This page has been archived and commenting is disabled.
Chinese Rate Hike Rumblings
With just 48 hours left until the rumored rate hike by the PBoC either this Friday or over the weekend, the verbal war in China is second only to the hacker war currently gripping the internet. First, the China Securities Journal, the same publication that warned that a rate hike was imminent earlier in the week, quoted Ba Shuson, a researcher with the State Council's Development Research center, who said that China's inflation in November may have peaked at a stunning 4.8%. He also added that "it will take time for the government’s measures to fight price gains to take effect." Of course the government would actually have to institute measures to fight price gains: if the just released Australia payrolls number is accurate, Chinese inventory stockpiling hit an all time high this month, and in exchange the country will likely see a huge influx of capital, making its inflationary problems even worse, although we won't know for sure until the trade surplus data is released later this week.
As for that good old standby of RRR hikes, which do exactly squat, another official urged that not only is another one overdue, but these have to start occurring far more often.
From Bloomberg:
Former Chinese central bank deputy governor Wu Xiaoling said banks’ reserve ratio should be raised more frequently while there are large foreign exchange inflows, the 21st Century Business Herald reported, citing remarks she made at a financial conference in Beijing yesterday.
There is still room to further raise reserve ratio, Wu wsa quoted as saying. China should implement price reforms to ease pressure on the yuan, the report said, citing Wu, who is currently deputy director of the Financial and Economic Affairs Committee of the National People’s Congress.
But then again no matter what happens, rate hike or no rate hike: it will be good for stocks - precisely as the intellectually challenged duo of Bernanke and Krugman noted earlier.
Again from Bloomberg:
An interest-rate increase in China would have an effect on the stock market for two to three days, China Securities Journal reported, citing central bank adviser Xia Bin.
Xia was “confident” in the stock market next year because of the country’s better economic outlook compared with other countries such as the U.S., he was cited as saying by the Shanghai Securities News.
But wait a minute: the US is confident that no matter what its economic outlook, it is confident in its own stock market. In other words, everyone is confident that no matter what the news, stocks will always go up....
Oddly enough, that is what the headlines always read just before the bubble bursts.
»
- 5446 reads
- Printer-friendly version
- Send to friend
- advertisements -
After her 5th or 6th rate hike .... Boom, bubble pop.
Like Bill Fleckenstein used to say back in the late 1990's.....
Each time the Fed raised rates, the market sold off for about a day, then just took off again.
To quote his Mania Chronicles:
"After the Fed raised interest rates in 1999, we got the "three steps and a stumble", and the Nasdaq 100 went up 160% shortly thereafter..."
In case it escaped your laser-like focus, we're talking about the Chinese Central Bank, and not the Fed.
How much of the BRIC bullshit story did you model your portfolio based upon, anyways?
I agree. I would say that the impact of the rate hike is already priced in both the US and Chinese stock market. I'm accumulating long positions in the Chinese stock market. Markets will go up after the rate hike announcement. I don't expect any surprises. But there is any, it will be on the easy side.
And another quote from the Mania Chronicles....
December 9, 1999
"Today's leaper du jour was the biggest explosion in stock market history. VA Linux, which filed at $11 and priced at $32, opened at $200, traded as high as $320 and closed at $250."
OMFG...VA Linux...blast from the past.
LMAO!
Nice!
Fast forward to January 18, 2001
"But even as employees of the Linux-based computer systems and services provider dared to dream about what their new fortunes might buy -- a new car, a European vacation, a new house -- they knew what went up so quickly would have to come down.
They just didn't realize how far and how fast. The history-making stock closed down $2 yesterday, to $7.13, off 97 percent from its all-time high of $242.88 on Dec. 17, 1999."
http://articles.sfgate.com/2001-01-18/business/17580566_1_va-linux-todd-...
I don't know what point you are trying to make. If it is that stocks are in a bubble, but you have to join the party, fair enough, but the main reason people get caught is simple greed.
If they are more worried about missing the blow-off top than a gut wrenching decline, they should not be playing the game. I don't know if you remember the website tulip.com, but it was a great place to watch the dotcom insanity. There was a banner across the top that said simply.
"Remember - until you sell, somebody else has got your money!"
Jim Rogers - Many topics ...Does not like uncle ben.
1 - http://www.youtube.com/watch?v=LNGTxSUrwV0
2- http://www.youtube.com/watch?v=hevMUQVsprI
3 - http://www.youtube.com/watch?v=yZDVJ4L0Lbg
China/Asia -
4 - http://www.youtube.com/watch?v=sOzU5d5I1p0
5 - http://www.youtube.com/watch?v=i7uYhnkYpFo
Thanks much Spalding_Smailes.
break the peg, China...
