Red Alert: Philippine Bonds Warns of Rapid and Dramatic Deterioration of Domestic Liquidity Conditions!

A loose Fed monetary policy (i.e., a positive sloping curve), sets in motion a false economic boom — it gives rise to various false activities. A tighter monetary policy, which manifests through an inversion of the yield curve, sets in motion the process of the liquidation of false activities (i.e., an economic bust ensues).—Austrian Economist, Frank Shostak

In this issue:

Red Alert: Philippine Bonds Warns of Rapid and Dramatic Deterioration of Domestic Liquidity Conditions!

-Yields of T-Bills Soars!

-Yield Spreads: From Flattening to Inversion!

-Yield Inversion: Symptoms of Balance Sheet Problems

-The Implications of Negative Spreads

-Weak Peso Compounds on Liquidity Squeeze, the 3Q Foreign Investments as G-R-O-W-T-H Mirage

-Phisix 6,900: Desperation Calls For The Rampant Use of Marking the Close Pumps!

Red Alert: Philippine Bonds Warns of Rapid and Dramatic Deterioration of Domestic Liquidity Conditions!

I am supposed to be on a holiday break, but recent developments at the Philippine bond markets have been too compelling to ignore because they have been signaling significant turn of events.

A week ago, I wrote about the intensifying signs of the flattening/inverting of the domestic yield curve as one of the factors that should not only inhibit any meaningful return of risk appetite, but likewise amplify the risk of an economic recession, as well as, risk of a credit crunch.

Apparently, this week’s market activities only reinforced my suspicions.

Yields of T-Bills Soars!

The above represents nominal BPS week on week changes

As of last week, yields of 3 and 6 months bills have rocketed! 5 year yield also jumped!

Perhaps most of the bond yield manipulators went on a Christmas vacation too soon for the surge in yields to have been unleashed.

Nevertheless, to repeat this has NOT been a HOLIDAY dynamic.

The following charts of the yields of 1, 3, and 6 month should tell us why.

Whether seen on a weekly (left) or monthly (right) basis yields of ALL three short term bills (again 1, 3 and 6 months) have spiked to MILESTONE HIGHS!!!

To put milestone in perspective, the weekly rates have been HIGHEST since 2014, while the monthly rates have likewise been HIGHEST since 2012!

However, investing.com charts have been limited to these time frame perspectives. And I suspect that the current yield have reached levels MORE than the demonstrated years.

And with the longer end little changed, the result has been a drastic and a dramatic curve flattening!

What you see depends on where you stand. So let us widen the angle to see how bond yields performed on a year to date basis.

Again the same dynamic holds: The yields of the short to mid end curve have been ascending FASTER than long term counterparts.

And that’s the reason why we have seeing the flattening to inversion process.

Now such dynamic now applies to almost the entire domestic bond spectrum!

Yield Spreads: From Flattening to Inversion!

Nevertheless, considering that the 10 year bond yield has been used as the mainstream’s benchmark, I will use them here to compare with the bills and notes counterparts.

I have noted during the mid-week that the coupon yield of the 1 month bill soared to a shocking 3.96%, but the yield has partly backed off from its high last Friday.

Now the above charts shows the spread between soaring yields of T-bills and 10 year bond equivalent.

The 10yr-1 month spread has narrowed to just 66 bps! (upper window)

The 10yr 3 month spread has dived to just 140 bps! (middle window)

And worst, the 10yr 6 month has collapsed to an astoundingly paltry 18 bps differentials! (lower window)

In short, the front end of the curve appears to be fast approaching an inversion!

Again the above charts reveal that this has NOT been anomaly but an extant dynamic for at least one year. It’s just that recent developments have been accelerating or escalating!

Let us move on to the spreads of the 10 yr relative to longer 1 and 2 year notes.

Apparently both have been plagued by the same flattening conditions as with T-Bill contemporaries.

It’s true that the above spreads have somewhat or marginally widened from previous levels last week, but they remain at landmark lows (as shown by the red arrows)!

Moreover, like the front face, the spreads above have been flattening from last year, but has only intensified during the last quarter.

Understand that the 10yr – 2yr benchmark has been a favorite bellwether by mainstream institutions like ADB. So perhaps current improvement on the 10yr-2yr maybe due to interventions to facelift the curve’s conditions.

However whatever cosmetic changes being applied by manipulators, it appears that they haven’t been successful in the concealment of the inversion process.

As I have earlier pointed out, it’s not just flattening anymore, negative spreads have already appeared.

