“If you have an approach that makes money, then money management can make the difference between success and failure… … I try to be conservative in my risk management. I want to make sure I’ll be around to play tomorrow. Risk control is essential.” – Monroe Trout

1. China OKs Pension Funds to Pour $97B Into Market — China gave approval for pension funds run by local governments to invest in the stock market. The measure was approved over the weekend by the State Council. State media in China estimate close to $97B will be eligible to be invested under the new rule.
2. Oil Falls to 2009 Crisis Prices — US crude futures settled down to $38.2 per barrel, the lowest since Feb 2009. The latest decline in crude followed the collapse in Chinese stocks, which was fed by widening concerns over slowing growth in the world’s largest oil importer. Other commodities including copper and soybeans also fell.
3. China Cut Interest Rate AND Reserve Ratio To Offset Capital Outflow — China’s central bank lowered both deposit and lending ratios by 25 basis points, taking the one-year benchmark rates to 1.75% and 4.60% respectively. The central bank also lowered commercial banks’ reserve ratio by 50 basis points. Large banks will still have to keep 18% of their deposits as reserves after this move. The PBoC last week pumped a net 150 billion yuan into the market via 7-day repurchase agreements and another 110 billion in 6-month loans into financial institutions. But these efforts were perceived insufficient and too short-term.
4. CVS Expands Telehealth Coveragee — CVS Health is jumping further into telehealth with a partnership that will expand patients’ remote access to doctors. Three leading telehealth companies – American Well, Teladoc and Doctor On Demand – will begin receiving referred CVS (NYSE:CVS) customers, as well as referring their own customers to 150 CVS walk-in clinics, in six states by the fourth quarter.
5. Investors Yank Cash From Almost Everything Just Like 2008 — Bloomberg, since July, American households — which account for almost all mutual fund investors — have pulled money both from mutual funds that invest in stocks and those that invest in bonds. It’s the first time since 2008 that both asset classes have recorded back-to-back monthly withdrawals, according to a report by Credit Suisse. Credit Suisse estimates $6.5 billion left equity funds in July as $8.4 billion was pulled from bond funds, citing weekly data from the Investment Company Institute as of Aug. 19. Those outflows were followed up in the first three weeks of August, when investors withdrew $1.6 billion from stocks and $8.1 billion from bonds.

…“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance”… Jesse Livermore

1. China Factory Activity Remains Weak in June — China’s factory activity contracted for the fourth straight month in June, suggesting that more stimulus measures may be on the way. The HSBC/Markit Flash China Manufacturing PMI edged up to 49.6, from 49.2 in May, but remained below the 50 mark which separates contraction from expansion. Manufacturers also continued to cut their staff numbers, with the June reduction the sharpest in more than six years.
2. Supreme Court Rules 6-3 to Save Obamacare Subsidies — the U.S. Supreme Court ruled Thursday to save subsidies for as many as 8 million people under the Affordable Care Act. In the case of King v. Burwell, justices determined that the subsidies should be available in states that don’t have their own exchanges. The court determined that the broader context of the ACA allows subsidies to all those under the Obamacare program.
3. Korea Cuts GDP Forecast On MERS, Plans $13.5 Billion Stimulus — as its economy gets hammered by the MERS virus, South Korea is planning a stimulus package of more than 15T won ($13.5B) to cushion the economic impact of the deadly respiratory disease. The country’s finance ministry also cut its outlook for economic growth this year to 3.1% and slashed its inflation projection to 0.7%.
4. China Stocks Plunge 7%, Slide Toward Bear Territory — China’s stock markets plunged toward bear territory last Friday as margin financing in China started to explode in December. The Shanghai market, China’s largest, closed down almost 20% from its recent peak, while the second-largest Shenzhen market fell 20%, entering bear-market territory. Margin financing balance rose by 200 billion yuan to 1 trillion yuan in December according to WIND data. See chart below

5. Greece to Hold Referendum — PM Alexis Tsipras, facing a June 30 deadline for a bailout deal but with his leftist Syriza party threatening to revolt over the terms, plans to hold a July 5 referendum. That could give him the mandate to pass painful reforms and deficit cutting measures.

The week ahead — Economic data from Econoday.com: