China matters: "I think China may be more important than Greece..."

LINK

Abenomics, exhorbitant QE...utter ignorance? Whose next? Japan's results so far:

Has Printing Ever Worked (in 800 years of Financial Folly)??

Bank of International Settlements (the Central Bank for Central Bankers):

"Risk-taking in financial markets has gone on for too long. And the illusion that markets will remain liquid under stress has been too pervasive (Chapter II).

But the likelihood of turbulence will increase further if current extraordinary conditions are spun out.

The more one stretches an elastic band, the more violently it snaps back. Restoring more normal conditions will also be essential for facing the next recession, which will no doubt materialise at some point.

Of what use is a gun with no bullets left?..."

LINK

"Special Alert: the EU Crisis Goes Into Hyperdrive"

"June 28, 2015

Special Alert: the EU Crisis Goes Into Hyperdrive

As we have asserted since 2012, the template for dealing with Crises has been laid out in Europe, particularly in the countries of Spain and Cyprus.

That template is:

1)   A problem first emerges.

2)   Various political and financial officials state that the problem is contained and there’s nothing to worry about.

3)   Months later, the market and mainstream media catch on… usually when the problem is already a massive crisis and a bank holiday needs to be declared.

4)   Individual investors lose a LOT of money while the same folks who cause the problem A) are not fired, fined or jailed B) never come clean about the full scope of the problem and C) claim that they can solve the problem and have all the answers.

Consider the story of Bankia.

Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.

The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion in funding for the bank (all provided by taxpayers of course).

These preference shares were shares that A) yielded 7.75% and B) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors (including said taxpayers).

Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything when the new bank was created.

Bankia was taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.

One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank (again) and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).

When the bailout took place, Bankia shareholders were all but wiped out and forced to take huge losses as part of the deal. The vast majority of these were individual investors, NOT Wall Street or its European equivalent (Bankia currently faces a lawsuit for over 140,000 claims of mis-selling shares).

So that’s two wipeouts in as many years. 

The bank was taken public a second time in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.

Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).

Today Bankia is tied up in a massive compensation lawsuit whereby it is to pay out between 200 and 250 million Euros to investors who bought it during its initial IPO. Of course, this payout is based on accounting standards that are at best massaged and at worst likely outright fraudulent (this is, again a bank that has wiped out investors three in times in three years), so who knows what will happen?

While certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.

Those morals are:

1)   Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors and the public).

2)   Any financial problem that surfaces will be dealt with via fraud or lies rather simply allowing those who screwed up to be fired or go to jail.

3)   When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed (not bank executives or politicians).

4)   The problem will be prolonged as much as possible, likely fixed years down the road, if ever and individuals will have little or no say in how it pans out.

In terms of the timelines for these events, Cyprus…

Here it is:

• June 25, 2012: Cyprus formally requests a bailout from the EU.
• November 24, 2012: Cyprus announces it has reached an agreement with the EU the bailout process once Cyprus banks are examined by EU officials (ballpark estimate of capital needed is €17.5 billion).
• February 25, 2013: Democratic Rally candidate Nicos Anastasiades wins Cypriot election defeating his opponent, an anti-austerity Communist.
• March 16 2013: Cyprus announces the terms of its bail-in: a 6.75% confiscation of accounts under €100,000 and 9.9% for accounts larger than €100,000… a bank holiday is announced.
• March 17 2013: emergency session of Parliament to vote on bailout/bail-in is postponed.
• March 18 2013: Bank holiday extended until March 21 2013.
• March 19 2013: Cyprus parliament rejects bail-in bill.
• March 20 2013: Bank holiday extended until March 26 2013.
• March 24 2013: Cash limits of €100 in withdrawals begin for largest banks in Cyprus.
• March 25 2013: Bail-in deal agreed upon. Those depositors with over €100,000 either lose 40% of their money (Bank of Cyprus) or lose 60% (Laiki).

The most important thing I want you to focus on is the speed of these events.
Cypriot banks formally requested a bailout back in June 2012. The bailout talks took months to perform. And then the entire system came unhinged in one weekend.

One weekend. The process was not gradual. It was sudden and it was total: once it began in earnest, the banks were closed and you couldn’t get your money out (more on this in a moment).