For the FOURTH STRAIGHT week, the 10 yr-3 yr yield spread remains NEGATIVE!!!!!!!!!!!!

…and apparently, negative spreads have not been confined to 10 yr and 3yr anymore, they have now been joined by….

…the 10yr-5yr where the curve’s spread just crashed to negative last week!

This is totally stunning!

Yield Inversion: Symptoms of Balance Sheet Problems

The crux is: The abrupt narrowing of spreads has now spread to envelop the entire Philippine treasury curve.

The question is WHY has this been happening?

The obvious main answer is that there is no such thing as a free lunch forever.

Balance sheet growth has inherent limits. The continuing massive bank credit inflation has caused short term rates to rise relative to the longer end.

Despite headline profits, many highly levered firms have HARDLY been generating sufficient cash flows to pay for existing liabilities. Many firms have been using NEW debt to pay for EXISTING debt. And these have partly been ventilated through heightened demand for short term loans. Importantly, these firms have been competing intensely with each other for access to these scarce funds.

Meanwhile, as part of exercise to meet current funding requirements, holders of existing short to mid end papers have also been frantically selling these securities to spur the upsurge in yields!

This is simply a symptom of the unraveling of malinvestments.

Remember, that only a few entities in the population have access to the formal credit (banking/bonds) system. Hence, the zero bound to negative spreads are symptomatic of increasing concentration of credit risks!

And such inversion dynamic appear to be signaling the intensification of financial stress within the system.

Now the mainstream would like to blame the US Federal Reserve for current developments. Yet the above charts exhibit that the FED may only be an aggravating factor and not its main cause.

The Implications of Negative Spreads

And think again of what the evolving spreads will do to bank lending activities. Or what will happen to the banking system’s maturity transformation (borrow short, lend long)?

The compression of Net Interest Margins will force banks to sharply reduce credit activities. And loans represent about half of banking assets.

And with the BSP’s 2009 pivot to spur domestic demand through “expansionary monetary policy” in order to embellish statistical GDP, this entailed the entrenched dependence on credit.

As of 3Q, for every Php 3 of loans issued by the banking system (BSP current production loans) such has only generated Php 1 of government’s inflated NGDP (GDP at current price)!

Given that I believe that NGDP has been INFLATED, then the credit/NGDP ratio or credit intensity must be HIGHER!

And any material reduction in credit activities will NOT only diminish statistical GDP, it would raise credit risk as well! Remember, credit money accounts for about 70% of domestic liquidity (76% M3 October 2015), hence a fall in credit activities will translate to a drop liquidity (money in circulation) which should distill into GDP (NGDP and Constant ‘real’ GDP)!

Think of what happens to asset markets too. If the so-called ‘fundamentals’ of asset markets have been juiced up by credit, then the reduction of credit activities will deduce to its deterioration.

And if asset market pricing (boom) has similarly been pillared by credit, then diminished credit activities would substantially lessen demand for risk assets!

Said differently, a reduction of credit activities will lead to a substantial repricing of the considerably overpriced and mispriced assets.

Hence, overpriced and mispriced assets maybe vulnerable to violent adjustments (a.k.a crashes)

2015’s surge in yields should also translate to financial losses for institutions who bought these debt papers during its heydays. However, accounting classification may have shielded them from revealing their actual status. The recent DBP ‘market manipulation’ controversy provides clues to such dynamics.

Now if half of the banking balance sheets have constituted loans and other the half have been divided into financial (and property) assets, and fees, then both will similarly be vulnerable to a downturn in economic activities and from a hefty repricing of assets.

To make a long story short, this means there will be a transmission and feedback mechanism through the sequence of slowing credit growth to NGDP to earnings to asset pricing to credit risk and vice versa.

Developments in the Philippine credit market have been in sharp contradiction to what the mainstream has been projecting. For instance Fitch ratings has recently sold the chestnut that Philippine banks appear to be in tiptop conditions. Fitch appears to be reading statistical leaves while overlooking market signals.

For most of the mainstream, statistics or historical numbers only matters. Crucial market signals, especially one that affects the core of the present GDP G-R-O-W-T-H template, much like basic economics, exists in a vacuum or a black hole.

Furthermore, if yield compression will force banks to substitute volume for margins, then obviously this will come at the expense credit quality, thereby amplifying credit risks.

As I recently wrote: So the banking system must be so desperate as to seek margins by gambling away depositor and equity holder’s resources through the assimilation of more credit risks by lending to entities with poor or subprime credit ratings.

