by Phil
I love a good distraction!
One of the great things about being good at forecasting the
Futures is that we were not only 100% prepared for Greece to melt down
(our Short-Term Portfolio was already up 152% as of Friday’s close) but
we’re already done talking about it and looking ahead to the much bigger
Financial crisis in CHINA!!!
If you are a typical short-term, short-sighted, impatient investor (they kind we make money off every day), now is a good time to click away and look for someone to explain to you what’s going on in Greece. I liked Felix Salmon’s “I Haven’t Been Paying Attention. What’s Going On In Greece?” enough to send it to the 1,000 people who asked me that this weekend. Greek markets are closed today (and will be all week along with the banks) but the Greek ETF (GREK) is trading and will open down 15-20% by my estimation.
image: http://www.finviz.com/fut_chart.ashx?t=ES&p=m5&s=m&rev=635711594173392158
As I said, I’m bored with Greece, we discussed it all weekend (and all year, and all month) in Member Chat, so you can catch up HERE, and we already played our strong bounce lines in the Futures and took our profits at:
I
was hoping that FXI would open higher this morning and we’d have a
chance to double down at a lower price after China announced over the
weekend after China cut both the lending rate by 0.25% AND lowered the
reserve requirements for banks by 0.25%, effectively doubling their
usual bi-weekly $85Bn cash injection in an attempt to stop the 20% slide
in their indexes. It worked – for about 30 minutes, as the Chinese
markets opened up 4% but, over the course of the session, they plunged
back to new lows, ending down about 3% for the day, 7% down from the
open in another disastrous session.
Hmm,
I wonder if we can think of any other countries where the Central Banks
have been eager to maintain a bull market by dumping FREE MONEY on the
investing class? I know I sound like a real party-pooper when I keep
hammering on those boring old Fundamentals but, in the end, we do have
to face reality. Printing money and handing it to Corporations and the
Top 1% who own them does NOTHING for the real economy.
image: http://pbs.twimg.com/media/CIpS-trUcAAtt8Z.jpg
And don’t forget the margin debt (see my 6/15 note).
What idiots lent out that kind of money to people who were buying
Chinese stocks AFTER they already gained 100% in a year? I guess the
PEOPLE will have to suffer because the Banksters who collected huge fees
for financing this bubble will now need to be bailed out as it implodes
on them.
I love a good distraction!
One of the great things about being good at forecasting the
Futures is that we were not only 100% prepared for Greece to melt down
(our Short-Term Portfolio was already up 152% as of Friday’s close) but
we’re already done talking about it and looking ahead to the much bigger
Financial crisis in CHINA!!!If you are a typical short-term, short-sighted, impatient investor (they kind we make money off every day), now is a good time to click away and look for someone to explain to you what’s going on in Greece. I liked Felix Salmon’s “I Haven’t Been Paying Attention. What’s Going On In Greece?” enough to send it to the 1,000 people who asked me that this weekend. Greek markets are closed today (and will be all week along with the banks) but the Greek ETF (GREK) is trading and will open down 15-20% by my estimation.
image: http://www.finviz.com/fut_chart.ashx?t=ES&p=m5&s=m&rev=635711594173392158
As I said, I’m bored with Greece, we discussed it all weekend (and all year, and all month) in Member Chat, so you can catch up HERE, and we already played our strong bounce lines in the Futures and took our profits at:
- Dow (/YM) 17,670
- S&P (/ES) 2,075
- Nasdaq (/NQ) 4,430
- Russell (/TF) 1,264.20
At $47.75, FXI should open lower this morning and we do expect China to step in with more stimulus but the Aug $45.50 puts at $1 are still a fun way to play if you don’t like complex spreads and, if China does stimulate and FXI pops higher, THEN we can adjust it and roll it to higher Sept puts because NOTHING they do can really stop this market from making a serious correction, at least to that $44 line ($1.50+ on the options, up 50%) and possibly the $40 line ($5.50, up 450%) – it’s just a matter of when (or should I say Wen?!? Get it, Wen.. that’s the Premier’s name – Wen! Ouch, tough room…).image: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/06-overflow/20150628_china2.jpg
I
was hoping that FXI would open higher this morning and we’d have a
chance to double down at a lower price after China announced over the
weekend after China cut both the lending rate by 0.25% AND lowered the
reserve requirements for banks by 0.25%, effectively doubling their
usual bi-weekly $85Bn cash injection in an attempt to stop the 20% slide
in their indexes. It worked – for about 30 minutes, as the Chinese
markets opened up 4% but, over the course of the session, they plunged
back to new lows, ending down about 3% for the day, 7% down from the
open in another disastrous session.
“The government appears eager to maintain a bull market to expand the capital market and reduce reliance on bank lending,” wrote Standard Chartered economists in reaction to the cuts. “Although the use of monetary policy for that purpose is questionable.”image: http://i1239.photobucket.com/albums/ff507/montys55/reaganomics-republicans-trikle-down-economics-political-poster-1294154060.jpg
Hmm,
I wonder if we can think of any other countries where the Central Banks
have been eager to maintain a bull market by dumping FREE MONEY on the
investing class? I know I sound like a real party-pooper when I keep
hammering on those boring old Fundamentals but, in the end, we do have
to face reality. Printing money and handing it to Corporations and the
Top 1% who own them does NOTHING for the real economy.
The Chinese rally has had no such effect. Even as stock markets saw their net capitalisation increase by $7.6Tn in 12 months, from $3.9Tn to $11.5 trillion – larger that the country’s ENTIRE Gross Domestic Product in 2014 – retail sales figures have declined steadily, and business investment has stayed weak. I’m sorry for all the people I got into arguements with when I said that the market rally simply wasn’t sustainable but – you are all idiots and I had to straighten you out. 8)So much of China’s current GDP growth is wrapped up in false increases in market wealth (it’s only paper gains and, when you try to cash it in, the market collapses because that much money simply does not exist to cover the fake market gains) that the (so far) 20% correction in the Chinese markets is $2.5Tn and that is going knock at least a percentage off their GDP, which will then panic investors further, etc, etc.
image: http://pbs.twimg.com/media/CIpS-trUcAAtt8Z.jpg
And don’t forget the margin debt (see my 6/15 note).
What idiots lent out that kind of money to people who were buying
Chinese stocks AFTER they already gained 100% in a year? I guess the
PEOPLE will have to suffer because the Banksters who collected huge fees
for financing this bubble will now need to be bailed out as it implodes
on them.
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