“Ordinarily, we think of the economy affecting stock prices. I think we miss a very crucial connection here in that this whole recovery, as best as I can judge, is to a very large extent, the consequence of the market’s bottoming last March and coming all the way back. You can see the whole blossoming of finance. Remember, it is the market value of equity in a financial institution that determines the ratings of its debt. It’s not the book value. As the stock prices have gone up, debt became far more valuable and you can see this huge issuance especially of junk bonds. It is affecting the whole structure of the economy, as well as creating the usual wealth effect impact.”

Doing business in India is more difficult than doing it in China, despite the recent spate of conflicts between Western companies and the Chinese authorities, Lord Peter Levene, chairman of Lloyd’s Of London, told CNBC Wednesday.

There is a 20% chance that a credit meltdown could happen in China come 2012, warns Jim Antos, bank analyst at Mizuho Securities Asia. He assesses how the Chinese financial sector is faring, with CNBC’s Martin Soong & Karen Tso.

Source – http://www.cnbc.com/id/15840232?video=1436614364&play=1

WSJ’s Jason Dean speaks to Fred Hu, managing director at Goldman Sachs, about the biggest challenge in China’s recovery.

Roubini: The debt ratios of banks and (individuals) are very high; (Individuals) have barely started saving. So what we’ve done is socialize these private losses and now we have a massive releveraging of the public sector with large and unsustainable budget deficits.

The Chinese market is likely to fall 25 percent, taking U.S. stocks with it, with the S&P 500 possibly falling below 800, Robin Griffiths, technical strategist at Cazenove Capital, said Monday. But then U.S. indexes will rise again for a substantial amount of time. The Dow and the S&P 500 index are likely to run out of seasonal steam this month and dip in October, he said, adding that the S&P 500 will drop to below 800. Griffiths then said the U.S. stock market will enter the “strong six months of the year” where the rally could run up into spring of next year and that could take the S&P up to 1,250. -cnbc