People's Bank Of China
In another Christmas surprise, China once again decided to adjust the cost of money, only this time instead of hiking, it eased, and in an effort to shore up the world's second-largest economy, China Business News reported that the PBOC will waive reserve requirements for non-bank deposits. As the WSJ adds, at a meeting with big financial institutions on Wednesday, the People's Bank of China told participants that they will soon be able to add deposits from nonbank financial institutions to their calculations of their loan-to-deposit ratios, according to the executives. The move would add considerably to the banks' deposits and allow them to lend more. Chinese stocks, which had been pricing in further easing by the PBOC for the past 3 months, a period during which the Shanghai Composite soared over 50%, were delighted by the latest easing move and surged even more, surging higher by the most in the past three weeks.
Worried about money-printing in China... don't! As China.org reports, an electricity generation plant in China's troubled Henan province is burning banknotes in what appears to be an effort to raise efficiency and reduce toxic emissions. One ton of scrapped banknotes can generate about 660 kWh of electricity, which means around 4,000 tonnes of coal can be saved in the province every year by using this process. Perhaps that is the solution to higher natural gas prices in winter for the US NorthEast... just transfer some banknotes up from The Eccles Building and heat the nation...
Fear Of "Surge In Debt Defaults, Business Failures And Job Losses" Means Many More Chinese Rate CutsSubmitted by Tyler Durden on 11/23/2014 10:40 -0500
The PBOC, which cut rates for the first time in two years on Friday, will have its work cut out for it. And in the worst tradition of "developed world" banks, Beijing will now have no choice but to double down on the very same bad policies that got it into its current unstable equilibrium, and proceeds with a full-blown policy flip-flop, leading to a full easing cycle that reignites the bad-debt surge once more. And sure enough, today Reuters reports citing "unnamed sources involved in policy-making" (supposedly different sources than the unnamed sources Reuters uses to float trial balloons used by the ECB and the BOJ), that "China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions" due to concerns deflation "could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making." In other words, China has once again looked into the abyss once... and decided to dig a little more.
Contrary to the death of the dollar chatter, the US currency continues to appreciate. Here's why there is still punch left in the bowl.
"The People's Bank of China decided to cut financial institutions RMB benchmark interest rate loans and deposits with effect from November 22, 2014. The one-year benchmark lending rate down 0.4 percentage points to 5.6%; one-year benchmark deposit rate down 0.25 percentage point to 2.75%, while the combination of market-oriented reforms to promote the interest rate, the upper limit of the floating range of interest rates on deposits of financial institutions by the benchmark deposit 1.1 times the adjusted interest rate is 1.2 times; other grades adjusted accordingly benchmark interest rate loans and deposits, and to make appropriate benchmark interest rate maturities degenerate."
The bad news: every central-planner is now all in. The good news for the liquidity addicts, is that the S&P futures are now 12 points higher on what is clearly the only growth strategy left in a centrally-planned world, and are approaching 2070 and just 30 points away from Goldman's 2015 year end target.!
- Japan Prime Minister Shinzo Abe Calls Snap Election (WSJ) - as repeatedly priced in...
- Flash Boys Raising Volatility in Wild New Treasury Market (BBG)
- Not Greece again: Greek Bailout Review Stalls as Troika Demands Final Steps (BBG)
- Iran uses China bank to transfer funds to Quds-linked companies (Reuters)
- Porn Mags With Free Madrid Theater Tickets in Tax Protest (BBG)
- Hong Kong, China stocks ease on profit-taking after stock connect launch (Reuters) - Hang Seng down 500 points in past 2 days
- Halliburton Mega-Deal Sealed by CEOs Over Coke and Coffee (BBG)
- Wall Street to Reap $316 Million From Day of Mega Deals (BBG)
- Mass murderer Charles Manson gets marriage license, state says (Reuters)
- Stick to tapering and rates pledge, says Boston Fed chief (FT)
- Turkey to let Iraqi Kurds reinforce Kobani as U.S. drops arms to defenders (Reuters)
- Obama makes rare campaign trail appearance, some leave early (Reuters)
- Japan GPIF to Boost Share Allocation to About 25%, Nikkei Says (BBG)... or three months of POMO
- Japan Stocks Surge on Report GPIF to Boost Local Shares (BBG)
- China Growth Seen Slowing Sharply Over Decade (WSJ)
- Russia, Ukraine Edge Closer to Natural-Gas Deal (WSJ)
