Wednesday September 9 Housing and Economic stories

TOP STORIES:

China Loses All Control: Arrests Journalist, Financial Executive Over Market Crash - (www.zerohedge.com) For two months, China has been on a quest to control both the stock market itself and the narrative around the stock market. After an unwind in the CNY1 trillion back alley margin lending complex sparked a late June selloff, China cobbled together a plunge protection team run by China Securities Finance (an arm of CSRC) and began intervening in the market. That effort has cost an estimated CNY900 billion so far. On July 20, Caijing magazine suggested that CSF was setting up to scale back the market interventions which many believed had kept the SHCOMP from collapsing altogether. Here's what happened next: That suggestion caused futures to slide in China and in short order, the "rumor" was denied by CSRC. Now, the reporter who penned that story has been arrested for, as Bloomberg put it earlier today, "spreading fake stock and futures trading information."

China's Stunning Stock Market Moves in One Huge, Annotated Chart - (www.bloomberg.com) Chinese stocks continue to plunge. Despite a Tuesday rate cut from the People's Bank of China, the $5 trillion rout rolls on. Authorities in China have escalated their blame game, looking for market selloff scapegoats.  The situation has captured the attention of the world, and market reverberations everywhere are being attributed (at least in part) to what's going on in China. Bloomberg Intelligence economist Tom Orlik has put together a fantastic, annotated chart that shows both the market's huge upswing and subsequent crash. As he notes, "Along the way there have been five rate cuts, a raft of interventions from the government aimed at stabilizing the market and a global stock correction with China at its core."

China Authorities Escalate Blame Game as Stock Slide Worsens - (www.bloomberg.com) Faced with a renewed stock market slide that has wiped out $5 trillion in trading value, China is again on the prowl for scapegoats. Authorities announced a probe of allegations of market malpractice involving the stocks regulator on Tuesday, while the official Xinhua News Agency called for efforts to “purify” the capital markets. The news service also carried remarks by a central bank researcher attributing the global rout to an expected Federal Reserve rate increase. The Shanghai Composite Index has plunged more than 40 percent from its peak, after concerns over the Chinese economy helped snap a months-long rally encouraged by state-run media. Authorities have repeatedly blamed market manipulators and foreign forces since the sell-off began in June and led officials to launch an unprecedented stocks-support program. Now, after suspending that program, the administration has embarked on a new round of allegations and fault-finding.

Emerging Debt Health Worsens Most Since 2009 as Record Comes Due - (www.bloomberg.com) Credit quality in emerging markets is worsening the most since 2009 as resource-reliant governments, developers and banks grapple with record repayments. Ecuador, whose biggest export is oil, was cut one level to B this month by Standard & Poor’s as crude’s plunge threatens to worsen finances. The credit assessor reduced its grade on Chinese developer Greenland Holding Group Co. as leverage expands, and on Russian Standard Bank last month as the nation’s worsening economy pressures its capital. Developing-nation debtors face mounting default risks as they struggle with the highest borrowing costs since the global financial crisis, plunging local currencies and China’s slowing economy. Emerging-market downgrades are 4 times the amount of upgrades at S&P -- the worst ratio since 2009 - as a record $5.2 trillion of bonds comes due for the debtors this year, according to Bloomberg-compiled data.

Art Collectors Were Busy in Market Rout Looking for Liquidity - (www.bloomberg.com) Art dealer Asher Edelman’s vacation in Comporta, Portugal, was interrupted Monday by inquiries from clients as global equities plunged. Some asked about borrowing against their art collections from Edelman’s art-financing company ArtAssure Ltd. Others wanted to sell works. Everyone was looking for the same thing: liquidity. “There are many margin calls,” Edelman said in a phone interview, adding that no deals were struck yet. Boutique lenders said they were unusually busy in late August, when most of the art world is on holiday. Global equities and the art market have become intertwined as art prices have soared and more wealthy buyers view their collections as an investment they can borrow against. “Ten years ago no one in the art market paid close attention to these corrections in the stock market,” said Elizabeth von Habsburg, managing director of Winston Art Group, an independent art appraisal and advisory firm. “Now clients respond immediately.”

OTHER STORIES:

As Markets Flail, China Investigates Large Brokerage Firms - (www.nytimes.com)
China’s ‘asset bubble’ growth solution hangs in the balance - (www.ft.com)
ECB Ready to Expand QE If Needed on Inflation Risks, Praet Says - (www.bloomberg.com)
China Swaps Decline as Rate Cuts Succeed Where Injections Failed - (www.bloomberg.com)

China Rate Cut Fails to Buoy Markets as Stocks, Commodities Fall - (www.bloomberg.com)
August Was the Month to Take Out the Trash in the Bond Market - (www.bloomberg.com)
Chinese Margin Debts Shrink by $156 Billion as Trades Unwind - (www.bloomberg.com)
There Aren’t Enough Firefighters to Stop America’s West From Burning - (www.bloomberg.com)
U.S. plans more Asia-Pacific drills to counter China reclamation - (www.reuters.com)