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Holy SHIBOR Batman, We Have A Snow Problem

Tyler Durden's picture





 

In our relentless pursuit of the completely locked up Chinese interbank market (here and here), we stumble upon today. And boy was today a doozy. Both the 7 Day SHIBOR and repo rate, which effectively both show the same thing, i.e., the rates in the unsecured interbank lending market, have jumped to fresh multi-year highs after posting a slight improvement yesterday. And guess who is to blame (in addition to the Chinese new year) - why snow, of course.

7 Day SHIBOR:

7 Day Repo Rate:

And from Credit Suisse's Hong Kong desk, here is one explanation for what is going on in China:

China is no exception to the intense winter weather being seen around the world as unusually large parts of the country are getting hit with winter weather. Blizzard warnings across much of southeastern China have resulted in cancellations in Shanghai, Jiangsu, and Hangzhou, where all departing flights had been cancelled on Friday and delays were the norm all weekend. China Southern (600029) -3.2%, Air China (601111) -2.0%, and Chian Eastern (600115) -0.6%

Coal prices, remain low as prices at Qinhuangdao Port, China's largest import hub for coal remained unchanged from last week, following a selloff of RMB20-40 depending on grade last week. The sector likely was hit off the back of news that China's Ministry of Commerce, NDRC, and Ministry of Finance will continue to scale back export tax breaks for high polluting, energy intensive industries, like steels, non-ferrous metals, and construction mats. Obviously something that would hit coking coals as well. Xishan Coal (000983) -4.1%, while Yanzhou Coal (600188) -5.7%, though that's more likely on the still low Qinhuangdao prices then anything else. Angang (000898) -0.9% and Pangang (000629) -2.1%

Property actually held up ok, despite continued concerns over the property tax. Shanghai's mayor spoke last Friday after both China & HK closed, but instead of going into detail on the property tax, he instead spoke about the need to protect Shanghai's youth and ensure they can continue to afford to live in the city. The property tax remains most likely to be implemented on high end housing. Vanke (000002) +0.8% and Poly (600048) +0.9%. Interestingly he did say that the city's minimum wage would continue to climb, by at least 10%, while also saying the city would support it's migrant worker population. Shanghai based retail still got hit, New World (600628) -2.9%, Yuyuan (600655) -4.4%, and Bailian (600631) -1.9%

Finally it looks likely that the PBOC won't auction bills off tomorrow [ZH: today] as the announcement still has yet to hit the tape. Obviously liquidity remains a central concern for the market, though the 1-week SHIBOR is starting to come off again after last week's RRR deadline. [ZH:scratch that]

For those who are still confused by the PBoC's monetary schizophrenia, here is a good primer as to why they are even more cornered than our very own Chaircreature - On The Paradox Of Concurrent Chinese RRR Hikes And OMO Liquidity Injections

 


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Tue, 01/25/2011 - 10:29 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Unusual weather, food riots, resource wars, and retards shooting politicians.  I wonder if, up in NY, Kunstler is laughin or crying?

Tue, 01/25/2011 - 10:46 | Link to Comment Deathtöngue
Deathtöngue's picture

James Kunstler is always neither laughing nor crying, but always dripping with cold sarcasm.

Tue, 01/25/2011 - 11:20 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Holy SHIBOR is right!   Bernanke caught on video driving a truck full of freshly printed dollars...in China!  Video clearly shows how little he regards the Chinese people:

http://www.liveleak.com/view?i=b32_1285779991

Tue, 01/25/2011 - 12:10 | Link to Comment the mad hatter
the mad hatter's picture

Complacency killed the fat cats. Bankers are "breathing a sigh of relief along with the Swiss mountain air"

 

http://www.bloomberg.com/news/2011-01-24/wall-street-partying-in-davos-a...

Tue, 01/25/2011 - 11:35 | Link to Comment Lost My Shorts
Lost My Shorts's picture

Yeah, he is the grumpy old man of doom, except today he is probably online pre-ordering an Italian cold fusion reactor.

Tue, 01/25/2011 - 11:41 | Link to Comment aerojet
aerojet's picture

That guy isn't worth talking about and here's why:  He always misunderstands the underlying causes of whatever it is he is observing  because he lets his own built-in biases run wild.  Thus, even if he is "right" about something, his analysis of how we got there is all wrong, and then everything he says after that falls apart because of it.  Also, how many times can Internet peoplez rant on and on about peak oil?

