Shadow Banking

The Reason For Copper's Dramatic Surge: Chinese Copper Inventories Hit Record

In the aftermath of China's record credit creation spree, a question that emerged is what China is spending all this newly created money on. One answer emerged overnight when Bloomberg reported that after tumbling in the first half of 2015, copper inventories at the Shanghai Futures Exchange had been steadily rising, and in the most recent week soared by 11% to an all time high of 305,106 tons.

G-20 Needs To "Man Up" Or Risk Sparking Market Chaos, Citi Warns

“Keeping the previous language would be very disappointing and would be viewed as either complacent or reflecting policy paralysis. [They need to] man up and tell member countries that monetary policy should be accompanied by fiscal expansion.”

China May Have Found A "Solution" To Its Massive Bad Debt Problem

Last April, China had an idea about how to boost the country’s dying credit impulse. One idea was to supercharge the country’s nascent ABS market which was barely producing $50 billion in supply per year. That effort failed in large part due to banks' unwillingness to offload their good assets in a time when NPLs are rising. So you can probably guess what Beijing's "solution" is.

Frontrunning: February 25

  • Europe shrugs off pre-G20 China stocks slump, sterling steadies (Reuters)
  • China Unveils Its Deliverables for G-20 -- And No Plaza Pact (BBG)
  • Foreign Money Could Be Slow to Enter China’s Bond Markets (WSJ)
  • China Urged to Stomach Much Higher Fiscal Deficit (WSJ)
  • Trump's Momentum Has Republicans in Congress Confused and Cowed (BBG)

Why We Won't Have A "Lehman Moment" In The 2016 Crash

Issuing more credit will only make the 2016 crash worse. Trying to stop the current crash with more credit and lower interest rates is like sending the cavalry on suicide charges against entrenched machine guns, artillery and tanks. The coming financial slaughter will be as senseless, wasteful and ineffective as any suicide attack in the Great War.

Meet China's Latest $1.8 Trillion "Problem"

China's mid-tier banks are piling up exposure to the riskiest subset of borrowers at a time when economic fundamentals are deteriorating on a near daily basis. Meanwhile, this exposure is being carried on a line item that allows the banks to avoid provisioning for the losses that will almost certainly materialize in the not-so-distant future. At one bank, this one line item is larger than the entire Philippine banking system.

Red Ponzi Ticking

There is something rotten in the state of Denmark. And we are not talking just about the hapless socialist utopia on the Jutland Peninsula - even if it does strip assets from homeless refugees, charge savers 75 basis points for the deposit privilege and allocate nearly 60% of its GDP to the Welfare State and its untoward ministrations. In fact, the rot is planetary. There is unaccountable, implausible, whacko-world stuff going on everywhere, but the frightful part is that most of it goes unremarked or is viewed as par for the course by the mainstream narrative.

"Perma-bears" 1 - BofA Economist 0

Eight months ago, Bank of America chief economist Ethan Harris triumphantly declared victory over the "perma-bears." Today, the "perma-bears" get the last laugh.