Chart of the Day: Do Japanese Prefer Having Cats to Having Dogs (and Kids)?

Pet cats have been booming at the expense of dogs (and kids).

That's according to a report from Bloomberg

The number of cats kept as pets is on the way to overtaking that of dogs in Japan, while the number of children continues to drop steadily. In the fast-aging nation with people increasingly living alone, cats are finding favor because dogs are more demanding and need to be walked, according to Kaoru Souma, secretary general of Japan Pet Food Association.

Chart of the Day: World Avocado Economics

Interesting graphics from Reuters' Answers ON on the global shortage of Avocados.

Chart of the Day: In Europe, Negative Rates and War on Cash Reinforce 'Cash is King'

The Bloomberg chart of the day shows a robust surge in cash in circulation in the Eurozone

The Bloomberg explains (hat tip Mises Blog)

Europe’s ATMs worked overtime in 2015. A record 1.08 trillion euros ($1.17 trillion) of banknotes were in circulation, almost double the value 10 years ago, according to data compiled by the European Central Bank. That’s a counterargument to some bankers who say that electronic forms of cash will replace paper money sooner rather than later.

The value of banknotes in circulation rose 6.5 percent last year, the most since 2008. There are financial reasons - including negative rates on deposits - but part of the increase could be related to the influx of refugees, who don’t have bank accounts.

Negative rates and the war on cash will push more and more people to use cash

Charts of the Day: US Benchmarks in Bear Markets: Russell 2000 and the Dow Transportation

Last night's selloff in US stocks has brought the small cap index the Russell 2000 into the fold of the bear market 

The Russell 2000 now joins the Dow Transportation Index.

Have these been the proverbial writing on the wall? 

Will this be the year of the Grizzly bears?

Charts: Bloody First Week of 2016 for Global Stocks!

For the global stock market, it was a bloody start for the year 2016 

The following graphics exhibit on the returns of major equity benchmarks for the 1st week of 2016.

Americas

Asia

Europe

Middle East and Africa (tables above mine, data from Bloomberg)

This week's stock market bloodletting produced several milestones as shown by charts below from Zero Hedge

1st week losses by the Dow Jones Industrials and S&P 500 had been as big or bigger than 2008.

Germany's DAX was a record...

...and so was China's Shanghai index (in spite of the government's intervention particularly last Friday).

And bear markets appear to be spreading.

Decoupling anyone?

Charts: Saudi Riyal, Dow Jones Industrials, OPEC Basket, Baltic Dry and Commodity Returns

The Zero Hedge posted some terrific charts today.

Has this week's market turmoil been a "China only problem"?

Not so says the Saudi Arabian currency, the riyal.

The Zero Hedge notes

Saudi riyal forwards hit their highest level in almost two decades as oil plummeted: twelve-month forward contracts for the riyal climbed 260 points, and set for the steepest close since December 1996 on growing speculation the world’s biggest oil exporter may allow its currency to slide against the dollar for the first time since 1986 (incidentally, Bank of America's "Number One Black Swan Event For The Global Oil Market In 2016").

Should the current pressure be sustained, the USD-SAR peg may break. What happens next? [clue: mayhem]

US stocks were a toast last night. And it's been a bad start so far.

Well, it has not just been a bad start, but for the Dow Jones Industrials the worst since 1900!

As for oil, WTIC closed past $33 last night. But WTIC hit an intraday low of $32.1 which virtually breached the 2008 low of $32.4. Well, as for the OPEC oil equivalent, prices of the OPEC basket plunged to 2004 lows. 

Notes the ZH: Amid Saudi price cuts to Europe, the basket price was set at $29.71 today - the first print below $30 since April 2004.

And on commodity shipments, the Baltic index likewise hit fresh lows.

Again from the ZH: Another day, another fresh all-time record low in The Baltic Dry Index as Deutsche Bank's "perfect storm" appears ever closer on the horizon. Plunging 4.7% overnight to 445 points, this is 20% lower than the previous record low in 1986 and as one strategist warns, "It’s a brutal start of the year, there’s just nowhere to hide on the market."

Finally with oil and commodity trade on milestone lows, how about return on commodity investments?

Rate of returns on commodities have hit the Great Depression levels! Incredible!

The ZH: While the "sell in 1973, and go away" plan had worked out for some in the commodity space, the destruction of the last decade has only one historical comparison... the middle of The Great Depression. The 10-year rolling annualized return for commodities is -5.1% - the lowest since 1938...

For commodities, a buying opportunity should arise someday...

So a critical test on the SAR peg, the worst DJIA performance since 1900, OPEC Basket at 2004 lows, fresh lows for the Baltic index and annualized commodity returns at Great Depression levels, PLUS CHINA--do all these suggest bullishness for risk assets or of growing probability of a global financial economic crisis?

Chart(s) of the Days: Yields of Philippine 1 Month Bill Soars to Highest Level Since at Least 2012!

What a truly remarkable development in the domestic bond markets today. 