Of course, higher yields don’t just imply credit risk, they also expose many sectors to interest rate risk!

Weak Peso Compounds on Liquidity Squeeze, the 3Q Foreign Investments as G-R-O-W-T-H Mirage

And to compound on the tightening liquidity noose has been the sustained weakening of the peso.

Not only will an infirm peso increase prices of imported items, it will reduce demand for peso assets, and more significantly, it will magnify the onus from foreign denominated liabilities. That’s because a weak peso means more pesos to service every US dollar debt owned.

The flagging peso continues to draw foreign money away from domestic financial markets. Foreign money exodus also contributes to a wobbly peso. It’s a feedback loop. Foreign portfolio according to the BSP posted net outflows last November.

Forgive me, but I would question government’s relentless efforts to exorcise the deterioration in real economic activities through the repeated shouting of statistical talismans.

By real economic activities I don’t mean constant ‘deflator adjusted’ prices. Recall that constant ‘deflator adjusted’ prices magically transformed negative into positive performances in 3Q GDP.

Instead, I allude to a living and breathing, and not an artificially constructed puffed up numerical economy.

While it may be true that government statistics which show foreign investments up 165% in Q3, one quarter does not a trend make.

Moreover, foreign investments numbers tend to be extremely volatile. Having said so, they don’t imply G-R-O-W-T-H!

History shows us why. From 2010 through 2015, two out of six years posted negative 3Q growth, specifically in 2012 -35.14% and in 2014 -44.32%. (green circles). So from a statistical perspective 3Q 2015 data shows of a base effect: current numbers reflect a reversal from the troughs of 2014.

Also this implies of little correlation or even causation with GDP. Foreign investments cratered even when GDP climaxed in 2012!

Additionally, correlation between foreign investments and the peso (BSP’s monthly average end of 3Q) have been loose so far. (top window) This again suggests that the low USD-php volatility in the recent past has had little influence on foreign investments. Such relationship may be altered when currency volatility crescendos.

Worst, historically, huge nominal gains have coincided with collapses, as seen in 1997 and 2008! (orange ovals)

And the same phenomenon applies even on significant gains in terms of % growth, as seen 1997, 2001 and 2005 (peaks in blue trend line).

Besides, foreign investments are not like foreign portfolio flows, where the latter tends to reflect on real time market activities.

Foreign investments have to be “approved” by respective government authorities or regulators. This means foreign investments have to undergo the political bureaucratic screening process by specific agencies based on technical legal guidelines as prescribed by the national government. So it would be obvious that such statistical numbers and or the release thereof would involve certain political elements or contain some degree of political influence. And given the embedded nature of politics on foreign investments, what stops the government from either ‘timing’ its release or embellishing such numbers? Given that government operates as monopoly, who will be there to verify on the authenticity of those numbers? Yet we are supposed trust those numbers.

Nonetheless there has been little evidence where the government’s recent liberalization contributed to the spike in 3Q foreign investments. That’s because except for agriculture and energy, it’s mostly the bubble sectors which benefited from the recent surge in foreign investments.

Besides, given the amplification of the risks of a global recession, this will not only affect foreign investments but likewise magnify risks of protectionism. Because inflationism represents an implied protectionist policy, it is INCOMPATIBLE with liberalization. And the consequence of inflationism will unfortunately (to my dismay as libertarian) lead to protectionist impulses or more politicization of the marketplace, the APEC boondoggle notwithstanding. The domestic strongman rule bubble already serves as manifestation of the rise of populist protectionist politics.

At the end of the day, with monetary conditions rapidly and severely tightening, unless such juncture radically improves, then 2016 should be a mainstream SHOCKER!

As final thought, if the shrinkage of domestic liquidity will lead to deflationary pressures, particularly in parts of the economy where areas or industries have been afflicted by excess supply and debt overhang, on the other hand, the weak peso will lead to inflationary pressures on areas dependent on imports. So the Philippines will likely see a coming stagflationary environment—a simulacrum of the post 1997 era.

Phisix 6,900: Desperation Calls For The Rampant Use of Marking the Close Pumps!

The Phisix stormed to a 1.96% gain over the week on a very low volume rip.

As for the volume, at an average of Php 5.55 billion, daily volume signified the FOURTH lowest for the year! So essentially sellers took advantage of aggressive bids to unload on high prices.

But what has really been striking has been the rampant “marking the close” sessions used to attain the week’s gains.

