Chinese Officials Come Clean to Rigging Economic Growth Stats

You don’t say? This is especially suprising come out from Chinadaily.com. You’d think they’d refrain from casting aspersions on the great Chinese command economy, fearing the ever efficient mobile execution vans. But, no, on this day, 11 days prior to KRAMPUS, the admit to wanton fraud, manipulation, and gross misconduct that is sure to get them a medal of “honor amongst citzenry” in the ancient walled country of the orient.

Several local officials in China’s Northeast region sought to explain dramatic economic drops in their areas by admitting they had faked economic data in the past few years to show high growth when the real numbers were much lower, Xinhua News Agency reported on Friday.

“If the past data had not been inflated, the current growth figures would not show such a precipitous fall,” one official was quoted as saying.

The report cited several officials in the region who acknowledged they had significantly overstated data ranging from fiscal revenue and household income to GDP.

Three years ago Liaoning province’s GDP growth was reported at 9.5 percent, but its current figure?over the first three quarters of this year?is just 2.7 percent. Jilin’s growth was reported at 12 percent three years ago, but its current rate is 6.3 percent in the same period.

The revelation about the inflated figures came as the GDP growth of the three Northeast provinces ranked the lowest nationwide.

Guan Yingmin, an official in Heilongjiang province, said local investment figures were inflated by at least 20 percent, which translates to nearly 100 billion yuan ($15.7 billion).

If the local financial reports were true, some single counties’ GDP would have surpassed Hong Kong. An earlier audit by the National Audit Office found one county in Liaoning that reported annual fiscal revenues 127 percent higher than the actual number.

A staff member in the Jilin provincial finance department, who asked not to be identified, told China Daily that in past years, local officials competed each other to lure external investment projects. They reported the promised investment value, whether it had been achieved or not, as the investment figure.

I hope you can appreciate the gravity of this publication and know that everything we suspected out of China is true: lies and corruption, lack of growth, pure fuckery.

Dr. Copper and oil foretold this story. Now let’s see how it plays out.

Interesting stats for you market lovers out there, courtesy of Exodus. When sifting through the market and applying a minimum daily trading volume of 500k, the median loss for all stocks this year is 12.45%. That’s significantly more than the break evenish the broader indices are showing now, no?

Check this out. Are you lads familiar beta? Essentially, it’s a measure of volatility. When a stock has a beta of 1, it should move with the market. A beta of 2, theoretically, should move twice the market. Investment planners usually incorporate beta to asses risk in a portfolio.

When I apply a beta of 2 to my screen, the median loss skyrockets to 43.5%. That’s way more than -12.45%. That’s an outrageous loss.

When I apply a beta range of 0.5 to 1, the loss lessens to just 3.7%.

Naturally, I am stripping out all important revenue and earnings power statistics that truly guide stocks higher or lower. This exercise is merely to paint a picture of how risk averse the market has been in 2015 and to shut the pie holes of indexers who query as to the ferocity of this tape.

Get this, stocks with market caps under $1 billion are down a median of 49% this year. And that strips out low volume crap, by inserting a volume filter of 500k per day. Here, take a look.

Conversely, stocks with caps above $1 billion are off by just 7%. When we apply a beta filter under 1, the loss lessens to just 2%.

Boys and girls,

The KRAMPUS has been defeated. We’ve bear’d witness to yet another spectacular bottom in the markets. From hereon forth, equity prices will balloon to absurd valuations. The Federal Reserve will enact surprise QE on Wednesday, and the bandits, who run around cutting heads off in the middle east, will go chill and watch some NFLX.

I stand before you a changed man (no homo). Just this morning, I felt we were in for very dire straights. I read stories of panic and mayhem, predictions of the grandest crashes ever to come. Yet, at the close of trade today, the market was a winner. Please ignore the fact that FCX closed down another 6% and most commodity stocks are barreling, headlong, towards empty swimming pools lined with land mines.

‘Tis the X-mas season, a time of year to mock christianity and praise lesser religions for their taste in abject violence. Also, ’tis the time of year to buy lots of presents and line the old plastic tree with lights and baubles made in China. Also, we should expect joyous stock exchanges, filled with cheerful men, clad in X-mas attire.

