Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-57580 Fri, 28 Aug 2015 01:40:20 GMT Oil Industry Needs Half a Trillion Dollars to Endure Price Slump http://implode-explode.com/viewnews/2015-08-27_OilIndustryNeedsHalfaTrillionDollarstoEndurePriceSlump.html iehi-feed-57562 Wed, 26 Aug 2015 01:36:44 GMT Devaluation Stunner: China Has Dumped $100 Billion In Treasurys In The Past Two Weeks http://implode-explode.com/viewnews/2015-08-25_DevaluationStunnerChinaHasDumped100BillionInTreasurysInThePastTw.html iehi-feed-57554 Tue, 25 Aug 2015 16:25:08 GMT China's market Leninism turns dangerous for the world http://implode-explode.com/viewnews/2015-08-25_ChinasmarketLeninismturnsdangerousfortheworld.html It turned into a global rout after the Shanghai composite index crashed 8.5pc on China's "Black Monday", pulverizing its July lows after the central bank (PBOC) - oddly passive - refused to come to the rescue as expected with a cut in the reserve requirement ratio for banks.

Beijing's botched efforts to prop up the country's stock markets have collapsed. An estimated $300bn of state-orchestrated buying achieved nothing, overwhelmed by an avalanche of selling by investors forced to cover margin debt.

Professor Christopher Balding from Peking University wrote on FT Alphaville that China is lurching from one incoherent policy to another, shedding credibility and its aura of omnipotence at every stage. "There is a very real risk that Beijing is losing control of the story," he said.

...

Whether or not China's economy is as weak as feared, the crisis is feeding a global chain-reaction through the entire nexus of emerging markets (EM), now half the global economy and therefore a greater threat than in the previous EM crises of the early 1980s and the late 1990s. "We are seeing the worst of all storms for emerging market currencies," said Bernd Berg from Societe Generale.

"This crisis has the potential to become worse than the Asian crisis in 1997/98 as it is spreading globally. Panic selling is triggering a bloodbath among EM currencies," he said.

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The Fed cannot cut rates this time, but it can issue a clear signal that it plans to delay rate rises. The futures markets are already pricing this in, slashing the chance of a rise in September to just 24pc, down from 50pc on Thursday.

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iehi-feed-57548 Tue, 25 Aug 2015 01:10:27 GMT Commodities Slump to 16-Year Low on Mining, Oil Stocks http://implode-explode.com/viewnews/2015-08-24_CommoditiesSlumpto16YearLowonMiningOilStocks.html iehi-feed-57539 Sun, 23 Aug 2015 16:45:59 GMT Why It Really All Comes Down To The Death Of The Petrodollar http://implode-explode.com/viewnews/2015-08-23_WhyItReallyAllComesDownToTheDeathOfThePetrodollar.html iehi-feed-57534 Sun, 23 Aug 2015 14:34:35 GMT No Shortage? Then Who Needs Immediate Delivery of 1,135,000 oz of Silver in a Non-Delivery Month!?! http://implode-explode.com/viewnews/2015-08-23_NoShortageThenWhoNeedsImmediateDeliveryof1135000ozofSilverinaNon.html iehi-feed-57517 Thu, 20 Aug 2015 15:15:04 GMT A Way of Life Drowned by Greece's Crisis http://implode-explode.com/viewnews/2015-08-20_AWayofLifeDrownedbyGreecesCrisis.html Mr. Karadoulamas says sales are half what they were last year, when the hall might have had 1,000 people. The turmoil brought by the referendum Greece held this year and the bailout made matters worse, he says. "People are only buying cheap fish."

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Mr. Tzikas is the third generation of his family in the business. His daughter, Gianna Tzika, is the fourth, serving as Konva's managing director. Konva sells canned anchovies, sardines, squid, octopus, tuna, herring and mackerel. Greece accounts for around 85% of sales. With Greeks' incomes depressed, this is a problem.

A more complex one is that credit to Greek companies has all but evaporated. Konva must pay cash up front for fish. But the supermarkets that sell its products don't pay Konva for as long as six months.

... other costs the processors face remain high, among them gas and electricity. The worst may be the cost of credit. Because of the crisis, it costs Greek companies more to borrow. Konva pays around 6.5% on €28 million in debt. Elsewhere in the EU, it might be closer to 2%.

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iehi-feed-57509 Wed, 19 Aug 2015 23:13:25 GMT So Long September: Bond Traders Defer Their Date With the Fed http://implode-explode.com/viewnews/2015-08-19_SoLongSeptemberBondTradersDeferTheirDateWiththeFed.html iehi-feed-57508 Wed, 19 Aug 2015 20:50:18 GMT LEAKED: GM Sees Overcapacity Fiasco in China, Hopes Americans Will Buy Lots of Chinese-Made Buicks (Despite Being Only 1/4th Size of Chinese Market) http://implode-explode.com/viewnews/2015-08-19_LEAKEDGMSeesOvercapacityFiascoinChinaHopesAmericansWillBuyLotsof.html iehi-feed-57507 Wed, 19 Aug 2015 20:41:37 GMT Oil Goes Down, Bankruptcies Go Up - These 5 Frackers Could Be Next To Fall http://implode-explode.com/viewnews/2015-08-19_OilGoesDownBankruptciesGoUpThese5FrackersCouldBeNextToFall.html So who will be next to fall? The list of troubled companies slumping toward Chapter 11 is growing. SandRidge Energy, Goodrich GR +% Petroleum, Swift Energy, Energy XXI, and Halcon Resources have all lost more than 90% of their market value since 2014, are larded up with too much debt, and would be lucky to survive the bust.