There were no warnings that this was coming because everyone at the top of the financial food chain are highly incentivized to keep quiet about this. Central Banks, Bank CEOs, politicians… all of these people are focused primarily on maintaining CONFIDENCE in the system, NOT on fixing the system’s problems. Indeed, they cannot even openly discuss the system’s problems because it would quickly reveal that they are a primary cause of them.

For that reason, you will never and I repeat NEVER see a Central banker, Bank CEO, or politician admit openly what is happening in the financial system. Even middle managers and lower level employees won’t talk about it because A) they don’t know the truth concerning their institutions or B) they could be fired for warning others.

Please take a few minutes to digest what I’m telling you here. You will not be warned of the risks to your wealth by anyone in a position of power in the political financial hierarchy (with the exception of folks like Ron Paul who are usually marginalized by the media).

With that in mind, now is a good time to prepare for systemic risk. I cannot forecast precisely when things will get as ugly as they did in Cyprus for the financial system as a whole (no one can).

However Greece just entered the final stages of its debt collapse: the ECB has just announced that it is declaring a Bank Holiday in Greece. We all know what is coming next: default or confiscation of deposits.

This will be spreading throughout the globe in the coming months."

Source:
Graham Summers
Phoenix Capital Research

If Howard Schultz gave up after being turned down by banks 242 times, there would be no....

Cat(s) explain in 1 gif why loans haven't helped Greek people. (h/t @alepouda)

https://lnkd.in/beew7Sc

ABBOTT & COSTELLO EXPLAIN THE UNEMPLOYMENT SITUATION

COSTELLO:  I want to talk about the unemployment rate in America  .
 
ABBOTT: Good Subject.  Terrible Times.  It’s 5.6%.
 
COSTELLO:  That many people are out of work?
 
ABBOTT: No, that’s 23%.  
 
COSTELLO: You just said 5.6%.
 
ABBOTT:  5.6% Unemployed.
 
COSTELLO:  Right 5.6% out of work. 
 
ABBOTT: No, that’s 23%.
 
COSTELLO: Okay, so it’s  23% unemployed.
 
ABBOTT: No, that’s 5.6%. 
 
COSTELLO:  WAIT A MINUTE. Is it 5.6% or 23%? 
 
ABBOTT: 5.6% are unemployed.  23% are out of work. 
 
COSTELLO: If you are out of work you are unemployed. 
 
ABBOTT:  No, Congress said you can’t count the “Out of Work” as the unemployed.  You have to look for work to be unemployed.
 
COSTELLO: BUT THEY ARE OUT OF WORK!!! 
 
ABBOTT: No, you miss his point.
 
COSTELLO:  What point?
 
ABBOTT:  Someone who doesn’t look for work can’t be counted with those who look for work. It wouldn’t be fair. 
 
COSTELLO: To whom?
 
ABBOTT: The unemployed.  
 
COSTELLO: But ALL of them are out of work.  
 
ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed. 
 
COSTELLO: So if you’re off the unemployment roles that would count as less unemployment?
 
ABBOTT: Unemployment would go down. Absolutely!
 
COSTELLO: The unemployment just goes down because you don’t look for work?
 
ABBOTT: Absolutely it goes  down. That’s how it gets to 5.6%. Otherwise it would be 23%. 

COSTELLO: Wait, I got a question for you. That means there are two ways to bring down the unemployment number?  
 
ABBOTT: Two ways is correct.
 
COSTELLO: Unemployment can go down if someone gets a job?
 
ABBOTT: Correct.
 
COSTELLO: And unemployment can also go down if you stop looking for a job?
 
ABBOTT: Bingo.  
 
COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.
 
ABBOTT: Now you’re thinking like an Economist. 
 
COSTELLO:  I don’t even know what the hell I just said!  
 
ABBOTT: Now you’re thinking like a Politician.

Carl Icahn: "what's better - making 2% or losing 30% as people did in 2008...right now it's an extremely dangerous time..."

"keep your powder dry - why do have to own anything...[risky]? ...It's just nonsensical..."

"Most troubling: ...80th consecutive month of increasing Y/Y unemployment, yet stocks are delighted of course."

LINK

Map: Every Country's Highest Valued Export

Why Fear Greece?

June 19, 2015

"The situation in Greece has very little to do with politics or economics. Instead it is entirely focused on just one thing.

