Monday, August 3, 2015


Greek Stocks, Economy Collapse, Suffer Worst Declines In History

The Greek stock market is crashing. The Greek stock market reopened for the first time in five weeks, and it's ugly. The benchmark ASE index plummeted 22.8% before recovering some of its losses. Piraeus Bank and National Bank of Greece crashed the maximum 30% before being halted.

The Greek economy is crashing. Greece's economy screeched as political turmoil took over. The Markit manufacturing purchasing managers' index (PMI) reflected a record contraction, crashing to 30.2 in July from 46.9 in June. Any reading below 50 signals contraction. "Manufacturing output collapsed in July as the debt crisis came to a head," Markit's Phil Smith said. "Factories faced a record drop in new orders and were often unable to acquire the inputs they needed, particularly from abroad, as bank closures and capital restrictions badly hampered normal business activity. Demand was hit amid the heightened uncertainty surrounding Greece's future, leading both total new business and exports to contract sharply, and it remains to be seen how long it takes these to recover."

Chinese Economy Crashes To 2-Year Low; China Stocks Plunge, Asian Stocks Test 2015 Lows

Yet again the endless reasurance from the talking heads of the world is proven fallacious as the crash in China's stock market has apparently crashed its economy. China's Manufacturing PMI final print for July collapsed to 47.8 - its lowest since July 2013. The reaction is not pretty. China is down 4-8% from Friday's highs (led by high beta high-flyers in ChiNext), most Asian markets are down 2-3%, and the broad MSCI Asia Ex-Japan index is once again testing the lowest levels of 2015. But apart from that, China is contained...

China is definitely slowing. China's official manufacturing PMI fell to 50.0 in July from 50.2 in June. China's Caixin manufacturing PMI fell to 47.8 in July from 49.4 in June; this was the weakest reading since July 2013. The numbers were just as ugly in Taiwan, Indonesia, and South Korea.

Bubbles collapse, period; and government interventions don't stop them. Furthermore, we are beginning to see a crack widen in the foundations of China's capital markets that could end up undermining the whole economy.

Puerto Rico Will Default 

"Puerto Rico will miss a payment on debt due Aug. 1, the governor's chief of staff said on Friday, an event that will be considered a default by investors as the commonwealth lurches towards what could be one of the largest US municipal debt restructurings in history," Reuters reported. "The missed payment will mark the first default by the commonwealth and shows the depth of the island's economic and cashflow problems. Puerto Rico Governor Alejandro Garcia Padilla shocked investors in June when he said the island's debt, totaling $72 billion, was unpayable and required restructuring."

Container Freight Rates From Asia To Europe Crash 23% In One Week

It appears that the recent spike in shipping rates was analogous to the dead cat bounce in crude oil prices: a speculator-driven anticipation for a sustainable rebound that never took place. And now, just like with crude prices, it is all crashing down.... again.  According to Reuters, shipping freight rates for transporting containers from ports in Asia to Northern Europe dropped 22.8 per cent to $400 per 20-foot container (TEU) in the week ended last Friday, data from the Shanghai Containerized Freight Index showed.

Copper Tumbles To 6 Year Low

Copper plunged to a fresh 6 year low, and like crude, is back in its second bear market of the past year. Crashing commodity demand, sliding Chinese stocks, Europe treading water and ignoring what may still be Greek contagion for the broader economy.

The Fed's Circular Logic Exposed

Hope, quite simply, just isn't enough for a real recovery. There is an undeniable element of troubling prevarication in the whole attempt to coax unearned optimism, as taken to the extreme it means that policymakers will never quite be honest about especially realistic downsides. That may even mean, in their zeal to "fool" consumers, they fool themselves on the circular logic.

ABOOK Dec 2014 Fischer 2

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