US Bloodbath Batters Asia - China Markets Enter Correction, Hit 7-Month Lows

More ugly 2018

If it seems like it was just a few days ago  that we reported of the biggest ever inflow into equities, it's because that's precisely when it happened. It was then that according to BofA CIO Michael Hartnett, we observed a "non-stop euphoria cabaret" in which markets saw a record $33.2bn inflow to equity funds, record $12.2bn inflow to active funds, $1.5bn into gold (50-week high), as well as record inflows to tech & TIPS.

Incidentally, that was the day the S&P hit its all time high, and more importantly, the day BofA also said that its euphoria and panic-buying driven "sell signal" was just triggered for the first time in 5 years, and predicted a 12% selloff in the next three months.

In retrospect, it took just two weeks because that post marked the peak of the market, and it has been non-stop selling since.
But much more troubling than the selling, is the composition: after all, as we showed earlier, the "worst case scenario" according to both JPMorgan and Morgan Stanley is if the liquidation panic was not just systematic funds and various quants puking as a result of the surge in the VIX, but if ordinary retail investors had also joined in: that would be a nightmare outcome for the bulls, as it would mean that the sharp but concentrated relentless selloff, had spread to the broader investing world, and institutions would have no choice but to join.
Specifically, this is what JPM said over the weekend when observing the recent record fund inflows:

If these equity ETF flows start reversing, not only would the equity market retrench, but the resultant rise in bond-equity correlation would likely induce de-risking by risk parity funds and balanced mutual funds, magnifying the eventual equity market sell-off.

And then there was Morgan Stanley:

Today’s moves lower are likely not being driven by systematic supply – this appears to be more discretionary selling. Systematic supply from vol target strategies is largely out of the way now, while consensus trades are getting hit:  NDX is underperforming SPX, momentum is down 1%, and the Passive Factor is up, indicating actively held names are underperforming names better held by passive funds.

Well, we now have confirmation.
According to the just released EPFR weekly fund flow data, what was just two weeks ago a record equity inflow has become a record equity outflow, as the 10% drop in the US stock market has officially launched a selling panic.
As Citi writes tonight, "in the week of 2/7/2018, bond funds had an inflow of US$4.0bn and equity funds lost US$30.6bn to outflows. This was the largest outflow on record from equity funds, which just had their record high inflow of US$33.2bn only two weeks ago. The largest outflow had come from US funds which saw US$32.9bn of outflow. "

Stated simply, this means that one no longer needs the VIX ETN, CTAs or risk pars to launch a liquidation panic: one has already begun, and retail is panicking, desperate to get out of stocks.
Which means that a full on bear market is now in the hands of just two players: institutions, and corporations. In other words, if hedge and mutual funds dont step up, and if companies don't unleash a buyback tsunami, it's about to turn very ugly.

After an insane winning streak in December and January, the Hang Seng has plummeted in the last few days and along with the rest of the major mainland China equity markets - has entered correction.

2018 started off so well in China...


But after an almost incessant ramp, China and Hong Kong stocks have crashed back to reality in the last few days...
Shanghai Composite is now at 7-month lows...


And Hang Seng is down 12% from its highs, back below 30,000...

The Yuan remains on edge as it tumbles most since the Aug 2015 devaluation...


And across the water, Japanese stocks are down 13% from their highs...

Things are getting ugly...

Bitcoin lost 600 Billion in valuation - that's stolen wealth from retail investors, not big financial houses, in the the last few weeks. It will lose more. As was foretold.

Pre-echo market dumps measuring in the trillions already shaking through the markets on a daily basis, now. Entire Hedge funds, investor consortiums, and retail investors have been wiped out by the hundreds daily, with loss stories in VIX, XIV, and other ETNs that are being discontinued by that most vicious of reverse splitting issuer, CREDIT SUISSE.

Credit Suisse, the most evil ETF wealth stealers in the game

Instead of rising, gold and silver - the real measure of the dollar, pound, and Euro, is steadily tanking, even while these currencies are at their lowest values in ages. One can't be, while the other cannot be - at the same time. This reveals that there ARE NO SAFE HAVENS FOR CAPITAL, when the house is being set on fire.


And the point?

Be mindful of these facts, prepare if practicable, and do what can be done to weather what may be a super storm on all fronts.  The more Trump improves the daily life of Americans, the quicker the satanists will do all within their power to make it worse. It's what they do, create 3rd world shitholes, where once prosperity was the order of the day.

You are warned.

Charts like this reveal the ugly. For financials, these are SELL PEAKS, not buys.