World Markets Continue To Tumble

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by Chris

The usual Monday night special (stock futures up, gold down) was a 50/50 affair, with only ‘gold donw’ being achieved.

The big news is that China cut its reserve requriements again to combat the increasingly obvious slowdown in the Chinese economy.

This has led to a weaker off shore Yuan and tumlbing Chinese equities with the SSCE down -3.7%.

Overall, the emerging economies are now in a bear market having tumbles 22% from the recent peak.

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We could argue that the recent peak was itself undeserved and a feature of endless central bank printing, but a bear market is defined as a 20% decline from the peak so we’ll go with that for now.

Again, the ~$4 trillion of dollar-denominated debt in the EMs is going to be a really painful episode to unwind.

For now US “”markets”” are looking resilient, and the minor decline in stock futures may well be undone before the open.  Of course, to me, ‘resilient’ means propped up by the usual cast of characters; banks, hedge funds, HFT firms, and central banks.

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My operating theory is that they need to squeeze every last retail dollar out of every retain account before they will be willing to entertain a decline.  I wonder how many brokers were busy dialing muppets, er clients, this weekend pitching the idea of ‘buying the dip’ from last week?

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