professionals and business people will do so warily because of this.

And it will get fractious. Last week, when anarchists disrupted the pro-Euro demo, burning the EU’s flag, there was a standoff between them and a largely nouveau riche crowd. The left chanted “EAM, ELAS, Meligalas”.

EAM was the mass resistance movement in World War Two. ELAS was its military wing, led by communists, which beat the Nazis. Meligalas was a village where in 1944 the partisans defeated a battalion of Nazi collaborators, executed some, and failed to prevent others from being lynched by local villagers.


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