That issue is collateral.

What is collateral?

Collateral is an underlying asset that is pledged when a party enters into a financial arrangement.  It is essentially a promise that should things go awry, you have some “thing” that is of value, which the other party can get access to in order to compensate them for their losses.

For large European banks, EU nation soveregin debt (such as Greece) is the collateral backstopping hundreds of trillions of Euros worth of derivative trades.

This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the Greek bailouts.

Remember:

1)   Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.

2)   Some 80% of the bailout money went to EU banks that were Greek bondholders, not the Greek economy.

Regarding #1, going into the second Greek bailout, the ECB had been allowing European nations and banks to dump sovereign bonds onto its balance sheet in exchange for cash. This occurred via two schemes called LTRO 1 and LTRO 2 which happened in December 2011 and February 2012 respectively. Collectively, these moves resulted in EU financial entities and nations dumping over €1 trillion in sovereign bonds onto the ECB’s balance sheet.

Quite a bit of this was Greek debt as everyone in Europe knew that Greece was totally bankrupt.

So, when the ECB swapped out its Greek bonds for new bonds that would not take a haircut during the second Greek bailout, the ECB was making sure that the Greek bonds on its balance sheet remained untouchable and as a result could still stand as high grade collateral for the banks that had lent them to the ECB.

So the ECB effectively allowed those banks that had dumped Greek sovereign bonds onto its balance sheet to avoid taking a loss… and not have to put up new collateral on their trade portfolios. 

Which brings us to the other issue surrounding the second Greek bailout: the fact that 80% of the money went to EU banks that were Greek bondholders instead of the Greek economy.

Here again, the issue was about giving money to the banks that were using Greek bonds as collateral, to insure that they had enough capital on hand.

Piecing this together, it’s clear that the Greek situation actually had nothing to do with helping Greece. Forget about Greece’s debt issues, or protests, or even the political decisions… the real story was that the bailouts were all about insuring that the EU banks that were using Greek bonds as collateral were kept whole by any means possible.

So here we are today and Greece is back in the headlines. Once again the country is out of money and the ECB and IMF are trying to punish it without hurting the larger EU banks.

Why are they making such a big deal about Greece… a country whose GDP is just 2% of the EU?

Because whatever happens in Greece will be used as a template for much larger problems AKA Spain and Italy.

Spain and Italy, by comparison, have €1.78 trillion and €1.87 trillion in external debt respectively.
That is a heck of a lot of collateral that would be in BIG trouble in the event of a bond crash for either country.

And both countries have bond yields that are spiking...

Here's Italy:


Smart investors should take note of this now. It is a MAJOR red flag to be watched closely."



Graham Summers
Phoenix Capital Research

Where U.S. Businesses Are Being Created the Fastest

LINK

Saudi frustration? "in spite of some 62% drop in rig count, US crude oil production is now the highest in over 40 years."

Why People Don’t Buy Long-Term-Care Insurance

NOTE:

1) LTC is ASSET PROTECTION (10-15k/mo. + inflation = eats assets fast).

2) LTC is usually added to life insurance today = gain pays entire premium + grows cash consistent with conservative portion of portfolio on top. So, if you don't use it = little financial regret.

When it comes to long-term care, two facts stand out. First, an estimated 70% of people will need such care, which will be costly. And second, most of them refuse to buy insurance to cover it.

The question is, why?

More...

Home Builder Optimism Explained

What's growing:




What's NOT:




Link

Greenspan on housing: 'Stagnation' here to stay

"We are in a position now, of secular stagnation..."

Greenspan on housing: 'Stagnation' here to stay

Link

"Fannie Mae: Loan-To-Value Ratio Now Higher Than During Housing Bubble"

"At last. Residential mortgage (1-4 unit) lending is almost back to zero percent growth!

...

...At least for 4% coupon Fannie MBS, the average LTV is higher now than during the housing bubble! So much for the story that Fannie and Freddie are “too tight” with mortgage credit.

But...how low should Fannie and Freddie expand (drop) their FICO box?

It is like a raccoon riding on the back of an alligator.

The raccoon hopes that the economy doesn’t tank and home prices fall (again)."

