China Warns Soros Against Starting A Currency War: "You Cannot Possibly Succeed, Ha, Ha"

Soros’s war on the renminbi and the Hong Kong dollar cannot possibly succeed — about this there can be no doubt. Reckless speculations and vicious shorting will face higher trading costs and possibly severe legal consequences. And just as proved in the yuan exchange rate case, the Chinese government has sufficient resources and policy tools to keep the overall economic situation under control and cope with any external challenges.”

Chinese Rush To Buy Foreign Assets As Mammoth $1 Trillion In Capital Flees Country

When the RMB deval dust settled, some $1 trillion in capital fled China in 2015 as Chinese rushed to move money out of the country ahead of what many expect will be a much larger yuan depreciation. Estimating capital flight out of China isn't an exact science and different analysts look at different proxies to determine just how leaky the ship is, so to speak. For their part, Goldman has endeavored to break down the numbers on the way to shedding some light on where to look to assess the pace of the flows. 

"My Career Basically Ended Today": What Is Really Happening In China

Liu Lang, a Chinese migrant worker, left his rural hometown in Sichuan Province two decades ago to work in the factories of the southern province of Guangdong, China’s manufacturing powerhouse. Now, he is moving back. “I worked my way up from a basic worker to a department head. And my career basically ended today,” Mr. Liu said on the train leaving Guangdong. Factories in Guangdong have been hit hard by the slowing economy, and many of them have closed, including the shoe factory where Mr. Liu worked.

Sage Investment Advice From Mike Tyson

The optimists have had things their own way in an almost unbroken line since March 2009. January 2016 so far would suggest that the pragmatists are now in charge.

US Equities Tumble As PBOC "Stamps Out" Short Yuan Speculators With "Murderous" Liquidity Squeeze

A jump in the overnight cost for borrowing yuan in Hong Kong is "reflecting further PBOC efforts to stamp out speculation," according to Michael Every, head of financial markets research at Rabobank Group. Hong Kong-based Every told Bloomberg in an interview, following a massive spike in overnight borrowing rates for Offshore Yuan that "a 66% rate is murderous for others being swept up in this who are not speculating." PBOC advisor Han earlier warned that short selling the yuan "will not succeed," adding that "it is pure imagination that the Chinese yuan will act like a wild horse without any rein." But as Every notes, the unintended consequences could be a problem, "imagine you needed access to CNH for other purposes for a few days," concluding ominously that "in other EM crises we see that central banks usually win a round like this, but lose in the end."

Frontrunning: January 7

  • China turmoil sends oil, stocks sliding (Reuters)
  • China's Stock Traders Go Home After 29 Minutes (BBG)
  • Yuan hits weakest since Feb 2011 on fresh low midpoint (Reuters)
  • Stocks Extend Rout, Oil Slides on China as Soros Warns of Crisis (BBG)
  • China's 29 Minutes of Chaos: Stunned Brokers and a Race to Sell (BBG)
  • North Korea Uses Bomb Test to Boost Dictatorship (WSJ)

Just Out From Evercore ISI: "Sell All Rallies Down To 1900"

"With the macro backdrop more vulnerable today than at any time since the financial crisis, and the S&P 500 and NASDAQ still near all-time highs, we anticipate a downside move to 1900 on the S&P within the first two months of the year. We reiterate our view that Crude and Energy remain structurally broken and possess significant downside from current levels which will only agitate and exacerbate the ongoing collaps."

Is This How The Dollar Gets Replaced?

A world where money is decentralized means a world where nothing you’ve ever seen before will become the new norm and the new norm is unlikely to include a scrap of paper issued by a bankrupt government.

SocGen Looks At The Devastation Across Markets, Sarcastically Concludes It Is "Time For A US Rate Hike"

"The solution to uncertainty is cheaper valuations. If problems are priced in, investors can afford to look through near terms concerns and focus on the longer term. Worryingly, we have exactly the opposite situation today. Average stock valuations are close to historical highs – so we have lots of risk and little in the way of valuation cushion.... Time for a US rate rise then?"