Figure HK first
Thanks spalding...
This is a sad state of affairs for the developed world. In particular the West.
I hope our leaders can get their shit together and do the right thing even though it's the hard thing.
The onus is on our leaders to make these difficult decisions for the sustainablilty of our culture. The easy decision is seldom the right decision.
It's time that we live within our means, be treated like adults, and accept responsibilty for the impropriety we were all guilty of.
Ron Paul just announced on Judge Napolitano's 'Freedom Watch' he WILL be the new House House Subcommittee for Domestic Monetary Policy Chairman - Spencer Bachus and the incoming Republicans were not swayed by the RINOS & establishment that Ron Paul would have been a poor choice. Good for these freshmen and whoever else threatened Boner...I mean Boehner.
Rand Paul is going to fight the Debt Ceiling 'raise' in January, with sponsored legislation. He will seek alternative options if that bill dies (and it will).
And a big FUCK YOU to Bernanke.
Bets on timing of Bernanke's resignation? (Greenspan, of all people, just said today that the bond markets are telling Bernanke that QE should end).
Greenspan wants his old job back. He can't keep his mouth shut since he left.
Maybe Andrea Mitchell looks even more like the Joker without makeup in the morning.
Memo to Greenspan:
You had many years and many opportunities to do the right thing. But you repeatedly let things get out of control. So, STFU, you duplicitous bass turd.
I am your spawn, your young eagle about to soar. Get out of my way.
Ben B.
How come RON PAUL isnt talking about FORECLOSER FRAUD....or has he allready.....
Raising rates to slow down an economy seems like a good problem to have right now.
4.8% inflation seems like a lot, yes, but Sadowstats says our real inflation rate is not much better.
Still pushing on that string.
Hey guys it's Jr here. Who cares if the China story is all magic numbers? There is no need to moralize where the market should go. Just hop on the train and try to jump off before it all goes kablooey. Does anyone really believe that minor changes in reserves and interest rates are enough to stop chinese growth, er I mean inflation? Robo and Spaulding may be right about the general market trend. Any small correction next week ought to be bought, but the news of the pending rate hike has been so well telegraphed it's probably already baked in. It's all a big yawner until they start hiking twice a month anyway.
Will you front the money for those who buy your thesis?
They'll give you a cut of their profits, I'm sure.
Thanks.
No one should be surprised by the strong statements of confidence.
Markets and economies, in the post-industrial, consumer-driven era, require the largest confidence game in the world in order to maintain the stability the controlled collapse.
When leaders (business, political, and otherwise) do not firmly display and speak of confidence, their followers become wrought with uncertainty. When the masses are uncertain they tend not to spend beyond the utmost essentials, businesses tend not to seek growth opportunities, and investors tend not to "hold their nose" and dump money into markets.
"China's inflation in November may have peaked at a stunning 4.8%"
That is orwellian-speak for food prices doubling over the last 6 months. In China, the first symptom of inflation is hoarding, and the massive import of raw materiel from Australia and the rest of the world in Oct and Nov are clear signs of speculative hoarding. That was why PMI across the world shot up in Oct and Nov despite a soft summer in industrial production. This is what happens when black-haired commoners have lost confidence in fiat money.
Actually, there's a good chance of imminent Bernanke resignation.
There are two new Fed Board members about to take seats and both are anti QE.
If he can't get a majority, he'll resign.
got a link to that info? thx
Somebody help me out with something. Since the CNY is pegged to USD, if you wanted CNY to strengthen, you could have policies that strengthened USD, right? Like no QE, balanced budgets, 8-9% interest rates, probably be alot harder to export to US willy nilly then, right?
I probably misunderstand the dynamic thought. Print away, on Shanghai manufactured printers :P
LOL
Alternately, if China implements policies that strengthen the CNY, does that in turn bolster the USD because of the peg?
A weaker us stock market and stronger dollar would help the Chinese more.
The lower the dollar, the higher the commodities they need to buy.
Anything they do to raise the yuan will hurt their economy exports.
How can Americans afford to buy Chinese crap if it costs even more, shit gas is now 3.10 a gallon and heating season is here.
Who needs rock, paper, scissors when you can play rock, rock, rock.
China is between a rock and a rock, from the Telegraph :
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8182605/Chinas-credit-bubble-on-borrowed-time-as-inflation-bites.html
Short the Euro at will, its heading to 1.20 again
"Oddly enough, that is what the headlines always read just before the bubble bursts."
Bubble? There is no bubble. A bubble in Gold, a bubble in Silver, but a bubble in stocks or a credit bubble? Nah...
Oh, wait a minute...
DavidC