On Monday, the Phisix losses hit a peak of 1.8%, approached the runoff period down .64% but shockingly closed up by .16% from a spectacular two issue pump! Marking the close produced a whopping .81% swing to turn negative into positive!

And 58.2% of SMPH’s eye-popping 8.25% jump to a new record high came from a last minute pump. And so with GTCAP, where 82% of the day’s 6.02% gains came from marking the close.

Since SMPH ended the week at Php 21.8/share or down Php 1.15 from the record Php 2.95, it’s really sad to see how price fixing actions by some entities have led to undue losses on resources used for such desperation headline enhancing pumps.

The same applies to GTCAP which closed at Php 1,262, though up 3.19% for the week, had been down Php 37 or 2.8% from the Php 1,299 pump.

I posted the egregious price fixing session here.

This wasn’t limited to Monday.

Friday’s session saw the Phisix down by 1.09% prior to the runoff (see upper window). All of a sudden, the Phisix closed down by only .56%! This shows how 49% of the day’s losses had been wiped out from Friday’s price fixing session! A four issue pump had been used to bolster the index.

Hasn’t it been an oxymoron to think the Philippines have supposedly reached “developed economy” status yet depends on brazen price fixing or cheating its way to attain such ends?

Last week’s rally was more than just about low volume, it was also about divergence:

Among the 30 composite issues constituting the PSEi index, 23 issues posted advances, 6 posted losses while 1 was unchanged.

In contrast, the broad market was tilted heavily in favor of sellers (lower right window). Declining issues topped advancing issues by 99. Declining issues led in 3 out of the 5 trading days of the week.

Such divergence reveals of the cosmetic actions to festoon the headlines.

It’s really a spectacle to see how price fixers have been frantically attempting to prop the index up in the face of shrinking liquidity. It’s an example of picking up coins (pennies) in front of steamroller founded on hopium.

And sad to say hopium has never been a good strategy.

Bank of Japan Announces ETF Expansion, Nikkei Goes on a Roller Coaster Ride!

As wonderful example of how financial markets have become so distorted from central bank interventions, just observe what occurred today in Japan's financial markets when the BoJ announced the expansion of ETF buying and of the lengthening of maturities of its bond purchases.

First, the additional measures from the BoJ from the CNBC

The Bank of Japan surprised markets Friday by announcing plans to increase purchases of exchange-traded funds (ETFs) and lengthening the maturity of bonds it purchases to encourage investment in the economy.

The BOJ said under the new program, it will purchase ETFs at an annual pace of 300 billion yen ($2.45 billion) composed of stocks issued by firms "proactively" investing in physical and human capital.

The plan will start with purchases of ETFs tracking the JPX-Nikkei Index 400, which screens for factors including corporate governance and investor-focused management.

The new ETF purchase program will begin in April and is in addition to the current ETF purchase program of around 3 trillion yen annually.

The BOJ meanwhile held rates steady and said it will stick to its plan to increase the monetary base by 80 trillion yen a year, as expected....

Meanwhile, the stated purpose for the expansion; again from the same article.

The BOJ's new ETF program is aimed in part at offsetting the possible market impact of the the central bank's sales of stock it has purchased from financial institutions since 2002, the BOJ statement said. It plans to take 10 years to sell those shares at a pace of around 300 billion yen annually.

The BOJ also said it would change the average maturity of its Japan government bond (JGB) purchases to 7-12 years next year from around 7-10 years at the end of this year.

But while the BOJ statement made an initial splash in markets, it isn't clear that it adds up to much.

"These are all helpful measures, but they won't make much difference in practice," Capital Economics' Thieliant said, noting that the 300 billion yen in additional ETF purchases is "minuscule."

My hunch is that possibly aside from the "sales of stock", which will be offset by this expansion, the BoJ may likely be responding to the Fed's rate hike

Yet how stocks and the yen reacted...(from CNBC)

After the decision, the Nikkei retraced early losses, climbing as much as 2.7 percent, before returning to negative territory. The dollar rose against the yen initially, fetching as much as 123.58 yen, compared with around 122.40 yen before the decision. The pair later retraced gains, with the dollar fetching 122.17 yen around 0437 GMT.

Stock market gamblers smelled blood and powered the Nikkei to spike by more than 2.7%, during the announcement! But after digesting the information from the updated program, whereby the expansion was construed as "minuscule", they sold off!

The Nikkei 225 traveled 2.7% up and then roundtripped or erased the gains plus closed the day down 1.9% (images above from Bloomberg). 

So that would account for a staggering 7.3% intraday move! Awesome volatility!