Tue, 01/25/2011 - 10:27 | Link to Comment The Axe
The Axe's picture

I feel like a skinny kid standing on the top of a sea-saw hoping the fat kid sitting on the other side, doesn't get up to go get a cheeseburger...

Tue, 01/25/2011 - 10:27 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

When people want to believe, any lie will do.

Tue, 01/25/2011 - 10:31 | Link to Comment JW n FL
JW n FL's picture

++++++++++++++++++++++++++++ football! YAY!!!!!

Tue, 01/25/2011 - 10:38 | Link to Comment vxpatel
vxpatel's picture

What meaning can be found in an entire way of life based on debt and deceit?

Tue, 01/25/2011 - 11:11 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

As long as the powers that be can keep a population endlessly crawling around the first few steps of Maslow's Hierarchy Of Needs, higher orders of thinking and living are never really entertained. At least not by the hungry and hurt.

Tue, 01/25/2011 - 11:17 | Link to Comment Hephasteus
Hephasteus's picture

There's only one thing wrong with that chart. Self actualization only involves bashing everybody on the bottom of the pyramid sucessfully without payback and transcedence is just going insane.

Tue, 01/25/2011 - 11:22 | Link to Comment Jim in MN
Jim in MN's picture

But on the bright side we have speed metal for our aesthetic needs.

Tue, 01/25/2011 - 11:43 | Link to Comment aerojet
aerojet's picture

I'm pretty sure consumerism would be dead if we all achieved transcendence (either individually or through genocide).

Tue, 01/25/2011 - 11:21 | Link to Comment Sudden Debt
Sudden Debt's picture

AND WHAT ABOUT MY SEXUAL NEEDS!!!

Tue, 01/25/2011 - 11:31 | Link to Comment Hephasteus
Hephasteus's picture

Drug addicted hookers will handle that. Plus provide valuable war funding to continue bashing the bottom of the pyramid.

Tue, 01/25/2011 - 11:40 | Link to Comment bigdumbnugly
bigdumbnugly's picture

sometimes, SD, you just gotta rely on yourself.

Tue, 01/25/2011 - 12:00 | Link to Comment Sausagemaker
Sausagemaker's picture

Apparently you'll have to "handle" them yourself.

Tue, 01/25/2011 - 10:27 | Link to Comment Sudden Debt
Sudden Debt's picture

HE! Same thing was the reason for the demise of the UK economy numbers for Q4!

Maybe they both use the same propaganda agency?

Tue, 01/25/2011 - 10:30 | Link to Comment A_MacLaren
A_MacLaren's picture

The western excuse for an eastern miss.  When Bejing starts issuing those statements, then we'll know the flat earth theory is in renaissance.

Tue, 01/25/2011 - 10:36 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Clever...

Now can we get a spin on record food inflation? Holy wheat prices Batman!

Tue, 01/25/2011 - 10:30 | Link to Comment JW n FL
JW n FL's picture

"And guess who is to blame (in addition to the Chinese new year) - why snow, of course."

Tears, crying... laughing. God Bless You Tyler!

Tue, 01/25/2011 - 10:35 | Link to Comment topcallingtroll
topcallingtroll's picture

People who think doom and gloom will hit us first before china need to read the link.  china is more leveraged than we are.  I don't normally support Ben, but in this case we have to keep the pressure on China and force a collapse or an easing of the peg.  We have no choice, because saying please hasn't worked with china and they are stealing our capital base and intellectual property.  I hope they all starve, quite frankly.  They deserve it if they don't loosen the peg.  Sending inflation back to us is not a major threat.  We will temporarily make adjustments, then have our Ipads manufactured in Vietnam.  We can always find a lower cost producer than China.  China knows this.  We are in a position to force a huge margin squeeze on china and food inflation if they don't play fair.  Look at how the big banks have been quietly positioning, especially jpm.  They are moving in for the kill.  China better not think they can play chicken with us.

Tue, 01/25/2011 - 10:31 | Link to Comment The Limerick King
The Limerick King's picture

A crises is starting to grow

Is it really because of some snow?

