"After comprehensive judgment, our economic recovery cannot be U-shaped, cannot be V-shaped, but will be L-shaped," warns an 'authoritative' person according to a shocking report published by Government mouthpiece People's Daily. The report, explaining why investors should not expect growth to pick up soon or expect more stimulus to come soon further sets expectations for China to "face the issue of rising non-performing loans" and not continue to create zombie companies. The result - a bloodbath in stocks and commodities...

Chinese stocks are down 4.5 to 7% in the last 2 days... as turmoil returns...

The report (found here), as Bloomberg summarizes, suggests China shouldn't loosen monetary conditions to enable growth...

China should abandon idea of loosening money conditions to accelerate economic growth, People’s Daily reports, citing interview with an “authoritative” person who wasn’t identified.

Monetary conditions shouldn’t be loosened to cut levels of leverage

China won’t use stock, forex and property-market policies as tools to ensure economic growth

Economic growth won’t be too low without stimulus as potential is sufficient

China should face the issue of rising non-performing loans of banks and not cover it up or delay handling it

Economy’s performance will be L-shaped for quite some time, instead of just 1-2 yrs

Economy’s performance won’t be U- or V-shaped

China will limit bankruptcies for “zombie” cos; at the same time it will definitely close cos. that can’t be saved, instead of converting debt to equity or forced restructuring

And the impact on stocks and commoditiers (as the latter's bubble implodes) is clear - Short-term...

And Long-term...

As the churn collapses, volume disappears and Iron ore, Steel rebar, and copper all collapse back to un-credit-speculated reality - smashing The Baltic Dry lower also.