Monday, August 31, 2015

Tuesday News Links

[Bloomberg] American Factories Expand at Slowest Pace in More Than Two Years

[Bloomberg] U.S. Stocks Tumble as China Slowdown Deepens Concerns on Growth

[MarketWatch] Dollar slides against yen as weak China data spur safe-haven demand

[Reuters] Oil falls on weak China factory data

[Reuters] China jitters send global stocks tumbling

[Reuters] China Stock Probes Send Shivers Through Investment Community

[Reuters] China Caixin factory, service PMIs suggest economic slowdown worsening

[Reuters] China central bank to clamp down on forwards trading to curb yuan depreciation

[Bloomberg] Bank of America Crunches the Numbers on Summer's Quant Storm

[Reuters] China, euro zone weaken despite world awash with cash

[Bloomberg] At 2 p.m. in China, the Stock Market Rescue Suddenly Switches On

[Bloomberg] China's Stocks Extend Rout as Factory Data Adds to Economy Woes

[Bloomberg] Yen Reigns With Euro as China Stock Slump Boosts Safety Demand

[Bloomberg] The $2 Trillion Emerging-Stock Drop Fixing All Eyes on China

[Bloomberg] Asian Stocks Drop as China Manufacturing Slump Boosts Yen, Gold

[Bloomberg] China Orders Banks to Hold Reserves for Currency Forwards

[Bloomberg] Man Group’s China Chief Said to Assist Police in Probe

[Bloomberg] Hong Kong Buys $2 Billion to Keep the City's Currency Pegged

[Bloomberg] South Korea's Exports Fall Most Since 2009 as China Slows

[WSJ] China’s Economic Woes Echo Across Asia

[Bloomberg] Brazil's Epic Era of Splurging Is Over

[Bloomberg] Canada Economy Contracts for 2nd Straight Quarter on Oil Shock

[Bloomberg] Southeast Asia's Biggest Companies Risk $392 Billion Debt Burden

[Reuters] Exclusive: U.S. weighs sanctioning Russia as well as China in cyber attacks

[Forbes, Keen] Why China Had To Crash Part 2

[WSJ] Understanding the Mechanics—and Risks—of Securities-Based Loans

[NYT] China Parade Draws Putin, but Few Other Major World Leaders

CBB Response to Question on "Moneyness"

From Bruce: "You commonly refer to "moneyness" in your columns.  Wikipedia defines it as:

"In finance, moneyness is the relative position of the current price (or future price) of an underlying asset (e.g., a stock) with respect to the strike price of a derivative, most commonly a call option or a put option."

Is that the sense in which you are using the term, or do you have another definition?"

CBB response: I stress that contemporary money rests upon perceptions of safety and liquidity.  Money is something that folks believe is a safe and liquid store of (nominal) value.  This perception essentially creates unlimited demand - with all the associated issues (over issuance! and the myriad effects of monetary inflation).  "Moneyness" is a perceived attribute of safety and liquidity (typically from government assurances/support) that creates a degree of extraordinary and self-reinforcing demand - especially for risk assets (stocks, fixed-income, derivatives) Moneyness is fundamental to credit and market bubbles.  Bubbles falter when the marketplace inevitably questions (perceptions shift) the safety and liquidity of the underlying credit and financial instruments.