This page has been archived and commenting is disabled.
State-Run China Securities Journal Says China May Hike Rates Over The Weekend
To all those who are considering buying the futures on the long-ago priced in news of the tax cut extension, we would like to caution that according to the state-run China Securities Journal (which is the same as prophet Jon Hilsenrath telling the great unwashed what the Printing God is about to do with near 99.9% accuracy), China may raise interest rates this weekend. Some additional color from Dow Jones: "Given the central bank set a precedent by raising interest rates right before the release of the consumer price index (previously), there's a 'sensitive policy window' before and after this weekend." If the hike is confirmed (and it is in line with our expectations, that China will hike first before it revalues the CNY any more) look for the greatest marginal credit bubble to promptly collapse, dragging down the US and EU with it, proving that all those who are preaching that Decoupling 2.0 is so different this time, are as always, merely Econ Ph.D.'s.
China announced an interest rate hike, the first in nearly two years, on the evening of Oct. 19, two days before the release of CPI data for September.
The front-page report also said the upcoming Central Economic Work Conference increases the chance of a rate hike soon. China's leading politicians will likely gather this weekend to discuss next year's economic policies, according to various state media reports.
Last Friday the Political Bureau of the Communist Party of China Central Committee, the highest decision-making body in China, said the government will shift to a "prudent" monetary policy next year from a "moderately loose" policy currently.
Economists widely expect Beijing to hike rates again before the end of the year, given surging prices.
The China Securities Journal report also said CPI may have picked up in November after increasing 4.4% in October from a year earlier; the October reading was a two-year high.
The original article can be found here.
»
- 9256 reads
- Printer-friendly version
- Send to friend
- advertisements -
No place to hide.
Well, if the citizens of Europe come through with the bank run tomorrow.... and China hikes the rates "this weekend".... we may all need more garden seeds sooner than we think...
interesting how MSM posts the bank run story the day before...
http://www.nytimes.com/2010/12/07/business/global/07cantona.html?_r=1&pa...
after reading the article, I am not sure if they are trying to remind everyone to go ahead with this or ... (I'm spinning... weee)
Why would a small rate hike cause the greatest marginal credit bubble to promptly collapse?
Really? elohel.
it is the effect of a margin call and everyone is playing with maxed out leverage. If your loans are floating and the rate goes up then the amount you are paying for the property goes up. People sell. Prices go down. More people sell. and so forth as everyone wants out and it is like a theather on fire.
Hey, didn't that happen here a coupla years ago?
are you talking USA or china
Thanks for the response. I am well aware of the effects rising rates have on margin and the collateral damage thereafter. What I want to see is the evidence that suggests that the marginal increase that is suppose to happen over the weekend hits the threshold that makes the bubble collapse.
New 'round here, baby? A little Koolaid and a spot of online gold would put an end to that awkward critical analysis.
A dripping, shovel full of red meat heaved at the Cult is an end in itself. The esuing melee for scraps, makes it easy to forget that the Doomers have been spectacularily wrong on just about everything since spring 2009 (stock market, EURO, BP, etc, batting << 0.100). So China must now conveniently implode.
@DeeDeeTwo
The only gold I own is my wedding band. If you can't recognize that the global economy is on the precipice of collapse or, at best, decades of economic malaise with lowered standards of living, then you are the personification of denial.
What does it all mean Basil??
Won't matter, SPY's to 127 anyway. Lift your offers.
Won't matter, SPY's to 127 anyway. Lift your offers.
i guess i don't get how fast this will happen, or should i say what makes a bubble pop, when people are ignoring the jobless news on friday what makes them finally wake up ?
It's a tipping point, so all anyone can rationally say is that pressure is building. Anyone who says he understands China would probably lie about other things too.
Oh yeh, I am holding by breath on this one.
http://www.theblaze.com/stories/unified-quest-2011-pentagon-war-games-u-... The Pentagon, will they be a factor?
yep that d be called pilling on i think lol
Will China bail out the EU ? CNN - Niall Ferguson, Gillian Tett - Wish they had longer cut ...
http://www.youtube.com/watch?v=37y64WCYeq4
It's comin' down my friends. They're the prudent ones, not us in the USA.This means a pull-out of commods.
so what. they are already over 5 percent. anything they do is trick us traders into selling them cheap corn.
We've heard this rumor for quite a while now. It never seems to materialize. My guess is, we start with some caution tomorrow then run once this story is shown to be a rumor once again.
Heavens no! A interest rate hike isn't going to hurt your new international foray is it, HW? You've got a swaption strategy that negates the effect of anything like this, right?
http://www.youtube.com/watch?v=meRgT5Nmogw
Bank run kids are about to be taught a valuable lezzon........
Double POMOS didn't pump the markets two weeks ago while the PD's took on billions in cash. And it's about to be sprayed out the FIAT FIREHOSE.
http://finviz.com/futures_charts.ashx?t=YM
Go China!!!!!!