Ref: Raccoon Econ 101

1937 Redux?

"...But no episode is more notable than what happened in the US in 1937, smack in the middle of the Great Depression. This is the only time in US history which is analogous to what the Fed will attempt to do, and not only because short rates collapsed to zero between 1929-36 but because the Fed’s balance sheet jumped from 5% to 20% of GDP to offset the Great Depression.

Just like now.

the impact of higher Fed rates will be far less predictable than normal, that historical comparisons may be less powerful, and that volatility across both credit & equity markets should continue to be owned.

Actually, the main reason is one, and it is very simple. It is shown in the chart below.

Here are some other reasons why the Fed's rate hike will lead to a period of, to put it mildly, volatility...

• Central banks now own over $22 trillion of financial assets, a figure that exceeds the annual GDP of US & Japan
• Central banks have cut interest rates 577 times since Lehman, a rate cut once every three 3 trading days
• Central bank financial repression created $6 trillion of negatively-yielding global government bonds earlier this year
• 45% of all government bonds in the world currently yield <1% (that’s $17.4 trillion of bond issues outstanding)
• US corporate high grade bond issuance as a % of GDP has doubled to almost 30% since the introduction of ZIRP
• US small cap 5-year rolling returns hit 30-year highs (28%) in recent quarters
• The US equity bull market is now in the 3rd longest ever
• 83% of global equity markets are currently supported by zero rate policies

...the manager of the world's biggest hedge fund...This is what Ray Dalio says ahead of the upcoming rate hike:

... in our opinion, inadequate attention is being paid to the risks of a downturn in which central bankers' abilities to ease are significantly impaired. Please understand that we are not sure of anything but, for the reasons explained, we do not want to have any concentrated bets, especially at this time.

Source: 1937 Redux

"...nothing has changed [from] the pre-crash status quo…only…relative/absolute debt has never been higher."

"...Or, as Italy's economy minister called it, "boring"... until such time as the Troika decided to yank its guarantees and the next Greece emerges. Only then does it get "exciting."


Source: http://www.zerohedge.com/news/2015-06-16/there-one-problem-europes-so-called-austerity

"...when the easy money dries up (making massive buybacks and blockbuster M&A more expensive), corporate America may wish it had invested a little less in chasing an equity rally and a little more in growth, efficiency, and productivity."

The Death Of Capex In 8 Charts

"...Of course, if leverage is going up today because it’s funding tomorrow’s growth that might not be a bad thing. Unfortunately, that’s not what’s going on.

Read more: http://www.zerohedge.com/news/2015-06-14/death-capex-8-charts

DEBT: "The plan worked... Iceland took hit…[now] 1st European...to beat its pre-crisis peak of economic output."

Iceland Imprisoned Its Bankers And Let Banks Go Bust: What Happened Next In 3 Charts

This year, Iceland will become the first European country that hit crisis in 2008 to beat its pre-crisis peak of economic output. In spite of its total 180-degree treatment of nefarious bankers, the banking system, and the people of its nation when compared to America (or The UK), Iceland has proved that there is a different (better) option that western dogma would suggest. As abhorrent as this prospect is to the mainstream's talking heads and Keynesian Klowns who bloviate wildly on macro-economics and endless counterfactuals, Iceland came to that fork in the road, and took it...

As The Independent reports,

While the UK government nationalised Lloyds and RBS with tax-payers’ money and the US government bought stakes in its key banks, Iceland adopted a different approach. It said it would shore up domestic bank accounts. Everyone else was left to fight over the remaining cash.

It also imposed capital controls restricting what ordinary people could do with their money– a measure some saw as a violation of free market economics.

The plan worked. Iceland took a huge financial hit, just like every other country caught in the crisis.

This year the International Monetary Fund declared that Iceland had achieved economic recovery 'without compromising its welfare model' of universal healthcare and education.

Other measures of progress like the country’s unemployment rate, compare just as well with countries like the US.

Rather than maintaining the value of the krona artificially, Iceland chose to accept inflation.

This pushed prices higher at home but helped exports abroad – in contrast to many countries in the EU, which are now fighting deflation, or prices that keep decreasing year on year.

With the reduction of capital controls – tempered by the 39 per cent tax – it continues to make progress.

"Today is a milestone, a very happy milestone," Iceland’s finance minister Bjarni Benediktsson told the Guardian when he announced the tax.