Or is this new mess

From old Ben's printing press

That is constantly pumping out doe.

 

Tue, 01/25/2011 - 10:36 | Link to Comment Sudden Debt
Sudden Debt's picture

Are you going to be a problem boy?

Tue, 01/25/2011 - 10:55 | Link to Comment The Limerick King
The Limerick King's picture

Them's fightin' words......

Tue, 01/25/2011 - 11:16 | Link to Comment small watcher
small watcher's picture

LK & SD
Battle over lines of verse
Haiku flagged as junk?

Tue, 01/25/2011 - 10:46 | Link to Comment SheepDog-One
SheepDog-One's picture

Bens magical 0% miracle machine! Snow messed it all up, boo hoo.

Tue, 01/25/2011 - 10:33 | Link to Comment JW n FL
JW n FL's picture

minus printing the world would be a lot worse off... fuck anyone who's not at our table, thats for sure.

Tue, 01/25/2011 - 10:37 | Link to Comment Sudden Debt
Sudden Debt's picture

So true, WHY OTHER WOULD GOD HAVE CREATED BARBED WIRE AND ELECTRIC FENSES?!

Tue, 01/25/2011 - 10:33 | Link to Comment Alex Lionson
Alex Lionson's picture

And what do you do when you have a liquidity squeeze? Right! Sell USTs in the most "DEEP" and "LIQUID" market. China has accumulated plenty of them.

Tue, 01/25/2011 - 10:34 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Reminds me of that song- "Blame it on the rain, falling. Blame it on the stars, shining. But whatever you do, don't blame it on fundamentals!"

Tue, 01/25/2011 - 10:54 | Link to Comment bigdumbnugly
bigdumbnugly's picture

never heard that one jus.  interesting lyrics...

must be it only gets airtime on the financial light rock stations.

Tue, 01/25/2011 - 10:38 | Link to Comment Oh regional Indian
Oh regional Indian's picture

China has now way out and is not looking for a way out of their mess.

Folks with eyes that see know that we are at the edge of a reset button.

Was reading a Newsweek article the other day, Where Stanley McChrystal was making a case for the draft. And in this electronically tracked times, dodging it will not be easy.

Stealth Fighters, air supremacy, parades (like here in India tomorrow), lot's of posturing, long term plays... all showing up....

Primed to fight.

ORI

http://aadivaahan.wordpress.com/2011/01/18/the-callousness-of-pornography/

Tue, 01/25/2011 - 10:45 | Link to Comment SheepDog-One
SheepDog-One's picture

Excellent post, ORI! Really I wish we had thumbs up buttons around here besides this boring 'junk' only stuff.

Tue, 01/25/2011 - 11:59 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Thanks SD1.

I think the Junk button is keeping with the fight club mentality. It's the inverse Thumbs down, contrarian indicator on ZH.

ORI

Tue, 01/25/2011 - 10:38 | Link to Comment Jason T
Tue, 01/25/2011 - 12:05 | Link to Comment Sausagemaker
Sausagemaker's picture

@ Jason - Holy Crap! 

Anyone want to chip in a rent a Capesize for the weekend?

Tue, 01/25/2011 - 10:38 | Link to Comment Fortunes Favor
Fortunes Favor's picture

Tie this SHIBOR/Repo problem together with the FXI/chinese equity market breakdown and a real problem is brewing. Watch for a big US equity market sell off as it follows China. http://rosenthalcapital.com/blog/

Tue, 01/25/2011 - 10:41 | Link to Comment bingaling
bingaling's picture

When it all implodes MSM will blame the Ice Age of Nov 2010 -March 2011.

Tue, 01/25/2011 - 10:43 | Link to Comment SheepDog-One
SheepDog-One's picture

OH RIGHT now China gots the snow too! Certainly couldnt see THAT coming, probably the ONLY flaw in the Central Banksters scheme to print trillions at 0% for themselves. Yea snow messed it all up, sure.

Tue, 01/25/2011 - 12:13 | Link to Comment tonyw
tonyw's picture

It's that unexpected annual cold snap round about December through February, they used to call it winter in the old days:-)

And, it's probaly the wrong sort of snow, too dry or too wet.

