I don't like Mondays...

Monday morning in Asia has given way to some sharp moves lower across markets. Shanghai stocks are below 3,000 after gapping lower at the open (last 2975.50), Copper is limit down (5%), LME Copper down $125 from the London close (2% - main support on 3m LME Copper is $5950, last $6120), other Asian bourses are 1.2%-2.6% lower, while risky currencies such as AUD and Asian FX are being sold aggressively - AUD$ traded from .8324 to a low of .8203

From Reuters: "China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, is set to pour up to $2 billion soon into the U.S. mortgage system by hiring mandates under the U.S. Treasury-backed Public-Private Investment Plan (PPIP), sources told Reuters. The firms in talks with CIC are designated PPIP managers and include Alliance Bernstein LP, with sub-advisers Greenfield Partners LLC and Rialto Capital Management LLC; Angelo Gordon and Co LP with GE Capital Real Estate; BlackRock Inc; Invesco Ltd; Marathon Asset Management LP; Oaktree Capital Management LP; RLJ Western Asset Management LP; Trust Company of the West; and Wellington Management Co LLP, said the sources."

From Goldman Sachs: “Closing our long oil/gas ratio tradeAlthough we continue to expect the oil/gas ratio, currently at 20.7 in the prompt contract, to increase further between now and the end of the summer, we believe this is a good exit point. Hence we are closing our long oil/gas ratio trading recommendation at a total profit of 3.37."

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Latvia - again

In May something strange happened but it went by barely unnoticed by the rest of this planet. Regional leaders in Asia agreed on a 120 billion USD emergency fund to counter the crisis. This fund was set up by the Asian Development Bank with his 67-members, in fact bypassing the IMF. Don’t forget that the IMF is de facto an United States driven institution, but that the US is also an important member of the ADB.
In the mean time we hear that the talks between Latvia and the IMF are not progressing at all. The IMF tries to play hardball.
While the EU is much more cooperative in finding solutions for the Latvian problem.
From the FT:

Although the Latvian Parliament did approve the announced budget cuts on Tuesday this week, the IMF response posted on its official website was rather lukewarm, suggesting that the measures were still not enough for the IMF to feel comfortable enough to continue the support of the Latvian peg with its own money.
Typically, the EU disbursements have followed those of the IMF in the sense that the EU left the IMF in charge of “managing” the programmes (ie, undertaking the economic assessments) and then would disburse its funds following the completion of IMF reviews. For example, this has been the practice in Romania and Hungary. Now it seems that in Latvia this IMF-EU cooperation could break down, with the IMF declining to conclude its review even though the EU wants to make its own disbursement.

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Bubbles

Thanks Citi for some useful information. We’re interested in the next mania – an emerging markets bubble.

Over the last four months we have seen large outflows from traditional safe havens including money market funds. Much of this money has flowed into riskier credit and equity funds. Within equities the biggest flows are going into Emerging Markets. So far this year inflows to Emerging Market equity funds have returned more than half of the outflows we saw in 2008.
While flows have been strong we think that bubble talk is premature. However, the combination of sound macro fundamentals in Emerging Markets, a relatively attractive corporate earnings outlook and, most importantly, abundant easy money suggests we have the ingredients for a potential bubble.

We add: the bubble seems already to have popped.

An Asian market of recent interest is Malaysia where sweeping changes will be announced soon.

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has the Won won? Tibbids

South Korea issued a 50.000 won banknote. It took a while but the value of the 10.000 won note has shrunk to 7.80 USD. What with inflationary pressure?

The Banker published his top-1000 banks by Tier 1 standards.
Tier 1 is common stock, preferred stock and hybrid debt-equity instruments.
JP Morgan Chase ranks first and Bank of America second. Of course, with a little help a friendly government reaching the top is easy.

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Asia leads the US

We live in strange times indeed.
The S&P futures are up another 1.5%. On their way to 820, this is a resistance hurdle of some importance.
What is so strange? It seems that US indexes are following the Asia session instead of the other way around.
The Nikkei is leading, not only the regional stock exchanges but also the US, although there are no particular reasons or drivers.
We also want to mention the squeeze in the final hour on Wall Street yesterday.

And than we have some news from Zimbabwe.
We read in an article that the local authorities are shifting away from the dollar and has chosen instead for the South African Rand as the countries reference currency.
Zimbabwe offers a timeless picture what can happen when the debasement of currency is running out of hand

One of the consequences is that the local stock index is not crashing at first but goes higher instead.
A false positive, as it is called

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