Greece -60%, China -30%, Next?

A couple of fast moving factoids from the news. Greece had a reopen of their stock market on Monday. While some of the stocks have held up, banks (no surprise) were hard hit. A 60% “haircut” in 3 days…

http://greece.greekreporter.com/2015/08/05/greek-stocks-end-lower-on-third-day-of-bourse-reopening/

Greek Stocks End Lower on Third Day of Bourse Reopening

By Philip Chrysopoulos –
Aug 5, 2015

After the third day of reopening of the Athens Stock Exchange, bank shares took another dramatic dive reaching a cumulative 63.81 percent loss.

The banking index lost 27 percent at closing on Wednesday, dragging all Greek stocks down. The market value of the four systemic banks — National Bank of Greece, Eurobank, Piraeus and Alpha — fell below 5 billion euros.

Eurobank shares dropped to 5 cents after losing 26.76 percent. Piraeus Bank lost 29.59 percent and Alpha 29.56 percent. National Bank shrank 24.29 percent.

Banks’ cumulative losses since the reopening of the local bourse on Monday reached 63.81 percent, diving to a new historic low of 238.40 points.

The Athens Exchange (ATHEX) general index closed at 643.22 points, shedding 2.53 percent from Tuesday’s 659.94 points. The large-cap FTSE 25 index declined 2.86 percent to end up at 188.88 points.

In total 39 stocks enjoyed growth, 56 suffered losses and 16 remained unchanged. Turnover amounted to 81 million euros, up from Tuesday’s 63.7 million.

“Ouch” doesn’t quite cover it… But frankly, I’d not own any bank in the EU, nor put any money in one of them. (Not sure the USA banks are any better, being now an arm of the US Government for all practical purposes).

Meanwhile, China is down 30% in a month. Well, that’s gotta hurt…

Live image at BigCharts.com

Shanghai index vs S&P500 and Hangseng

Shanghai index vs S&P500 and Hangseng

Easy to see where the government forbid selling and stepped in with car loads of cash… yet at best it has been a temporary stop to the drop.

Oil, coal, natural gas, metals, and more all down hard over the year (so not much demand happening, meaning production is dropping / dropped).

Live image at BigCharts.com

Commodities vs S&P500 August 2015

Commodities vs S&P500 August 2015

This is DBC Deutsche Bank Commodity index vs GSC Goldman’s (that has heavier energy weighting) vs S&P 500 and several other commodity ETFs. KOL is coal, UNG is US Nat. Gas, USO is US Oil, JJC is copper while JJN is nickle, GLD is gold and SLV is silver.

Essentially all of them dropping hard. (To some extent due to dollar strength, but the divergence of JJN a year back and the spread from gold to oil now shows much of it is not.)

There just isn’t a lot of demand for “stuff” right now. Not good.

Wondering about Europe and Brazil? Here’s your chart… While Italy (EWI and the main ticker) bounced up last year (on this 2 year chart) it’s been downhill since. EWQ is France. EWG Germany, EWU Britain. EWA Australia and EEM Emerging Markets while EWJ is Japan. EWZ, Brazil, continues to drop like a rock under their newer stronger more Socialist government… as Socialism always does…

Live chart at Bigcharts

Europe, Japan, Emerging Markets and Brazil 2 year chart.

Europe, Japan, Emerging Markets and Brazil 2 year chart.

As we said earlier, the US markets were looking very toppy, and since that (yes, somewhat tepid…) “top call” have been lackluster to down. You can see on the chart above that SPY is essentially flat for the last 6 months.

All leading to the question: What’s next?

In “tips”, Larry Ledwick pointed to this interesting article:

http://www.nationalreview.com/article/421990/housing-bubble-2-count-on-the-crash

The Fed had as a stated goal to get housing prices back up again. That is WHY they have had all the gusher of money into the banks. The problem, of course, is in deciding just what is the ideal price for houses and trying to stop the hurricane of money into paper assets and mortgages at just the right time and with no rebound / collapse… Never been done before, but hey, there’s always a first time.

