Monday, August 31, 2015

Today's Headlines

Posted by Gary .....at 1:56 PM
Bloomberg: 
  • China's Stocks Cap Biggest Selloff Since 2008 on Rescue Doubts. China’s stocks fell, capping the benchmark index’s biggest two-month tumble since 2008, amid concern that government intervention to prop up the market will fail. The Shanghai Composite Index dropped 0.8 percent to 3,205.99 at the close. The gauge lost 12 percent this month after sliding 14 percent in July. The SSE 50 Index of the nation’s biggest stocks rebounded 6.7 percent from its intraday low. Citic Securities Co. slid 5 percent after Xinhua News Agency said executives were detained on suspicion of insider trading and the securities regulator was said to order the brokerage industry to boost its contribution to the nation’s market rescue. Bearish bets in the options market climbed as traders weighed the level of state support before a World War II victory parade this week.
  • SocGen: Half-Hearted Capital Controls Are Coming to China. Between a rock and a hard place.
  • Macau Economy Slumps 26.4% as Anti-Graft Crackdown Deters Gamblers. Macau’s economy dipped to its lowest since 2011 as high-end gamblers avoided the world’s largest casino market amid a widening crackdown on graft in China. The city where gambling accounts for four-fifths of economic output saw GDP tumble 26.4 percent in the last quarter, according to government data released Monday. The drop worsened from 24.5 percent in the first quarter.
  • Are Luxury Brands Feeling the Heat from China? (video)
  • China Brokers Tumble as Citic Staff Detained, Rescue Costs Grow. China’s brokerages tumbled after four Citic Securities Co. executives were detained and people familiar with the matter said the industry was told to contribute another 100 billion yuan ($15.7 billion) to a stock market rescue fund. Citic executives including managing directors Xu Gang and Liu Wei admitted alleged insider trading, the state-run Xinhua News Agency said. The nation’s largest brokerage fell as much as the maximum 10 percent percent in Shanghai and slid to the lowest since May 2014 in Hong Kong. A Citic press officer declined to comment. 
  • Emerging-Market Stocks Head for Biggest Monthly Slide Since 2012. Emerging-Market Stocks Head for Biggest Monthly Slide Since 2012. Emerging-market stocks headed for their steepest monthly loss in more than three years as Federal Reserve officials signaled they’re prepared to raise interest rates and concern grew China’s efforts to prop up equity prices is failing. Russia’s ruble led currencies lower. Investor expectations that the market turmoil will spur the Fed to delay its interest-rate increase was shaken after Vice Chairman Stanley Fischer said over the weekend there is "good reason" to believe inflation will accelerate. That view was echoed by officials of the European Central Bank and the Bank of England, indicating that the days of higher rates are approaching. In China, options traders increased bearish bets as they weighed the level of state support before a World War II victory parade this week. About $1.9 trillion -- more than Russia’s annual gross domestic product -- was erased this month from the value of stocks traded in the 31 largest emerging markets as China’s surprise devaluation of the yuan triggered a global rout. Price swings surged to the highest level since 2011 as the move heightened concern the world’s second-biggest economy will slow, undermining global demand. 
  • Junk-Rating Dread Sends Ibovespa, Real to World's Biggest Losses. Brazilian stocks and the real led global losses on speculation that Latin America’s largest economy is struggling to put its finances in order and avoid a credit-rating downgrade to junk.
    The Ibovespa extended the worst monthly slide since September, led by banks, after President Dilma Rousseff was said to have abandoned the idea of reviving a tax on financial transactions to boost revenue. The Brazilian government will send to Congress a budget proposal for 2016 that projects a primary deficit instead of the previously expected surplus, according to two people familiar with the matter. Stocks also slumped on renewed concern that China, Brazil’s top trading-partner, will fail to revive its economy. “Brazil is getting closer to a rating cut,” Alvaro Bandeira, an economist at Banco Modal, said from Rio de Janeiro. “There’s lack of credibility toward the fiscal adjustment. In addition to that, all the uncertainties regarding China’s growth is dimming the outlook for Brazilian exports.”