Such volatility has likewise affected the USD yen (chart from investing.com) as indicated by the article.

By turning participants into Pavlovian dogs dependent on central bank actions, financial markets have become totally deformed or has lost its essential 'price discovery' functions. And this is why when economic reality will reassert control (sometime soon) from central bankers, the adjustments from such massive distortions will be disorderly and violent. 

Today's actions should serve as a blueprint for things to come.

Graphic of the Day: What's Behind the Colors of Star Wars' Lightsabers

To know more, pls proceed to the source Vox.com

Headline of the Day: What Junk Bonds Derivatives Have Been Signaling, US Fed Siphons $105 billion as Part of Rate Hike

Two charts from the article

Read the Bloomberg article here

Last Sunday I wrote,

And another thing, the US Federal Open Market Committee (FOMC) will be holding its meeting next week (December 15-16), with markets heavily anticipating its first rate hike since June 2006.

This comes even as financial markets have shown increased signs of anxieties anew.

In the US, its more than just falling stocks but yields of junk bonds have been rocketing!

The other day, the US Federal Reserve spelled out how it would raise rates: (NY FED)

Last night NY Fed siphoned $105 billion

Bullish eh?

Infographics: All of the World’s Money and Markets in One Visualization

An infographic on the estimated stock of the world's money, credit and asset markets from the Visual Capitalist. They write:

All of the World’s Money and Markets in One Visualization

How much money exists in the world?

Strangely enough, there are multiple answers to this question, and the amount of money that exists changes depending on how we define it. The more abstract definition of money we use, the higher the number is.

In this data visualization of the world’s total money supply, we wanted to not only compare the different definitions of money, but to also show powerful context for this information. That’s why we’ve also added in recognizable benchmarks such as the wealth of the richest people in the world, the market capitalizations of the largest publicly-traded companies, the value of all stock markets, and the total of all global debt.

The end result is a hierarchy of information that ranges from some of the smallest markets (Bitcoin = $5 billion, Silver above-ground stock = $14 billion) to the world’s largest markets (Derivatives on a notional contract basis = somewhere in the range of $630 trillion to $1.2 quadrillion).

In between those benchmarks is the total of the world’s money, depending on how it is defined. This includes the global supply of all coinage and banknotes ($5 trillion), the above-ground gold supply ($7.8 trillion), the narrow money supply ($28.6 trillion), and the broad money supply ($80.9 trillion).

All figures are in the equivalent of US dollars.

Courtesy of: The Money Project

A bonus chart from the late economist John Exter with his eponymous Exter's Pyramid

The table represents the proportionality of fiat money/credit/derivatives with gold (chart from goldcore.com)

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!

Quote of the Day: Why not use spoons instead of shovels?

Milton Friedman was traveling in a developing Asian nation when his host took him to visit an excavation project that was part of a public works program. Instead of using earth-moving equipment, the workers were using shovels. Friedman asked why. His host told him the aim of the program was to employ as many workers as possible. Friedman quipped: "Why not use spoons instead of shovels?"

This is from financial journalist and author Caroline Baum in an article published at economics21.org

US Stocks: Strong Headline Bellwethers, Deteriorating Internals

Like Philippine stocks during the 1H 2015 "record" run, US stocks appear to be having their own version of a stock market Potemkin Village.

Gavekal's Eric Bush explains, (bold mine)

Over the past year, more stocks in the US have been declining than advancing for the first time since 2009. In the charts below, we show the cumulative net advances (i.e. # of stocks advancing minus the number of stocks declining each day cumulatively added together over a specific time frame) over 1-year, 2-year, and 3-year time periods.

The one-year cumulative net advances has fallen from 10,760 in January 2015 to -2,547 through yesterday’s close. This is remarkable since our GKCI United States Index is only about 6% of its 1-year high. Over the past decade or so, usually when the one-year cumulative net advances goes negative it is associated with a sizable decline in the market.

Cumulative net advances over the past two- and three-years remain positive, however, the impressive breadth in the market that was intact at the end of 2014 has quickly faded away. 

Dilbert's Scott Adam's on A Voter's Guide to Thinking

At his website, Scott Adams of the Dilbert comic strip fame offers eight tips to improve a voter's thinking process

A Voter’s Guide to Thinking

1. If you are comparing Plan A to Plan B, you might be doing a good job of thinking. But if you are comparing Plan A to an imaginary situation in which there are no tradeoffs in life, you are not thinking.