*  *  *

But apart from the economics... Iceland also allowed bankers to be prosecuted as criminals – in contrast to the US and Europe, where banks were fined, but chief executives escaped punishment. The chief executive, chairman, Luxembourg ceo and second largest shareholder of Kaupthing, an Icelandic bank that collapsed, were sentenced in February to between four and five years in prison for market manipulation.

"Why should we have a part of our society that is not being policed or without responsibility?" said special prosecutor Olafur Hauksson at the time. "It is dangerous that someone is too big to investigate - it gives a sense there is a safe haven."

http://www.zerohedge.com/news/2015-06-11/iceland-imprisoned-its-bankers-and-let-banks-go-bust-what-happened-next-3-charts

"The [new] "if we build it (and offer credit to anyone who can fog a mirror), they will come" economy."

There has never been more cars in inventory than now...!

Where the World's Unsold Cars Go To Die (courtesy of Vincent Lewis' Unsold Cars)

More: http://www.zerohedge.com/news/2015-06-11/channel-stuffing-economy-there-has-never-been-more-cars-sidelines

The Results Are Worse Than Reported: Why the Next Housing Crisis Is Imminent!

By Harry S. Dent Jr., Senior Editor, Economy & Markets

Most commentary on the housing markets — from the industry, from analysts, from the media — all give the impression that the housing crisis is well behind us.

One economist in U.S. News & World Report highlighted the slight uptake in new single-family homes this year as fodder for economic growth. So is a $4.95 purchase at Ben & Jerry’s!

Nobody sees the greatest long-term trend: The next generation cannot fill the shoes of the baby boomers. It’s smaller and they simply cannot match the spending power of their predecessors. The economic implications are profound — especially for real estate, because unlike disposable goods, it never goes away!

That’s why Chapter 3 of The Demographic Cliff is entitled: “Why Real Estate Will Never Be the Same.”

But there are other short-term dangers that’ll make this bad situation even worse. And almost no one sees them!

Long term, the boomer’s decline in housing demand triggered the housing crisis. The shorter-term trigger was the subprime crisis. That’s what happens when you issue a ton of bad loans while home prices keep dropping!

But economists keep pointing at the latest positive numbers to show we’re heading to recovery. Look at the Case-Shiller Index up almost 16% since the start of 2013! Look at the Federal Housing Finance Agency’s index up 11% over the same period!

Guess what? Those numbers are mostly bogus!

A recent piece from Keith Jurow called “Why the Housing Market Collapse Is Set to Resume” explains why. Like me with the stock market, Jurow’s one of the only guys warning about a crash in the housing market!

He looks at Core Logic, the premier source on mortgage delinquencies. Their data shows that delinquencies have fallen from 2010’s high of 8.6% to 3.9%.

Sounds good, right?

Except the largest banks report completely different figures.

Walls Fargo reports a delinquency rate of 13.8%.

JP Morgan Chase: 13.3%.

And Bank of America: 12.9%.

Those are a lot bigger than 3.9%! And much more threatening!

So what’s the deal, Harry?

Core Logic is reporting the number of delinquencies. The banks are reporting their total outstanding balances. They’re completely different figures!

They’re ignoring the fact that those “numbers” include jumbo loans on homes that are $400,000 to 500,000 or higher. When you add them up, that’s millions and millions of dollars on their balances.

What sounds worse? A handful of delinquent homeowners, or millions of dollars outstanding? Core Logic’s just focusing on the one that sounds better!

This is why the “housing recovery” is a big fat lie…

To prop up the sector, the banks stopped foreclosing on larger loans in 2010. Putting them back up for sale would have completely saturated the housing market. Home prices would’ve fallen even lower, and too-big-to-fail banks would’ve been nailed!

So, they targeted the smaller fish instead.

Almost all of these smaller mortgage loans are bought and guaranteed by government-sponsored agencies like Fannie Mae and Freddie Mac. So they take the losses, not the banks. The average mortgage at Fannie Mae is a measly $159,000. Those are the loans the banks targeted for foreclosure… not the big ones.

After all, better to foreclose on the easier-to-sell homes than the ones that could never possibly sell.

So while Core Logic touts a 3.9% delinquency rate, Jurow’s sources show it’s more like 17% to 19% nationwide on the larger jumbo loans.