The yield of Philippine 1 month Treasury bill soared to its highest level [to at least 2012]! 

I say "at least" because that's the max from investing.com charts

Today's astounding surge in the yield of the 1 month bill has narrowed its spread with the 10 year benchmark to a mere 15 bps! 

This I believe, like the nominal yield equivalent, represents a milestone! 

As I have recently noted, the inversion process within the Philippine treasury spectrum appear to be spreading. And definitely this would NOT be a good news for a credit dependent economy and Philippine risk assets too!

Chart of the Day: Bears Reclaim Thailand's SET

Following yesterday's decline, Thailand's SET has regressed back to the bear market territory

The above represents the chart of the day: Thai's major equity benchmark the SET has fallen by 21.55% from the February peak (as of yesterday). 

The SET has already broken the August 'yuan devaluation' lows and seems at pace to test the December 2014 support. (images from Bloomberg)

Of course, the SET's weakness can be traced to the rising US Dollar as seen via the resurgent USD THB (via Google finance). 

Given the current pace of appreciation of the USD relative to the Thai bath, it would seem that a possible breakout by the USD Thb from the September highs would be manifested or coincidental with a likely breakdown by the SET of December lows.

What would be the ramification from such scenario? We'll find out soon.

Charts of the Day: Papal Stock Market Cycle (?), US High Yield Credit, Corporate Bond Spreads and Profit Margins

The Papal Stock Market cycle? [Source Business Insider]

Divergences! US stock markets soar as... 

...high yield credit stress surge! [Source David Stockman's Contra Corner]

...corporate bond spreads widen! [source Gavekal Blog]

...and as corporate profit margins tip towards recessionary levels! [source Barclays/Business Insider]

Chart of the Day: How Big is Uber?

From the National Post (hat tip Mark Perry)

Chart of the Day: Hong Kong's Hang Seng Index Falls Into the Bear Market's Grip

After China, Hong Kong major equity benchmark, the Hang Seng Index (HSI) fell into bear market territory (20% loss from the highs) today. (chart from investing.com)

Will the HSI bounce from here? Or will this highlight the next phase of the HSI's next leg down? 

And will the rest of Asia follow? And if the latter does, will these signal Asian Crisis 2.0?

Chart of the Day: Record Unprofitable IPOs

From Zero Hedge

Awesome Images of the Day: A Glimpse of China’s Stock Market Crisis

The following tweets are from South China Morning Post's Managing Editor for International Edition George Chen...

The tweet above looks like China's modern version of the early middle age King Canute, where the latter supposedly ordered the sea to turn back the tide.  

But unlike King Gnut or popularly known as King Canute, who did so in order to show the limits of his power, the Chinese version may be appealing to populist demand...

Chinese investors gamblers have been venting their rage as the boom turned into a three week stock market bust. 

One example of expression of the fury can be seen in the poster above.

And part of measures to stem the hemorrhage has been yesterday's new rule for a daily trading limit (image and article from the Business Insider)

Yet unfortunately, Chinese stocks performed against the wishes of China's political leadership.

But it didn't stop them from trying... 

The Chinese government easily learned the ways of the Philippine index managers via the 'afternoon delight' selective pump on several key heavyweight issues.

Unfortunately they haven't been as effective.

From as deep as 4.96% during the first half of the session as shown in the lower window below, losses have been reduced to just 1.29% at today's close. 

But as Mr. Chen tweeted above, 1,600+ stocks closed limit (10%) down!

And the broad market meltdown had been quite evident in most of China's benchmarks.

Chart of the Day: China’s Crashing Stocks Déjà vu of Wall Street 1929?; Update on China's Stocks--Government Market Support Produced Mixed Performance

Interesting comparison between China's crashing stocks and Wall Street's 1929 crash

The Bloomberg on the China's eerie déjà vu of Wall Street 1929:

On Wall Street in 1929, it was the great banking houses of J.P. Morgan and Guaranty Trust Company.

In China today, it’s names like Citic Securities Co. and Guotai Junan Securities Co.

They’re separated by 86 years and 7,300 miles, but Chinese financiers are turning to the same playbook used by their American counterparts to fight a crash that’s wiping out stock-market fortunes on an unprecedented scale.

Investors in China are hoping it works out a lot better this time around.

When five of America’s most-powerful financiers met at the House of Morgan at 23 Wall Street on Oct. 24, 1929, the immediate impact of their plan to pool resources and prop up the market was encouraging: the panic of Black Thursday gave way to a recovery and the New York Times lauded the bankers for putting a floor under share prices.

The boost to confidence didn’t last long. The rout resumed by the following Monday, with the Dow Jones Industrial Average losing 13 percent. The gauge would go on to drop another 34 percent over the next three weeks, as the attached chart shows.

Oh here is an update on Chinese stocks

The Shanghai index closed up 2.41% on a volatile session.

The major benchmark opened 4+% (update:not 4% but 7.8%!!) but by afternoon lost all of the gains to even fall into negative. It’s only from the final tenth of the session where all of today’s gains emanated from.