China, PIIGHS, Bank run will crash this Casino
A rate hike may signal that the economy is still growing strongly, what with gray market lending still booming, etc.
The negativity surrounding China and growth, fabricated numbers, slave labor, real estate bubbles, hidden off balance sheet debt etc. are all known and have been for the last several years. Read Pettis, Andy Xie, Dragonomics at the FT, Hendry, Chanos, etc. etc. etc. The Telegraph presents a series of rather cold and hard looks at China via Ambrose Pritchard.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8182605/Chinas-credit-bubble-on-borrowed-time-as-inflation-bites.html
Its the timing, ducky. There's the rub. Shanghai is flapping in a long and tortured pennant formation. Just flapping in the wind.
Tail or the dog? If the rate hike does materialize, we'll see who holds the highest card, liquidity or fear of a slowdown. It's not easy to buy CDS for your average Joe, but buying puts on Hong Kong via the EWH certainly is.
China is Ben's Central Bank..they could pull the rug out from under at anytime.
Miners are crashing
KITCO goes red
A pull back to buy PMs would be a blessing. I don't want so much exposure to fiat anymore. I don't believe in it. Neither does the rest of the world. Game is over, we are playing out the final years of a system reset. Lots of risk...lots of upside.
+1 Absolutely.
Now that I have exited my longs at 1422, I want a pullback to 1380, at least.
To dive in again, of course.
Bring that puppy down, for one more shot again.
We may not see 1,380 ever again! -- A drop of 40 seems unlikely to me. The fiats are all coming down.
Just FYI.
India's largest bank already increased their lending rates/deposit rates effective tuesday.
http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/State-Bank-hikes-deposit-rates-by-up-to-150-bps/articleshow/7057008.cms
I remember a time in America's history when we didn't give a rat's ass about what China's economic policy was... USA was number one!
Well, guess what Selah,
USA is NO LONGER number one!
Roll that into a nice cigar and smoke it!
If there is one thing China has going for it, it is that its investor class' opinion is at the whim of the oilgarchs. In the US, Blackhawk Bernanke feels he must appease everyone, from the Major hedge funds to the government institutions. In China, they are one in the same. For the most part, the investors work for the government. Therefore, what is in the best interest of the government is in the best interest of the people, because the government says so. It is a slight difference between the two; America thinks it is free, and is free to buy either Microsoft or Google.
Case in point, China knows the end game lies in how much precious metals can be hoarded. Sure, they want equities higher, but not at the loss of precious metal holdings. So, for the most part since the Fall of '08, China has not let PMs appreciate out of whatever range they come in at. People were calling this the "Chinese put". That is apropos.
China will sacrifice almost anything to keep buying in this price range. They will float rumors bi monthly of hike rates, hike rates that have never happened ahead of the Federal Reserve Bank until a few short months ago (the hike was marginal). They will most likely not do this for the reason stated above, they want gold cheap. If they, or anyone for that matter, raise rates, that will deal a death blow to the farcism. Cash will need a place to run, and unsure if the Yuan or the dollar are the better bet, the cash will run to gold. A substantial rate hike will put the nails in the Neo-Keynesian coffin.
THAT WOULD BE AWESOME.
JPM had some fun with any ZHers who tried to short copper off this.
Don't worry, we'll have the last laugh over in silver.
As JPM is about to launch a copper ETF, might be a good short entry point for people wanting to bet against the retail investor. Copper up 2.4% today ...
Steve Saville has a good read on this DEC 2 here:
"China has possibly now reached a critical juncture where the monetary authorities are forced to make a choice between keeping the fixed-asset investment bubble going and thus risking hyperinflation, or addressing the mushrooming inflationary pressure by slowing/stopping the monetary expansion. The choice is being forced upon them at this time by sharp rises in food prices and the social unrest that such price rises foment in a country where a large section of the population spends about half its income on food. We suspect that they will try to avoid hyperinflation and will, instead, attempt to gradually deflate the fixed-asset investment bubble. "
http://news.goldseek.com/SpeculativeInvestor/1291705620.php
China rate hikes are self- defeating in that they attract hot money capital inflows from ZIRP states such as Japan and the US. These inflows are inflationary in and of themselves.
Since China does not impose capital controls what the PBOC claims vis. rate hikes is disingenuous. China needs to print and print some more to bail out its political elites who are in debt up to their ears. China closes the 'interest rate' door while opening the 'capital inflow' door. The entire effort is cheap theater.
China inflation is substantially higher than is reported in the media, likely 20% per annum. Next year? 40%. Once Chinese savers start burning their cash hoards the race to historic rates will be on.
China's 'Nomenklatura' will bail itself out @ the expense of its citizens.
Gimme a beer, let's watch!