And that’s just nationwide. When you isolate the larger, more bubbly markets where most of those delinquencies on jumbo loans occur, you see results like this…

The delinquency rate of the New York City metro area is 39.06%. The Miami/Ft. Lauderdale area: 37.59%. Tampa/St. Petersburg — where I live — 36.81%. Vegas: 29.74%. And the Chicago-Naperville-Joliet area: 28.25%.

Do you understand how misleading 3.9% is!? There are 19 million people in the NYC metro area alone. And nearly 40% of its homeowners who have jumbo loans are delinquent!

If the economy sinks into another recession — which we believe is inevitable — just imagine what it’ll look like if even MORE delinquencies come up. It’ll be especially bad in metro areas with large, delinquent mortgage loans threatening higher losses!

This crisis is not behind us. Banks still have the worst loans on their balance sheets. The demographic trends show a net decline for houses from 2015 through 2039. Who cares if 2015 is showing a pitiful rise in new homes sales thus far!

...For now, consider your real estate holdings — especially higher-end properties in the major markets. Banks can tighten up on loans very fast if they see the sector start to crack.

And don’t buy into the bogus figures that say the housing market’s doing better. We’re warning you — it’s not!


Harry

Twitter @harrydentjr

"In a 2007-esque reflection, Hovnanian's CEO appears to be admitting things are not as rosy as homebuilders have all been projecting..."

"...

• *HOVNANIAN "TOO AGGRESSIVE" IN PRODUCING HOMES ON SPEC, CEO SAYS
• *HOVNANIAN CONCESSIONS ON SPEC HOMES CUT MARGINS: CEO
• *HOUSING MARKET FEELS A "BIT TENTATIVE," HOVNANIAN'S SORSBY SAYS

However, the CEO added 2016 will be the breakout year... so that's nice..."

"...Is this the first chink in the armor of Homebuilder optimism?"

Full Management Report @ZeroHedge: http://www.zerohedge.com/news/2015-06-09/homebuilder-plunges-12-after-ceo-admits-they-were-over-optimistic

US high yield vs. US investment grade bonds before finl crisis...total return thru today = ~identical ...Wisdom?

So...why take the risk? Risk belongs under your control = in your business, not in your savings/business reserves.

Ignore this! ...How's this going to end?

China+? Bubbles grow...collapse suddenly, i.e., everybody runs for the exits at the same time. Think now.

Unprecedented levels of activity in China's equity markets

The speculative fervor in China's equity markets is spreading as the Shanghai Composite hits new multi-year highs on elevated volume. The index easily cleared the 5000 mark after hovering just just above 2000 around six months ago. This rally has been nothing short of spectacular.

Source: Investing.com

Here are some key trends that point to just how heated the market has become.

1. A-share (domestic) trading activity has exploded.

Source: Credit Suisse

2. Weekly account openings have reached new highs. This is a revenue bonanza for China's brokers as many tap the IPO market for themselves (see story).

Source: ‏@vikramreuters

3. P/E ratios are touching historical records as well as valuations are stretched in many instances.

Source: ‏@NickatFP 

4. Margin debt levels are also near record, including as a percentage of market capitalization. Here is margin debt a percentage of the GDP.

Source: @PatrickMcGee_ 

Perhaps the most telling sign of speculative activity is this photo. There isn't much one could say here.

Source: @enlundm @DoubleEagle49

China's public equities market cap is now around $10 trillion (as a comparison, Japan's whole market is half that). That's over 13% of the global equity market capitalization (after being just above 5% some six months ago). Chinese tech firms listed in the US are now running back to China where their shares can get an instant pop in valuations (see story).

While many analysts are calling this a bubble, it's important to point out that bubbles can last for a long time. Unless Beijing interferes - and there is a strong possibility it will - this trend could last for a while. Of course the longer this goes on, the uglier things will get on the way down.

_________________________________________________________________________

Sign up for our daily newsletter called the Daily Shot. It's a quick graphical summary of topics covered here and on Twitter (see overview). Emails are NEVER sold or otherwise shared with anyone.
_________________________________________________________________________

From our sponsor, Fitch Solutions: Sign-up for Inside Credit - a weekly wrap-up of noteworthy Fitch content delivered every Friday.

SoberLook.com