Japan watch... for that matter.. asia watch.

http://www.zerohedge.com/news/2013-06-25/asia-crumbling-chinas-worst-2-days-almost-4-years-nikkei-450-pts-session-highs

Asia Crumbling; China's Worst 2 Days In Almost 4 Years, Nikkei 450 Pts Off Session Highs

Submitted by Tyler Durden on 06/25/2013 00:03 -0400


Things are getting a little out of hand in Asia once again. China's Shanghai Composite is down 3.7% at the break for its biggest 2-day drop in almost 4 years (-8.9%) and Japan's Nikkei 225, after staging a solid come-back has collapsed 450 points from its highs of the early session smashing below the US day-session lows. Chinese repo is very noisy but 7-day is around 160bps higher for now at 9.2% (having traded at 17% at one point - suggesting 'specific' injections have been made). The carry unwinds continue as USDJPY and Nikkei track each other tick for tick. S&P futures are not going unpunished (-4.5 from the close and -12 from after-hours highs). What's Chinese for 'Dallas Fed's Fisher' or Japanese for 'Hilsenrath'?



Nikkei 225 collapsed below US day-session lows after staging a modest recovery early in the session...

http://www.zerohedge.com/news/2013-06-25/china-crash-continues-shanghai-composite-enters-bear-market-pboc-rumors-emerge

China Crash Continues; Shanghai Composite Enters Bear Market; PBOC Rumors Emerge

Submitted by Tyler Durden on 06/25/2013 02:39 -0400

Bear Market
China



After imploding in its morning session by a whopping 5.8%, which would have brought the two day crash to a stunning 10%, the Shanghai Composite rebounded trimming its losses by more than half due to so far unfounded rumors there will be a PBOC press conference later today in the last hour of trading in which it may provide some impetus for a bounce (which oddly enough is boosting US equity futures far more effectively than those of China). The expectation is that at the Lujiazui Forum (link here), the PBOC will speak alongside the the CSRS, the CBRC, and CIRC at which the PBOC will wave a white flag to the Chinese "feral hogs." Don't hold your breath: considering the China Daily oped released earlier, this seems highly improbable but at this point global markets are clutching at any and all straws. Look for big market disappointment if the PBOC refuses to address any additional liquidity provision in a few minutes or over the next several days especially since unlike the US, the Chinese central bank is not willing to be held hostage by the stock market in its mission to rid the country of shady "shadow bank" lending conduits.

Specifically, and as has been the case for a while now, the main reason for today's ongoing crash is precisely the ongoing lack of activity by the PBOC which did neither repos nor bill sales overnight, keeping excess liquidity precisely where it has been: non-existent. And as we said yesterday, the interbank liquidity stability lasted "for a very brief amount of time", with both 1 Week and 1 Month SHIBORs resuming their surge.

It got so bad, financial news website Hexun wrote an editorial in which it pleaded the PBOC to say something and give the market clear signals on its intentions in dealing the with nation’s cash crunch, as the markets are "clueless." Whether due to this, or finally crying uncle, the PBOC is now expect to come out and say something. Unless it doesn't of course. Which will probably be the case because an editorial in China Daily, the official party mouthpiece, the author said that the drop in benchmark Shanghai Composite Index shows authorities are preparing to continue painful and necessary reforms to keep the economy growing in a more sustainable manner. It is highly unlikely they will flip their stance just because the crash is continuing.

In the meantime, the result is that absent some miraculous surge in the last hour of trading, the Shanghai Composite will be down about 2.5% (Material index -4.6%, Property Index -3.4%, Commercials Index -3.8%, Financial Index -2.8%), -8% in two session, and down -22% from its February highs: an official bear market.

This is what the carnage looked like before the now traditional deus ex rumor.





If there is no PBOC intervention, expect the US and European equity futures

http://www.zerohedge.com/news/2013-06-25/time-running-out-fast-italy

"Time Is Running Out Fast" For Italy
Submitted by Tyler Durden on 06/25/2013 - 09:30

Everyone knows Europe is insolvent; the only question is "when" will Europe be forced to finally admit this truism. The long overdue house of cards may start toppling in as little as 6 months, as The Telegraph reports, Mediobanca's 'index of solvency risk' suggests "time is running out fast" for Italy. With the breakdown in Eurozone talks on a banking union and the Fed's shift in policy, Europe "has become a dangerous place," warns RBS. Unless Italy can count on low borrowing costs and a broad recovery, it will "inevitably end up in an EU bailout." The current situation is as bad as when the country was blown out of the ERM in 1992 as "the Italian macro situation has not improved...rather the contrary; with 160 large corporates in Italy now in special crisis administration." If the ECB doesn’t act, one analyst warns (pleads) it could see all the gains of the past nine months vanish in two weeks. Mediobanca said the trigger for a blow-up in Italy could be a bail-out crisis for Slovenia or an ugly turn of events in Argentina, which has close links to Italian business. "Argentina in particular worries us, as a new default seems likely."