2. If you see quotes taken out of context, and you form an opinion anyway, that’s probably not thinking. If you believe you need no further context because there is only one imaginable explanation for the meaning of the quotes, you might have a poor imagination. Sometimes a poor imagination feels a lot like knowledge, but it’s closer to the opposite.

3. If a debate lends itself to estimates of cost (in money or human suffering) and you aren’t willing to offer an estimate in support of your opinion, you don’t yet have an opinion.

4. If you are sure you know how a leader performed during his or her tenure, and you don’t know how someone else would have performed in the same situation, you don’t actually know anything. It just feels like you do.

5. If something reminds you of something else (such as Hitler, to pick one example) that doesn’t mean you are thinking. That just means something reminded you of something. A strong association of that type can prevent you from thinking, but it is not itself a component of reason.

6. Analogies are not an element of reason. Analogies are good for explaining things to people who are new to a topic. If I am busy as a beaver, that does not imply that I also build dams by gnawing on wood. It just means I’m busy.

7. If you think your well-informed and reasoned opinions as a voter are bringing up the average, let me introduce you to the 100% of other voters who believe they are bringing up the average as well.

8. If your opinion is based on your innate ability to predict the future, you might be employing more magical thinking than reason. The exceptions would be the people who use data to predict the future, such as Nate Silver. That stuff is credible albeit imperfect by nature. Your imagination is less reliable.

 Dandy.

Ted Talk: Journalist Sharyl Attkisson: Beware of the Manipulation of Media through Astroturfing!

Beware of the manipulation of media by interest groups, warns multi-awarded investigative journalist Sharyl Attkisson at her fabulous Ted Talk!

Much of what you read or see out there has signified an "increasingly artificial paid for reality" through the use of "surreptitious Astroturfing". Astroturfing has become a huge industry according to Ms. Attkisson "than the traditional lobbying of Congress"

Ms Attkisson defines Astroturf [2:00]

What is Astroturf? It is the perversion of grassroots, as in fake grassroots. Astroturf is when political, corporate or other special interest disguise themselves and published blogs, start facebook and twitter accounts, publish ads, letters to the editor or simply post comments online. To try to fool you into thinking an independent or grassroots movement is speaking. The whole point of Astroturf is to try to get an impression there is a widespread for or against an agenda when there is not. Astroturf seeks to manipulate you into changing your opinion by making you feel that you are an outlier when you're not 

So beware of surveys, of news or articles which are in reality press releases, or when applied to economic developments, information based economic sophistry.

Ms Attkisson provides several insights as how to defend against astroturfing by spotting signs of them. 

I would add a more important trait which she has missed: develop critical thinking.

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.

Amazing Marking the Close Pump Sends Deep Red PSEi into Green!

Some entity or entities have been so very peeved or upset by the string of losses that they decided that they had to do something in order to ease their emotional baggages.

The PSEi bled by as much as 1.8% early morning, halved those losses by mid afternoon.

The PSEi was down by about 43 points or .64% a minute before the runoff…then…

TADA!

Marking the Close!

The fantastic .81% swing transformed NEGATIVE .64% PSEi to suddenly close UP by +.16%!

See how down is UP, low is HIGH, less is MORE?

Well the PSEi’s .8% ramp has mainly been from a two stock pump!

SMPH’s 8.25% surge to a new record high was a product of a stunning last minute 4.8% pump!

In short, 58.2% of SMPH’s breathtaking gains came from price fixing!!

SMPH holds the third largest market cap weighting in the PSEi.

Even more astounding was GTCAP’s late minute acrobatics.

GTCAP rocketed by the 5.09% from a last minute push! The closing bell pump accounted for a whopping 82% of the day’s 6.2% ramp!

SMPH’s magnificent gains pushed the property index by 1.19%! Meanwhile, GTCAP’s heroics powered the Holding firms gains (along with AC) by 1.16%

Also notice that ALI slumped by 3.24% today. Ironically, last Friday, ALI was pumped at the last minute by 1.5% to post a 2.6% gain. Today's losses means that not only has ALI  given up all of Friday’s manipulated advances, it has surrendered 78% of last week’s 4.11% advances!

If ALI’s performance serves as a guide then those last minute pumps won’t last.

Moreover, the broad market reveals how it was a bloodbath for most issues today as decliners led advancers by 121 to 43--or 2.8 issues down for every 1 up.

Peso volume again shriveled to Php 4.97 billion (all images above from PSE and colfinancial)

Yet today's frantic pump clearly exhibits the intensifying desperation (denial phase).