Assembled in the USA from 100% Chinese parts.

https://ftalphaville.ft.com/marketslive*

Wonderfully snide! Unlike the idiots on cable business channels with their mindless market-pumping, FTAlphaville are all for mocking financial folly. Of which there's always quite a lot. But a down market exposes what's been hidden during a boom, so it inspires more entertaining commentary.

As Warren Buffett said, “It's only when the tide goes out that you learn who's been swimming naked.”

Yesterday the ocean receded a bit.

(*bikergeek notes that the page is behind a wall. It's not a paywall but it does require registration, as does all of FTAlphaville.)

From https://uetoken.com:

"The world's first 100% honest Ethereum ICO.

"You're going to give some random person on the internet money, and they're going to take it and go buy stuff with it. Probably electronics, to be honest. Maybe even a big-screen television.

"Seriously, don't buy these tokens."

Useless Ethereum Token raised $300,000.

"The UET crowdsale has finished. Thanks to everyone who contributed!
(Regardless of the fact that none of you read any of the warnings on this page.)"

Cute kitties, easier to store than Beanie Babies, and more profitable (at least until the bubble bursts)!

They are really bogging down the Etherium blockchain, though.

Polemic Paine describes the hilarity that ensued:

It’s the small hours of London Friday morning for me and the reasons for GBP's freediving world record attempt haven’t yet been formulated. Now I'm afraid that if you started reading this expecting me to tell you what is going on in GBP, then sorry, I don't know. But having worked in FX for a good chunk of my life I can have a good guess at what is now going on in the banks.

First, every salesperson is struggling to call all their clients who had 'call levels’ at zones never expected to be hit, whilst trying to fill orders in systems at levels that they think they can get away with. Oh, hang on, no they can’t do that anymore as they need audit trails. So, they will all be huddled around spot desks arguing over whose order was hit at what. Said spot dealers will be shouting a lot and staring at an automated blotter that is slowly dripping in a queue of trades that their antiquated order and back office system in some far off distant place on the planet is trying to process. Basically, there will be a lot of ‘WHAT THE FUCK IS MY POSITION.. ARRRGH ‘ going on.

Meanwhile, clients will be calling in demanding to know why their stops were done 7% below current market and why no one called them. Because if they had been called they would have bought it back at 8% below current markets because they are all retrospective geniuses.

Managers will be trying to recite the rules of engagement for filling stops but can’t find them so call compliance. However, compliance is asleep because they are mostly based in Head Office and that isn’t in the Antipodes, apart from the Antipodean banks whose compliance officers will be teaching some course to the catering staff on how not to deal with Yemeni banks.

By now the dealing systems will be catching up with what's going on and the spot traders now fit into two categories:-

Group 1 who look at their position screens and see a vast profit who split into groups 'A' and ‘B'. 'A' stays very quiet knowing that sales will want some of the profit if they see how much it is and ‘B' who stand up and declare themselves as trading Gods.

Meanwhile Group 2, on seeing vast losses, immediately write emails to every manager under the sun blaming their staggering losses on system latency and the ridiculous guaranteed stop levels that sales made them undertake. If they are lucky management will swerve the losses into a contingency book, but if they are unlucky and the bank was thinking of replacing them with a 'Raspberry Pi’ algorithm, they will be out of the door by close of Friday.

But back to sales. Those that are still on the phone are quoting the reason for the fall on anything that they feel everyone else is saying because no one has a real clue. They will probably repeat what JPMChase or Goldman say as they reckon that the guys there are cleverer than them and more likely to know. So, clients will currently be being told that it is due to- "Barriers being hit at 1.25, 1.20 , and 1.15" and if they can't even manage that will say "Stop losses”, which is a great generalised term that demands no justification. But some foolish folk will have done a Bloomberg News search for GBP and decided that it is due to the news that fracking had been allowed in North West England. Which is of course rubbish, because we all know that it happened because Diane Abbott was made the shadow Home Secretary.

By now very senior management will have come down to the dealing room. Bearing in mind this is out of London time zone, the senior managers involved will have absolutely no idea whatsoever about Sterling so will ask questions to frantic spot and sales folks along the lines of "Has Brexit been announced?" or "is this is a big move?" The frustrated dealing staff will have to tread a thin line with them, alternating between wanting to tell them to piss off and ingratiating themselves with them as, with the size of the losses they can see, they may well be up before them the following morning.

Dan McLaughlin in the National Review makes a number of important points about changes to the $20 bill:

"There are a few lessons here, not least the power of popular culture: Hamilton, previously the most obscure figure (to the general population) of the men on American currency was clearly saved in large part by the runaway success of the Broadway hip-hop musical celebrating his life. Conservatives may decry the politically correct identity-politics drive to demand a woman on the money and downgrade Jackson, but it’s worth remembering that Jackson has only been there since 1928, when he replaced Grover Cleveland, and decisions about whom we should honor on our money have always said as much about our values at a given moment as about any historical merit.

