CRASH2: Brace yourselves for the next phase, ‘reality intervention’.

Other factors are about to come to the fore in China, and the West has more to face beyond a Chinese implosion

As the PBOC printed a few billion more yuan overnight, things on the Shanghai Composite have gone from temporary fingers in the leak to mutliply-installed automatic pumps:

For those of you unfamiliar with the Wu Chinese language group native to Shanghai, the phrase yo oh no yo looks like this

Slowly, however – at the very core of the West’s bubble itself –  reality is intervening among the pros about a lot more than Chinese meltdown: dollars are still leaving the stock markets in search of better returns and lower costs, and importantly the ‘price-insensitive sale’ trade is firmly established in New York: this is peopled by folks who must sell equities – be they good trades or bad, these are not margin calls any more, they’re credit calls.

We’re seeing this reflected in today’s futures numbers: contracts on the S&P 500 expiring in September lost 0.8% in New York, as did those related to the Dow Jones Industrial Average. And lest we forget, ‘rally’ or not, when the S&P 500 closed yesterday, it was still down 5.5% for the month.The Nikkei is 1500 points below where it was on August 10th, and the Australian ASX 200 fully 9% lower than it was on August 3rd.

Late afternoon CET today (Friday), the Dax is down 0.7% and the FTSE has clawed itself back to no change on the day: across the Pond, the Dow, S&P, Nasdaq and NYSE composite are seismographing up and down to little effect. Nothing dramatic, but this is beginning to feel like a rally-car with one of its wheels loose.

Enjoy the weekend.

Earlier at The Slog: Britain’s Silent Property Debt Disaster

Filed under: Chinese & US QT, Worse to come Tagged: FTSE, Janet Yellen, Nasdaq, S&P futures, Shanghai, Wu Chinese dialect