"Our global credit impulse (covering 77% of global GDP) has suddenly collapsed: whereas back in Jan '16 the global credit impulse was positive to the tune of 3.8% of global GDP (of which China comprised 3.5% of global GDP) it has now fallen back to -0.1% of global GDP."
While Trump seemingly remains the only topic worthy of discussion blanketing the airwaves, as the following chart from Goldman demonstrates, it has been China where policy uncertainty has stealthily exploded in the past three months.
The global "risk on" melt-up continues. After a modestly hawkish Yellen warned that every meeting is live, and refused to take March off the table, sending the dollar and yield higher and the S&P to fresh record highs, world stocks rose hitting a 21-month high on Wednesday with the dollar rising for the 11th straight day, the longest positive streak since July 2015.
How long can China's debt continue to grow before a Minsky moment or systemic debt crisis? As the government continues to rely on credit-fuelled investment to offset downward pressures within the domestic economy and from a subdued global environment China's debt/GDP ratio is set to rise further. But how much higher can it rise? Here is UBS' attempt to answer the $64 trillion question.
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust ...”
European, Asian stocks fall and U.S. equity-index futures traded mixed on Monday with fresh memories of the Dow Jones rising to under 1 point of 20,000 on Friday. The dollar has rebounded on fresh geopolitical concerns, while the pound extends its decline from Friday and has slide to 10 week lows on a Sunday interview from Theresa May which suggested a "Hard Brexit" may be in the cards.
"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."
Ask yourself; what are the trades that make complete sense and all your instincts say are right, and then do the opposite. Basically what you end up constructing is an out of consensus portfolio and we all know how consensus trades work out in this market.