Between China and Europe, I think margin calls (and general risk-off divestiture) are coming in across the globe.
NYSE margin debt just peaked at a whopping $507B in April and the most recent numbers show that it's starting to unwind with $499B in May.
The way the Chinese authorities are dealing with their market crashing is akin to a person who doesn't know how to swim. It is their panicked thrashing about that ultimately leads them to drown.
Seems that the Greek issue is much larger than most anticipated due to the highly contagious response. Along with the Chinese crash, both events are triggering a scenario where the US dollar rises but DXY strength will only hurt the equity markets in the medium term. There will probably be a short-covering rally when the Fed announces they will not be raising rates due to the strong dollar but the credibility of central banks around the globe are not fast eroding.
I suspect that once the official Q2 GDP numbers drop, the US will be in a technical recession - so much for that "recovery". Right now, even gold/silver are getting smashed by the margin calls but that is only short term. Both will grow wings and fly soon enough... it seems that longs just have to endure a little more pain (as they did in '08 for about 10 months before things turned up for PMs). I really think that this time it will not take nearly as long, not even 3 months to ignite the PM rocket since depressed prices will ultimately lead to physical shortages and meanwhile, big banks such as JPM and Citi seem to be shorting paper to load the physical cheaply.
Shall be interesting to say the least.
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