Shalemageddon is coming, albeit delayed a bit, a-la bank extend-and-pretend, 2007-crash style. This part of the article is especially funny to us:

Samson is the biggest bankruptcy of the oil bust so far, and a huge black eye to private equity giant KKR, which in 2011 led a $7.2 billion leveraged buyout of the company. The deal was a classic LBO: about $3 billion in equity backed by more than $4 billion in debt. It seemed like a good idea at the time... The sophisticated KKR team assumed it could squeeze a lot of value out of Samson, which since Schusterman's death in 2001 had been run by his daughter Stacy. Charles would be proud of her for inking the deal of a lifetime, selling the family jewels at what turned out to be the top of the market for shale-y acreage. It didn't take long for KKR and its equity partners to realize they had overpaid tremendously. The pain has been spread around. Japan's Itochu Corp. put up $1 billion in the LBO for a 25% equity stake. Two months ago it sold back its shares to Samson for $1.

Guess Itochu was ... [wait for it...] ... doing their part to spend spend spend for Abenomics! ;)

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iehi-feed-57506 Wed, 19 Aug 2015 20:34:32 GMT Brace for more dividend cuts as Canada's oilpatch runs out of cash http://implode-explode.com/viewnews/2015-08-19_BraceformoredividendcutsasCanadasoilpatchrunsoutofcash.html iehi-feed-57492 Tue, 18 Aug 2015 15:46:38 GMT Exclusive: U.S. graft probes may cost Petrobras record $1.6 billion or more http://implode-explode.com/viewnews/2015-08-18_ExclusiveUSgraftprobesmaycostPetrobrasrecord16billionormore.html iehi-feed-57489 Tue, 18 Aug 2015 14:37:33 GMT World shipping slump deepens as China retreats http://implode-explode.com/viewnews/2015-08-18_WorldshippingslumpdeepensasChinaretreats.html ``World shipping has fallen into a deep slump over the late summer, dashing hopes of a quick recovery from the global trade recession earlier this year and heightening fears that the six-year economic expansion may be on its last legs.

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The storm in the shipping industry comes as the New York state manufacturing index for July plummeted to a recessionary low of minus 14.9, the lowest since the Great Recession and one of the steepest one-month drops ever recorded.

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[Since the Chinese currency re-valuation last week] the great worry is that companies in emerging markets will struggle to service $4.5 trillion of US dollar debt taken out in the boom years when quantitative easing by the Fed flooded the world with cheap money, much of it at irresistible real rates of 1pc. This is up from $1 trillion in 2002.

The monetary cycle has gone into reverse since the Fed ended QE in October 2014 and cut off the flow of fresh liquidity. While the first rate rise in eight years has been well-telegraphed, nobody knows for sure what will happen once tightening starts in earnest.

This stress-test could prove even more painful if China really has abandoned its (crawling) dollar peg and is seeking to protect export margins by driving down its currency.

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iehi-feed-57483 Mon, 17 Aug 2015 16:02:34 GMT Doomsday clock for global market crash strikes one minute to midnight as central banks lose control http://implode-explode.com/viewnews/2015-08-17_Doomsdayclockforglobalmarketcrashstrikesoneminutetomidnightascen.html Time is now rapidly running out. From China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.

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The great props to the world economy are now beginning to fall. China is going into reverse. And the emerging markets that consumed so many of our products are crippled by currency devaluation. The famed Brics of Brazil, Russia, India, China and South Africa, to whom the West was supposed to pass on the torch of economic growth, are in varying states of disarray.

...

As central banks run out of silver bullets then, credit markets are desperately seeking to reprice risk. The London Interbank Offered Rate (Libor), a guide to how worried UK banks are about lending to each other, has been steadily rising during the past 12 months. Part of this process is a healthy return to normal pricing of risk after six years of extraordinary monetary stimulus. However, as the essential transmission systems of lending between banks begin to take the strain, it is quite possible that six years of reliance on central banks for funds has left the credit system unable to cope.

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iehi-feed-57481 Mon, 17 Aug 2015 15:50:13 GMT Russia increase gold output sixfold; to move to the "golden ruble"? http://implode-explode.com/viewnews/2015-08-17_Russiaincreasegoldoutputsixfoldtomovetothegoldenruble.html iehi-feed-57479 Sun, 16 Aug 2015 14:12:57 GMT Brazil braces for massive protests calling for President Dilma Rousseff's impeachment http://implode-explode.com/viewnews/2015-08-16_BrazilbracesformassiveprotestscallingforPresidentDilmaRousseffsi.html iehi-feed-57466 Fri, 14 Aug 2015 19:11:15 GMT Zuma: 40% of SA platinum, 31% of gold mining is now loss-making http://implode-explode.com/viewnews/2015-08-14_Zuma40ofSAplatinum31ofgoldminingisnowlossmaking.html iehi-feed-57464 Fri, 14 Aug 2015 18:59:10 GMT AEP: China denies currency war as global steel industry cries foul http://implode-explode.com/viewnews/2015-08-14_AEPChinadeniescurrencywarasglobalsteelindustrycriesfoul.html iehi-feed-57463 Fri, 14 Aug 2015 16:57:29 GMT COTs - Speculative Positions - Short Squeeze Coming in PMs? http://implode-explode.com/viewnews/2015-08-14_COTsSpeculativePositionsShortSqueezeCominginPMs.html iehi-feed-57452 Thu, 13 Aug 2015 12:55:29 GMT AEP: China cannot risk the global chaos of currency devaluation http://implode-explode.com/viewnews/2015-08-13_AEPChinacannotrisktheglobalchaosofcurrencydevaluation.html