Tue, 01/25/2011 - 10:47 | Link to Comment Hephasteus
Hephasteus's picture

This looks like one of those don't loan morgan stanley silver lessons you hear about.

Tue, 01/25/2011 - 10:49 | Link to Comment bigdumbnugly
bigdumbnugly's picture

always figured there'd be some unforseeable catastrophy to set things off.

yeah, like snow.

Tue, 01/25/2011 - 10:51 | Link to Comment Deathtöngue
Deathtöngue's picture

Down silver! Down NASDAQ! Down $HUI and FXI! Down Transports and Russell, go short like a pixie!

(Couldn't find anything else to rhyme with FXI. Sorry.)

Tue, 01/25/2011 - 10:55 | Link to Comment Quintus
Quintus's picture

I'm seeing a pattern in this whole worldwide Snow fiasco.

I'll bet if we look hard enough, we'll find that Osama Bin Laden is the evil mastermind behind all this snow.  Secret undisclosable intelligence sources will soon 'Discover' that he has set up a vast James Bond style HQ (Complete with a giant map of the globe, strange flashing lights and the mandatory beeping noise machine) in Iran from where he is controlling his devious scheme to freeze the infidel western economies into submission using his weather modifying ray gun.

Government officials will then earnestly prepare the country for war on the basis of the aforementioned secret and undisclosable information (Trust us!  We won't fuck it up again - promise!) to purge the world of this frosty wrongdoer and his evil followers.

Tue, 01/25/2011 - 10:57 | Link to Comment alter ego
alter ego's picture

China and US have a non-conventional self

assured destructive currency war.

Let's see who blinks first.

Me think that China is not going to de-peg their

currency.

What most of the people are not seen is the

that train is coming without brakes, and is a

Biiiiggg train completed loaded.

Just remember physics101 and how inertia

works.

I don't know if people realize how in deep sh..t

we are right now.

 

 

Tue, 01/25/2011 - 11:01 | Link to Comment doomandbloom
doomandbloom's picture

Shi(t)bor just hit the fan...

Tue, 01/25/2011 - 11:08 | Link to Comment Spalding_Smailes
Spalding_Smailes's picture

Miners = Bloodletting ....

Sliver Wheaton is down 25% in a few weeks ( 3% today ).... The cream of the crop getting monkey hammered.

PM share prices have turned bearish ........falling below their 50-day MA, which has fallen below their 200-day MA, for most.

Tue, 01/25/2011 - 11:11 | Link to Comment Jim in MN
Jim in MN's picture

Third snowiest winter ever in Minnesota and it just makes us mad.

Mad enough to willfully twist Zappa lyrics for this story:

Swear to God they got the most

At every business on the coast

They got the FLAKES

Tue, 01/25/2011 - 11:28 | Link to Comment TumblingDice
TumblingDice's picture

So this thing is like the stock market?

Tue, 01/25/2011 - 11:31 | Link to Comment gwar5
gwar5's picture

Snow job

Tue, 01/25/2011 - 12:22 | Link to Comment steve from virginia
steve from virginia's picture

This is China's hyperinflation.

 

When countries are experiencing very high rates of inflation, one effect is an apparent 'shortage' of cash, which ultimately compels money authorities to add more and more to the money supply. Right now, industries are clamoring for cash. These companies will turn to loan sharks to gain the funds they need if the authorities cannot satisfy them.

 

Zhou's problem is that China's money supply does not flow entirely through banks but also through a gigantic, informal black market of local government entities, developers, overseas traders and lending pools. China is increasingly tolerant of this informal economy because it is 'backup liquidity' @ no questions asked and because this shadow economy provides 'services' for the elites. No black market will survive only to provide goods for the proletariat, there simply isn't enough margin.

I went through this a few weeks ago: http://is.gd/q7VNCE China's rate of inflation is probably 5% per month ...

Tue, 01/25/2011 - 14:20 | Link to Comment virgilcaine
virgilcaine's picture

Credit is tighter than frog ass..!  

Liquidity is everything.. notice how the most credit sensitive, small cap, tech and crb related are being destroyed.

The speculators had their fun.. it's time to FEED THE BEAR!  LOL  

:  Ursus arctos horriblis

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