In all seriousness, going from +150 in futs to negative 50 NASDAQS on the open, to a positive close is insane. And, it’s also uncharacteristic of December. I’d love to say we’ve bottomed for sure. However, current trends dictate otherwise.

I never trusted those Canadians from up north. I used to have a client who owned wells near Canada and he’d always bitch and moan about “that cheap Canadian crude” selling for 20% less than current market prices. Apparently, the Canadians are whoring themselves out for really cheap prices, almost like a terrorist regime.

Oil has slumped to levels last seen in the global financial crisis in 2009 amid a global supply glut. While the prices of benchmarks West Texas Intermediate and Brent hover in the $30s, they represent a category of crude — light and low in sulfur — that is more highly valued because it’s easier to refine. Some producers of thicker, blacker and more sulfurous varieties have suffered heavier losses and are already living in the $20s.

A blend of Mexican crude has plunged 73 percent in 18 months to $27.74 on Dec. 11, its lowest level since 2004, according to data compiled by Bloomberg. Venezuela is experiencing similar lows. Western Canada Select, which is heavy and sulfurous, has slumped 75 percent to $21.37, the least in almost eight years. Other varieties including Ecuador’s Oriente, Saudi Arabia’s Arab Heavy and Iraq’s Basrah Heavy were selling below $30, the data show.

Most places in the world, a lot of the producers they don’t really get the Brent price, and they don’t get the WTI price,” Torbjoern Kjus, an analyst at DNB ASA in Oslo, said by phone. “It’s really a dramatic situation that really cannot continue for a very long time for many producers.”

After reading stuff like this, and how ISIS is selling their crude for 1/4th of market prices, I get the sense that producers are panicking, willing to accept any price for their wares. In a liquidation, things need to get real messy before a bottom is put in. Perhaps that’s what we need then, a good old fashioned rate hike to stoke the flames of illiquidity, forcing ham and eggers to halt production and go away.

This guy Scott Minerd is super entrepeneurial, attempting to feast off the bones of his enemies during KRAMPUS season. He posits in this CNBC interview that 15-20% of high yield funds could be the next Third Avenue…like right now.

How wonderful.

Yes, Wall street is behaving like a spoiled brat, ahead of the Fed. I suppose we ought to pack it up until Wednesday and accept any losses from now to then as part of the game.

Oil is hovering at 11 yr lows. Deflation is the fear. So, the Fed is hiking rates?

Yes, you heard that right. The unexplainable is going to happen; but what can we do?

Everyone is transfixed on crude, junk bonds and shares of Apple, diving lower. But what about investment grade credit? Remember, I told you there is upwards of $250 billion in distressed basic resource debt. But behind that in higher quality debt is a much larger amount: $1.8 trillion.

Look now, because the LQD is showing signs of wear.

Plunging commodity prices, galloping higher dollar, horrible retail sales, disadvantage exporters, a blind Fed equals KRAMPUS.

I’ve been following the bond king very closely and I find that he looks like the gent who played Hannibal Lecter from the teevee, Mads Mikkelsen. A few days from the first Fed hike in a decade, Hannibal Gundlach is beginning to sound a bit crazy.

I’d have to believe that if they met today that they wouldn’t raise rates,” Gundlach told Reuters in a telephone interview. “I mean, Wow. Look at the chart of JNK (The SPDR® Barclays High Yield Bond ETF). It’s accelerating to the downside.”
Thursday, Martin Whitman’s Third Avenue Management said it was barring investor withdrawals while it liquidated its high-yield bond fund, an unusual move that highlights the dangers of loading up on risky assets that are hard to trade even in good times.
“There’s never just one cockroach” in any kind of credit meltdown, said Gundlach, who oversees $80 billion at the Los Angeles-based DoubleLine Capital. Investors have been on “credit overload,” in a reach for yield, Gundlach said. “People are too long credit and the credit is melting down and the stock market is whistling through the graveyard. It is so similar to 2007, it’s scary.”
The junk-bond fund blowup comes ahead of next week’s Federal Reserve’s Open Market Committee meeting on December 15 and 16, at which time policy makers are expected to raise rates from near-zero levels for the first time in nearly a decade.
Gundlach, who has been warning that the U.S. Federal Reserve should not tighten monetary policy next week, said: “They’re just hell-bent on raising rates. They talked that they would do it and they want to do it — and yet nominal GDP is lower than it was in September of 2012.”
“Yet they did QE3 in September 2012,” Gundlach said.
Gundlach said investors should note that the PCE deflator is currently lower than it was in September of 2012; junk bonds are massively weaker, as are emerging Markets and the CRB index.
“How is it that QE3 was necessary with all of those indicators substantially stronger than they are today and yet we are going to raise rates now ‘because we promised’.”

