MARKETS: The journey to safety continues, the fall in economic activity continues, and the debt maelstrom goes anarchic… THE NEXT STEP: PANIC

Friday, August 21, 2015
By Paul Martin

AUGUST 21, 2015

U.S. stocks fell more than 1.3% yesterday, some 220 points down. The Nasdaq Composite lost more than 1.9%. The S&P 500 fell into negative territory for the year and only just became positive at the close. Very significantly when looking towards economic fundamentals, energy stocks this year are down 17%.

Average crude oil fell to $40.90; the forty-dollar line has been an emotional game-changer since last December. “Oil is poised to dip below $40,” admitted Larry Peruzzi, director of international trading at Cabrera Capital Markets LLC in Boston.

The PBOC’s balance sheet is astronomically bigger than it was five years ago (ie, they’ve been buying tons of junk) and the China money supply has risen 20% in three months. The Politburo knows this must shrink and money will have to get a lot more strict. As to how that can aid a recovery, your guess is as good as mine: but in reality, China policy is no longer about recovery, it is about surviving….and not allowing the future to become an infinite American hegemony.

Meanwhile, on July 27th 2015, the Shanghai Composite plunged 8%. On August 18th, it dropped 6%. Today (August 21st) it fell a further 4.3%….and that’s in the context of draconian Beijing controls on selling, as the PBOC has been buying. But (see above) now the buying’s eased as the Government tries to stop other excrement hitting hithertoo unseen fans in the attic and the cellar…so things seem a tad out of control.

Even the Wall Sreet Journal now accepts that: it opines this morning about ‘doubts building about Beijing’s ability to get the world’s No. 2 economy back into gear’, an exceptionally polite statement on the whole: exports having slumped some 8% last June, new Chinese data released today shows that factory activity fell to a six-and-a-half year low.

The Rest…HERE

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