"...Tubman herself is a worthy honoree, the first ordinary citizen on paper money and a woman of great courage and powerful Christian witness. She was also — this tends to be forgotten today — a nurse and scout during the Civil War and herself a leader of the women’s suffrage movement until her death at 91 in 1913, more than half a century after her “Underground Railroad” exploits. Tubman’s life is not without its own controversies, like her assistance to John Brown in advance of the Harper’s Ferry raid that ended with Brown being hanged for treason (the justification of Brown’s actions is one of the great ethical dilemmas in American history: How far exactly should one go to stop something as bad as slavery?). And if the debates over the $10 and the $20 lead more Americans to learn the flesh-and-blood stories of Hamilton, Jackson, and Tubman, that can’t be a bad thing. They remind us that our politics have always been messy and sometimes bloody."

Interesting. I hadn't heard of most of these.

http://www.whatsonweibo.com/10-scams-in-china-to-watch-out-for/

There's so much to say about the ongoing stock market crash in China but I'm on the road so I can't really take time to post.

The very short story is that the market is crashing. The government is panicking because it unwisely tied its reputation to a rising market. It compounded its error by trying all kinds of measures to stop the fall--all of which have failed--which have damaged their reputation even more because it has made it clear that the authorities have no idea what they are doing.

Millions of people have lost money speculating in this market. Prices are falling so fast that most of the stocks traded on the Shanghai and Shenzhen exchanges have had their trading suspended, either because their prices have fallen to their daily limits or because their companies have requested that their stocks be suspended. At the rate things are going, there won't be any stocks left to trade at all by the end of the week.

It's an amazing spectacle. The authorities look powerless and incompetent. Mostly it's something the Chinese government did to themselves. And it was all so predictable: it is the nature of market bubbles to burst even faster than they inflate.

Now that the Chinese are experiencing a market crash--sorry, correction--that we all expected, they are blaming short-sellers. You could have predicted that as well.

James Mackintosh:

Late on Thursday they announced an investigation into manipulation by short sellers, while the futures exchange seems to be discouraging people shorting, or betting on price falls.

In practical terms, the action failed: stocks fell again, leaving them down 12 per cent on the week and down more than a quarter from their peak three weeks ago, with extraordinary intra-day swings.

In principle, though, the action is just wrong. The reason the stock market is falling isn’t short sellers, it’s long sellers. More precisely, the hordes who’d been piling into stocks and pushing prices through the roof over the past year are selling, and that was entirely predictable (the difficult issue was when there would be a rout, not whether there would).

...

China’s authorities hope to avoid the 72 per cent fall they saw after their 2007 stock market bubble popped, coincidentally identical to the drop in the Nasdaq after the dotcom boom. As well as attacking short selling, they have cut rates and tried to ease the pressure on margin debt to allow yet more leverage to pile on top of what analysts say is probably already the most use of broker-supplied loans to buy stocks than ever before in recorded history. One of the barmiest rule changes was to allow brokers to accept pretty much anything from antiques to houses as collateral against loans; if the brokers were to take advantage of the rule change, customers could literally bet the house on shares going up. On top of that, on Friday the securities regulator confirmed it would slow the pace of IPOs, freeing up more cash to buy existing shares. If anyone wants to.

Ultimately the government has it in its power to turn the market round if it really wants to, since it can create unlimited money to buy shares, but so far there’s no sign that such uber-QE is under consideration.

China’s an authoritarian one-party state, so its efforts to bend the market to its will perhaps shouldn’t be a surprise. Western investors shouldn’t feel superior, though: Britain first banned short-selling in Bank of England stock just three years after the Old Lady of Threadneedle Street was set up in 1694, and short selling bans and probes have begun after plenty of the big market crashes since – including the post-Lehman collapse. It never did any good, and regulators and politicians never learnt the lesson: it’s almost never the shorts who cause the problem, but the longs who first drive prices way above reasonable levels, them rush to get out.

In a followup post, the folks at FT Alphaville said this about China's equity markets:

Of course, as the FT’s Josh Noble says, there’s still room for this to run. Politics and momentum are powerful forces. Per Josh, “this market rally has something going for it that previous bull runs have not — central government support.” Whether that support exists separately to the need to prop up growth rates… who knows. For now it doesn’t really seem to matter — the Shanghai Composite was up 1.5 per cent, taking its gains for the year so far to nearly 32 per cent and you can’t knock the greater fool theory while it’s working.

And as someone who generally knows what they’re talking about said to us recently (and we are paraphrasing a bit since we didn’t take it down at the time): “Oh, for sure. It’s going to be an absolute disaster. The government has no idea what it’s doing. But in the meantime, lots of money to make!” Seems about right.

I missed this post when it came out. The Chinese stock markets are really booming. It's like 1929! or 1999.

Deutsche Bank, quoted in FT Alphaville:

Bubble watchers point out median earnings multiples for Chinese technology stocks are twice US peer valuations at their dot.com peak. More worrying perhaps is a health-goods-from-deer-antlers producer on 70 times, the seamless underwear manufacturer on 90 times or those school uniform and ketchup makers on 330 times!

From the same article in Alphaville:

It seems everyone in the country is racing to open a brokerage account – 1.67m new accounts in the latest week, according to the China Securities Depository and Clearing Co. That sounds a lot, although it is growth of only about 1 per cent a week in the total of new accounts: China, remember is big.

They go on to make some comparisons between the current state of the Shenzhen and Shanghai markets and that of the Russell 2000.

"Past performance is no guarantee", etc. I wonder when the music's going to stop?