Business

The rally of the last month has many scratching their heads.

That is, until you realize:

1)   Most of it was driven by “short-covering.”

2)   The primary buyers of stocks today are corporations buying back their stock to juice EPS, not actual investors.

3)   Actual investors have been selling the farm.

Central Banking manipulation only works as long as a reasonable number of investors continue to “drink the Kool Aid.”

Unfortunately we are now well past that point.

Last June, China’s stock market miracle ended in tears.

The SHCOMP’s inexorable, parabolic ascent was to a large degree facilitated by an explosion of margin debt, the likes of which could not be found in any other major market across the globe. For instance, by the end of June, the outstanding balance of margin transactions as a percentage of the SHCOMP’s free float market cap was nearly 14% compared to just 5.5% for the S&P and less than 1% for the TOPIX.

• Oil Drops With Emerging-Market Currencies on Rig Recovery Signs (BBG)
• A plea for help - How China asked the Fed for its stock crash play book (Reuters)
• Obama to meet Raul Castro on historic Cuba trip (Reuters)
• Wall Street's Pile of Unwanted Treasuries Exposes Market Cracks (BBG)
• Dimon's Timing Looks Savvier by the Day as Equities Rebound (BBG)
• Brazilians Brace for More Drama at Top Court, Congress (BBG)
• Captured Paris Terror Suspect Salah Abdeslam Says He Planned More Attacks (WSJ)

The sarcastic highlight of the overnight session was the Chinese stock market, where just one month after injecting a record amount of new loans into the financial system, the PBOC lamented the danger posed by China's tremendous debt load: "Lending as a share of GDP, especially corporate lending as a share of GDP, is too high" People’s Bank of China Governor Zhou Xiaochuan told China Development Forum yesterday.

By Charles Mudede Of The Stranger's Slog

Occupancy Rate Becoming Less of a Concern for Downtown's Real Estate Investors

I was recently informed by local economist and manager of IDEAeconomics, a website that promotes post-Keynesian views (and post-Keynesian must not be confused with neo-Keynesians), Alan Harvey that a significant shift has occurred in the market for commercial property in Seattle's downtown area.