China has a window from now to President-elect Donald Trump’s inauguration to halt FX intervention and let yuan depreciate to its equilibrium level, Yu Yongding, a former academic member of PBOC’s monetary policy committee, said, providing one possible explanation for bitcoin's 20% surge in the past week.
While traders around the world slept, China's banking system suffered another mini cardiac arrest when the overnight repo rate traded on Shanghai Stock Exchange soared as much as 30.87% to 33%, the highest since September 29, before closing at 18.55%.
The fate of a defaulted $45 million Chinese corporate bond sold through an Alibaba-backed online WMP and belonging to the telecom company of one of China's biggest billionaires, was thrown into doubt on Monday, after a bank said letters of guarantee for the bonds were counterfeit, suggesting an entirely new "finance scare" is emerging in China.
"Beijing will increase controls on the property market to maintain stable home prices in 2017, said a statement issued after a plenary session of the Beijing Municipal Committee of the Communist Party of China on Saturday. Housing prices in the capital are already too high and ensuing increased social tension brings enormous challenges to ... stability in the city."
Today we look at a list of 10 things that won't happen in 2017, courtesy of Lombard Street's chief Euro economist. As Perkins puts it, "2016 was weird. Could 2017 get even weirder" and in an attempt to answer, he shares the following, "humorous" (high conviction, non-consensus) take on the year ahead.
"Markets don’t have a purpose any more - they just reflect whatever central planners want them to. Why wouldn’t it lead to the biggest collapse? My strategy doesn’t require that I’m right about the likelihood of that scenario. Logic dictates to me that it’s inevitable..."
"The narrative about an improving economy, thriving jobs market, and glorious future is bullshit. I know it. You know it. And your establishment puppeteers know it. But only “fake news” sites would dare reveal these inconvenient truths."
The market was waiting for the DOJ to announce the long-awaited settlement with Deutsche Bank today. Instead, it got news of a surprise lawsuit filed by the DOJ which sued Barclays after failing to settle a long-running probe into the UK bank's involvement in pre-crisis mortgage fraud.
Gold is collateral of last resort as it is near-universally accepted. Repo fails indicate, very strongly, collateral shortage. Put the two together and you get yet more evidence that central bankers really don’t know what they are doing. And, also like in Bagehot’s day, the repercussions are global.