The hubris of “The folks in charge” is astounding, and the degree to which they believe they have control when they at best have influence is boggling. Yet they are sure they can control the hurricane and ride the wind…

Instead, housing prices are going up for the same reason that college tuitions are: because the government facilitates lending people money at concessionary rates to purchase them. The Fed has, despite the occasional sobering gander in the direction of reality, been keeping the cheap-money sluices pretty much wide open. The federal regulators have loosened their grip over Fannie Mae and Freddie Mac’s lending activities, and, according to a Fed report released Monday, banks are once again loosening up their lending standards.

This ended badly the last time. It’ll end badly this time, too.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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9 Responses to Greece -60%, China -30%, Next?

  1. M Simon says:

    I have been getting premonitions of various sorts for a while. Reality hits in September.

    Maybe a friendly little war in the ME to lighten up the darkness. Followed by darker.

  2. omanuel says:

    I have absolutely no understanding of the monetary system as anything but a scam.

  3. oldbrew says:

    With the big banks it’s ‘heads they win, tails you lose.’

  4. Larry Ledwick says:

    Looks like entertainment media is taking a bath too. I guess the important question is why?
    Is it because investors think they over valued and demand is drying up for their products, or is this liquidation to raise funds or ???

    http://www.bloomberg.com/news/articles/2015-08-06/media-wipeout-taking-down-pillar-of-bull-market-in-u-s-stocks

  5. E.M.Smith says:

    @M.Simon:

    I hope your premonitions are just a bad lunch…. but usually bad things arrive about October…

    There are some wonderful quotes in that link! I think they apply equally well to the AGW nonsense. (And, frankly, that kind of crap is why Economists are decent at spotting it in the Global Warming fraud… We’ve seen it before!)

    Samizdata quote of the day
    Johnathan Pearce (London) · Economics, Business & Globalization
    So many economists today spend more and more time mastering higher-level mathematics and econometric techniques that they simply never master basic microeconomics. These economists (from my reading of him, I judge Piketty to be among them) take their fluency in statistics and their skill at quantitative-data gathering for being a fluency in, and skill at doing, economics. They are mistaken. And while their error is too-often masked to the general public by their formal credentials as professional economists, their error is never hidden from genuinely skilled economists such as Deirdre McCloskey.

    – Don Boudreaux, of Cafe Hayek. The whole item is worth a read, as is the McCloskey item at the Cato Institute to which he links. And let’s not forget Samizdata’s own Perry Metzger’s marvellous “shoe event horizon” takedown of Piketty a few months ago.

    […]
    And quite so Laird.

    The substitution of mathematics (especially statistics) for real economic reasoning is not new.

    Sir William Perry (the follower of Thomas Hobbes who was, in turn, Francis Bacon’s man) was doing it – way back in the 1600s.

    Government economic “planning” is not made any more rational by throwing around lots of stats and then playing with them.

    However, many highly “educated” fools act as if mathematics could act as a substitute for reasoning.
    […]
    Quite so.

    Mathematics is only a language. Language is to convey thought.

    Using mathematics as the language will not substitute for deficiencies of thought.

    @Oldbrew & OManuel:

    Well… in many ways it is a giant confidence game (at least since we went to fractional reserve banking with paper money). Folks create buckets (trainloads?) of money out of nothing, and get real value for it, but only as long as everyone THINKS it has value… Sounds like a Ponzi to me…

    @Larry:

    Disney announced lower Yr/Yr ad sales on ESPN. Since that is THE flagship property, everyone else must be doing worse (or so the thinking goes) and it must be due to the “cord cutters” since Netflix posted monster gains. Ignore the fact that last year ESPN had some giant sports event… (Worldcup? Something of that scale) so you can’t possibly expect this year’s ads to match… But that’s Wall Street for you.

    Then again, I’m not watching TV right now…

  6. bob sykes says:

    The Schiller-Chase housing index, which goes back over 100 years, shows that housing prices more or less track inflation. Why the feds think they can rebuild a stable bubble that was well above the trend line is beyond comprehension, other than some collusive corrupt scheme.

  7. Graeme No.3 says:

    Man who rides tiger is afraid to dismount. Chinese traditional.

  8. Larry Ledwick says:

    Interesting summary article which details the list of indicators that central banks have lost control of the tiger they are riding.

    http://www.telegraph.co.uk/finance/11805523/Doomsday-clock-for-global-market-crash-strikes-one-minute-to-midnight-as-central-banks-lose-control.html

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