  • China's Crazy Month Sends Tremors Into Europe Equity Bull Case. (video) The worst month for European equities in four years is finally making a dent in investors’ confidence. Traders whose spirits were lifted by hefty profit expectations and promises of central-bank stimulus have finally relented, pulling money out of the region’s equity funds for the first time in 15 weeks. They’re also paying the most since February to hedge against more declines. Investors withdrew $3.6 billion from European equity funds in the week ended Aug. 26, according to a Bank of America Corp. note citing EPFR Global data. Those were the largest outflows since October. August’s slump almost completely erased this year’s gains, with Germany’s DAX Index among the most bruised as concern grew that its exporters would get hit by China’s currency devaluation.
  • Samsung Loses $44 Billion of Value in Worst Streak Since 1983. Tepid demand for Samsung Electronics Co.’s newest Galaxy smartphones triggered a fifth straight monthly decline for the electronics maker, wiping out about $44 billion in market value since April.   
  • Jackson Hole Has a Worrying Message for Draghi & Co. Mario Draghi may have skipped the Federal Reserve’s Jackson Hole symposium this year, but he can’t dodge its conclusion: central banks can’t steer inflation as well as they thought. Less than six months into a stimulus program that the European Central Bank president promised would revive consumer-price growth, the euro area is facing renewed disinflationary pressure as China’s economy slows and commodity prices slump. Inflation failed to pick up this month, data showed on Monday, and Draghi may have to downgrade the institution’s forecasts on Thursday.
  • U.S. Currency Probe Expands to Russia, Brazil Trades. U.S. prosecutors have expanded their probe of currency-market manipulation by some of the world’s largest banks to include the Russian ruble and Brazilian real, according to two people familiar with the matter. 
  • Asian Currencies Record Biggest Monthly Decline in Three Years. Asia’s currencies posted their biggest monthly loss in three years, led by Malaysia’s ringgit, after a yuan devaluation heightened the risk of a currency war in the region as the U.S. prepares to raise interest rates. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, retreated 2.6 percent in August, the biggest monthly decline since May 2012. Global funds sold about $10 billion more equities than they bought in South Korea, India, Taiwan, Thailand, Indonesia and the Philippines, the latest exchange data show.
  • Europe Stocks Post Worst Month Since 2011 on Fed, China Concern. European stocks posted their worst month in four years, as investors weighed Federal Reserve comments for clues on the trajectory of interest rates, while confidence waned in China’s ability to prop up the market. The Stoxx Europe 600 Index slid 0.1 percent to 362.79 at the close of trading, extending its monthly drop to 8.5 percent. The equity gauge earlier pared losses of as much as 0.7 percent after data showed the euro area’s inflation rate rose faster in August than estimated. The volume of shares changing hands was 56 percent lower than the 30-day average as the U.K. market was closed for a holiday.
  • Dow on Pace for Worst Month in Five-Years. (video)
  • S&P Rout Has Room to Go If Bond Spreads Have Anything to Say. (video) Credit markets foretold the selloff in U.S. equities. Should they also prove prescient in calling its extent, stock bulls have more to worry about. In the three times when the extra yield bond investors demand over Treasuries has climbed as much as it has since May, the Standard & Poor’s 500 Index has lost an average of 18 percent, according to data compiled by Bloomberg since 1996 that excludes recession years. At its lowest level last week, the benchmark gauge for American equities was down 12 percent from its May peak. “The credit widening has been a fear signal. The market took it and finally began to sell off,” said Brent Schutte, senior investment strategist at BMO Global Asset Management in Chicago, which manages $250 billion. “There are nervous investors out there who have ridden the market for five years and have been skeptical. Now that they’re seeing this, they may be selling.”
Zero Hedge:
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