He makes excellent points. But he’s making one fatal error, when trying to understand this Fed: it’s Bernanke less. He was an American hero, a monetary legend. Yellen is a grandmother with a string of pearls to attend to. Ben used to keep the asshole from Kansas in check, slap fire out of his mouth when he needed to. Yellen is permitting the hawks to rule the roost–because she’s old, weak, and feeble minded.

Ergo, this Fed will raise rates into year over year earnings decline, the first time since 1967, pushing us over the ledge into recession.

Ok, you keep reading me rant about how insane it is for the Fed to tighten into this muck. Finally, I present to you, the Krampus loving folks of iBankCoin, hard data suggesting that Fed chair Janet Yellen is not only incompetent, but in fact, clinically insane.

Over the past 70 years, the S&P 500’s price-earnings ratios shrank during the first year in 10 out of the 12 Fed tightening cycles, falling an average 15 percent, according to data compiled by Bloomberg, Ned Davis Research and S&P Dow Jones Indices.

When P/E multiples are under threat, it helps if earnings are rising — but that’s not the case now. Profits from S&P 500 companies are mired in the worst decline since the global financial crisis as a strengthening dollar and plunging oil wreak havoc on sales for companies from Exxon Mobil Corp. to Procter & Gamble Co.

Analysts predict a 0.6 percent decrease this year, marking the first time since 1967 that the start of a Fed tightening coincides with a drop in corporate profits. Such a thing has happened only three times since the World War II. In two, stocks held on to modest gains as earnings growth accelerated following the initial rate hikes in September 1958 and November 1967. During the cycle that began in April 1946, equities fell into a bear market despite a profit rebound.

In other words, the Fed is playing with fire, whilst juggling a mason jar brimming with nitroglycerine.

Can the market go up next year?

Anything is possible. However, odds are Fed tightening will cap off this bull market and send us into recession. Consider the fact that the dollar strength is only going to get worse for exporters and the bulk of the damage has yet to be seen in the oil and gas space.

2016 is setting up to be a very colorful year indeed. Get your FAZ mobile driving suits ready.

If a rep did this, year in and year out, regulators would feast on his carcass, punt him so fucking far out of the industry, his head would resemble a football. But for the players at Direxion, Proshares, and Velocity, they get permission to create more destructive products, directly and specifically designed, as if in hell itself, to make people lose money.

THEY DESIGN PRODUCTS THAT LOSE PEOPLE MONEY.

Without further adieu, here are the capital destructors of 2015.

GASL -96.7%
UWTI -91.55%
UGAZ -91%
BOIL -77%
UCO -75%
NUGT -74%
JNUG -73%
TVIX -67%
UVXY -67%
RUSS -63%
ERX -61%
YINN -56%

Asian markets are in rout mode. Santa Claus has been shot in the chest three times. Christmas has been canceled. Krampus is coming this Xmas.

The fuckheaded NIKKEI is off by 600 now

If you want positivity, you’ve come to the wrong place. Everything is going to hell in a handbasket. Assholes believe the market had a ‘solid year’ in 2015, as non-systematic risk plagued, then harangued, then plagued retail investors to no end. Professionals were equally routed amidst a sea of complete bullshit, stemming from oil and gas blow ups to biotech hand-grenades to high yield hijinx.

There was nothing redeemable about 2015 and things are about to get exponentially worse in 2016, as the Fed fixes to RAISE RATES into this meltdown. To be honest with you, I am entirely besides myself by recent rhetoric and find myself to be looking at all of this from way up above, through a fog of miscommunication–trying to wade through the propaganda.

SAVE YOURSELVES. Rip open those Xmas presents. Return them to the stores. Save the money for a rainy day, for it is about to come down in sheets.