- Leveraged Money Spurs Selloff as Record Treasuries Trade (BBG)
- After clashes, Hong Kong students, government stand their ground before talks (Reuters)
- Mystery Man Who Moves Japanese Markets Made More Than 1 Million Trades (BBG)
- Draghi’s Trillion-Euro Pump Finds Blockage in Spain: Euro Credit (BBG)
- Apple plays defense on iPhone 6 bending, software concerns (Reuters)
- U.S. to Shield Military From High-Interest Debt (WSJ)
- U.S. Outgunned by Extremists on Social Media Battlefield (BBG)
- Yen Weakens on Pension Fund Reform; Aussie Drops to 7-Month Low (BBG)
- Secretive Russian oil giant has no fear of sanctions (Reuters)
- Ride-Sharing Services Face Legal Threat From San Francisco, Los Angeles (WSJ)
- Putin’s Sell-Treasuries-for-BRICS Bonds Plan Has Limits (BBG)
"Get To Work Mr. Chinese Chairman": China Set To Fire Its Central Bank Head, Unleash The Liquidity FloodgatesSubmitted by Tyler Durden on 09/24/2014 10:12 -0500
In what is certainly the most impotant news of the day, the WSJ reports that China's long-serving central banker Zhou Xiaochuan, "the face of the Chinese economy to markets globally" is about to be given the boot. According to the WSJ, "Chinese leader Xi Jinping is considering replacing Mr. Zhou, say party officials, as part of a wider personnel reshuffle that also comes after internal battles over economic reforms." And while it is true that at the age of 66, Zhou has passed China's retirement age, and his departure will be spun as an old man spending more time with his family, the reality is that this is part of a major Chinese shift in the "balance of power between reformist and reactionary forces, with the momentum for reforms being eroded by the loss of growth momentum in the economy," said Eswar Prasad, a Cornell University China expert. Zhou's replacement: a career banker, who will do the bidding of, you guessed it, banks, which means "liquidity to the max."
- Quid pro quo Clarice: Iran seeks give and take on Islamic State militants, nuclear program (Reuters)
- Alibaba’s Banks Said to Boost IPO Size to Record $25 Billion (BBG)
- European Stocks Fall Amid China Concern as Tesco Slides (BBG)
- Tesco Suspends Executives, Probes Error That Triggers New Profit Warning (WSJ)
- Kurds say they have halted Islamic State advance on Syrian town (Reuters)
- Because luck and managing money is genetic: Financial Elite's Offspring Start Their Own Hedge Funds (WSJ)
- Islamic State Onslaught Spurs Mass Exodus of Syrian Kurds (BBG)
- Rockefellers, Heirs to an Oil Fortune, Will Divest Charity From Fossil Fuels (NYT)
According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfers. Meaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.
- Carl Icahn says 'time to be cautious' on U.S. stocks (Reuters)
- Banco Espirito Santo Lifts Lid on Exposure to Group (BBG)
- Slowing Customer Traffic Worries U.S. Retailers (WSJ)
- Insurgents enter military base northeast of Baghdad (Reuters)
- Obama tells Israel U.S. ready to help end hostilities (Reuters)
- Japan economics minister warns of premature QE exit, sees room for more easing (Reuters)
- Greek Banks See Quadrupling of Housing Loans by Next Year (BBG) ... to fund buybacks like in the US?
- Piggy Banks Being Raided Signal Swedish Housing Dilemma (BBG)
- London Seeks New Spenders as Russians Skip $719 Champagne (BBG)
A money-laundering butterfly flaps its wings in China... and the US housing market crashes?
- Xi Says China Conflict With U.S. Would Be Disaster (BBG)
- Short selling drops to lowest level since Lehman (FT)
- Scoping the new subprime as watchdogs cry 'bubble' (Reuters)
- Carlos Slim to break up América Móvil empire (FT)
- Jury Acquits Rengan Rajaratnam in Insider-Trading Case (WSJ)
- Hamas rockets land deep in Israel as it bombards Gaza Strip (Reuters)
- Hong Kong Buyers Queue for New Homes After Prices Plunge (BBG)
- Rebel Stronghold in Ukraine Braces for Its Showdown (WSJ)
- Tiny Houses Big With U.S. Owners Seeking Economic Freedom (BBG)
- Chinese Cash-Bearing Buyers Drive U.S. Foreign Sales Jump (BBG)
While numerous massively indebted administrations around the world hope to divert the attention of what's left of their struggling middle class away from its daily impoverished existence and distract it with flashing lights and glitzy animations showing another all time market high on a daily basis, a significantly more important shift taking place behind the scenes is appreciated by very few: the ongoing de-dollarization of the world. For the latest example of how increasingly more countries are setting the stage for the final currency war, we go again to Russia where VOR's Valentin Mândr??escu explains that slowly but surely the BRICS - that proud Goldman acronym which was conceived to perpetuate the great American way of life by releasing trillions in US-denominated debt in heretofore untapped markets - are morphing into an anti-dollar alliance.