Moreover, the final segment pump has reportedly been directed at a few companies.

From another Bloomberg report:

More than two stocks dropped for each one that rose on the Shanghai Composite Index, which climbed 2.4 percent to 3,775.91 at the close. The benchmark gauge was supported by rallies in PetroChina Co. and Industrial & Commercial Bank of China Ltd., the two largest members on the index, amid speculation of buying by state-directed funds. The ChiNext measure of smaller companies sank 4.3 percent, while the Shenzhen Composite Index retreated 2.7 percent.

So perhaps the Chinese government took a page out of Philippine index managers’ afternoon delight pump. 

But the result from the  government's support has only been to push up the index while the rest of the market remained unconvinced, as shown above.

Divergences imply of weak foundations that has pillared today's market actions. So unless market breadth improves, the menace of a crash remains.

And fascinatingly, such mixed showing came just after the PBOC announced last night that they will backstop margin trades of brokerages via a government agency.

From Wall Street Journal: The People’s Bank of China will inject capital into China Securities Finance Corp., which is owned by the securities regulator, according to the statement by the China Securities Regulatory Commission. The company will then use the funds to expand brokerages’ business of financing investors’ stock purchases. 

Will the harrowing Wall Street’s 1929 episode repeat in China?

Charts of the Day: Collapsing World Export and Import Prices

Yesterday I featured a news site which showed of an astounding chain of negative headline economic developments in Asia. 

Yet the following charts from Gavekal Blog provide us clues for such unfolding dynamic. 

Writes Gavekal's Eric Bush:(bold mine)

According to the World Trade Monitor, world export prices declined by -15.8% year-over-year in April and are back at level last seen in 2009. World import prices have declined by -15.1% year-over-year as well.

In the developed world, export prices are down-16.6% year-over-year. This a larger drop than what occurred in 2009 and is the largest year-over-year decline since 1990 (when this series began). Import prices have declined by -17.5% year-over-year. The drop it 2009 was slightly larger.

Lastly, in the emerging markets, trade prices have fallen but not quite to the extent that they have in developed world. Emerging market export prices are down -15.1% and import prices are off -12.6% year-over-year.

The speed of plummeting rate of prices of merchandise trade last seen during the Global Financial Crisis appear to be indicative of the conditions of the global economy. They are most likely symptoms of sharply slowing demand and a glut of goods (from excess capacity)

Yet the above represents the periphery to core dynamics in progress.

As I wrote last February 2014

if the adverse impact of emerging markets to the US and developed economies won’t be offset by growth (exports, bank assets and corporate profits) in developed nations or in frontier nations, then there will be a drag on the growth of developed economies, which would hardly be inconsequential. Why? Because the feedback loop from the sizeable developed economies will magnify on the downside trajectory of emerging market growth which again will ricochet back to developed economies and so forth. Such feedback mechanism is the essence of periphery-to-core dynamics which shows how economic and financial pathologies, like biological contemporaries, operate at the margins or by stages. 

 Worry not. Stocks are bound to rise forever. 

Photo of the Day: Asia's Deteriorating Economic Headlines

Today's Nikkei Asian Review presents a chain of articles from the "economy" section that has been quite revealing of what's been happening to the Asian region.

Chart(s) of the Day: Yields of Philippine 1 Month Treasury Bills Soar to 3 Year High!

Hasn’t it been portrayed by media and the establishment that the Philippine political economy have developed 'invincibility' and or 'immunity' to all sorts of risks? 

If so, then who from the establishment institution/s has been so desperate or frantic enough to raise short term liquidity by dumping 1 month bills on the marketplace to send yields of 1 month treasury to 3 year highs?! And why?? (charts from investing.com)

Yet there have been repeated attempts at vehemently “massaging” yields as seen during the past few days. 

Unfortunately for the index managers, it appears that the developing 2 year uptrend has signified a powerful force to have kept manipulations at bay. 

Yet more signs of record stocks in the face of record imbalances at the precipice. 

Charts of the Day: The Uber Effect: New York Taxi Bubble Deflates

Both charts from AEI’s Mark Perry

Austrian economist Thomas DiLorenzo on Uber via the Lew Rockwell Blog:

New York City’s taxicab monopoly “kingpin” can’t pay his debts, thanks to competition from lower-priced/higher quality Uber drivers.  Citibank is foreclosing on 90 of his monopoly “medallion” loans.  Go, Uber Go!

New York’s decades-old taxicab “medallion” crony-capitalist scheme was set up to limit competition in the business, thereby creating monopoly profits for then-existing cab companies.  It’s the urban version of mercantilist agricultural policies that pay farmers for NOT growing crops or raising livestock.  The current price of one of these medallions is around $800,000, down from over $1 million in June of last year thanks to competition from Uber.  Let’s hope that every last one of these “kingpins” is driven from the market by Uber (and other free-market competitors).

Bubbles have always been a product of government interventions.