Yuan

In China, Nobody Wants To Be A Bagholder

With the frenzied speculation that drove levels and volumes in Chinese commodities off the charts having dawned on everyone from Cramer to Chinese Securities regulators as 'not real', it appears everyone is scrambling to not be the bagholder for this bubble as authorities crackdown on Chinese asset managers pooling retail investor funds, warning of the rise of "ponzi schemes." While nobody knows for sure how much of the trading surge has been driven by individuals, but the evidence suggests retail punters are playing a big role, and as Bloomberg reports, the average holding period for contracts including rebar and iron ore was less than 3 hours in April!

Peter Boockvar Warns "If Central Bankers Get Their Way, The Global Bond Market Will Blow Up"

"My fear is that central banks are now taking this too far through negative interest rates in particular and that they’re going to literally destroy their own banking systems. If they’re actually successful in generating higher inflation, then they’re going to destroy their own bond markets... our government officials, and I will include the Federal Reserve in that, have failed the American people."

The Coming War Of Central Banks

History has shifted, and we're leaving the era of central bank convergence and entering the era of central bank divergence, i.e. open conflict.

Goldman Closes "Short Gold" Recommendation With 4.5% Loss; Will Continue Buying Gold From Its Clients

Iit took just two and a half months for Goldman to get officially stopped out of its short gold recommendation, which as we first noted, happened on April 29, when its the price soared above $1,300 breaching Goldman's stop. Officially, Goldman's Jeff Currie decided to take his time, although he too finally threw in the towel today admitting Goldman was wrong yet again with one more trading recommendation (recall that Goldman had earlier been stopped out and lost money on 5 of its Top 6 trades for 2016 in just over a month).

"Bored" Chinese Workers Created "Uncontrollable Bubble" In Commodity Futures

With the collapse of China's smoke-and-mirrors commodity bubble comes the post-mortem as the horde of Chinese gamblers flood from one government-appointed market to another as the American dream of get-rich-quick schemes appears to have been adopted by the burgeoning middle classes now disillusioned with real work. As Bloomberg reports so shockingly, from the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors; but rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016..."you have far too much credit, money sloshing about, money looking for higher returns."

The Twilight Of The Gods (aka Central Bankers)

The current financial market volatility increasingly reflects loss of faith in policy makers. Celebrity central bankers are learning that they must constantly produce new miracles for their followers. For the moment, the volatility is confined to financial markets and the effect on the real economy is limited. The ever present risk is of a doom loop where financial market problems lead to banking system weakness which, in turn, feeds a credit crunch and a contraction in economic activity. That familiar movie does not have a happy ending.

US Futures, Europe Stocks Jump On Oil, USDJPY Surge; Ignore Poor China Data, Iron Ore Plunge

The overnight session has been one of alternative weakness and strength: it started in China where stocks tumbled 2.8% to a two month low following some unexpected warnings in the official People's Daily newspaper and poor trade data. Concerns about China, however, were promptly forgotten and certainly not enough to keep global assets lower, with European stocks gapping higher at the open and rallying from a one-month low, driven by a "surprising" surge in the USDJPY which has moved nearly 200 pips higher since its post-payrolls low. Another driver is the jump in oil, which rallied just shy of $46 a barrel, buoyed by Canadian wildfires that are curbing production and speculation that the Saudi Arabian oil minister succession will be bullish for oil prices.

Is Beijing About To Put An Abrupt End To Cross-Border M&A?

Massive capital outflows from China in an effort to preserve capital is something that we've covered extensively in the past (here and here for example). Last month, China's Ministry of Commerce (MOC) came out to do some damage control, and downplayed the extent of the activity. It also hinted that the government would "help" Chinese companies with overseas M&A in the future...

Innoculation From The Big Narrative Lie

The following exercise in truth-seeking is intended to inoculate you from the Big Narrative Lie coming soon to a status quo media megaphone near you, that this resurgence in risk assets is caused by a resurgence in fundamental real-world economic factors. We know you want to believe this is true. It’s unpleasant, 8 years after the crisis, to accept the reality that we are mired in a policy-controlled market.

Zimbabwe To Print Its Own US Dollars Amid Severe Cash Shortage

Zimbabwe is set to print its own version of the US dollar, as an ailing economy fuels a severe cash shortage in the southern African nation. John Mangudya, Zimbabwe’s central bank governor, said Thursday the so-called bond notes will be backed by $200 million in support from the Africa Export-Import Bank. The specially designed dollar notes will come in denominations of two, five, 10 and 20. They will also have the same value as their U.S. dollar equivalents. The bond notes are an extension of so-called bond coins of one, five, 10 and 25 cents which the central bank introduced in 2014 and are pegged to the value of the U.S. dollar.

 

Futures Rebound As Crude Regains $45 On Canada Fears; Turkey Hammered

While markets remain relatively subdued ahead of tomorrow's nonfarm payrolls report, after several days of losses in US stocks which pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday's post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks. 

Global Stocks Slide As Dollar Continues Rising: Has The "Pricing In" Of Trump Begun

While there was no unexpected overnight central bank announcement unlike yesterday's surprise by the RBA which unleashed volatility havoc in the FX market, which promptly spilled over into all asset classes, overnight stocks around the world saw another leg lower without a tangible catalyst, while EM currencies fell to a one-month low after two Fed presidents raised concern investors had become too complacent in their belief that U.S. interest rate raises will stay on hold. Or perhaps all that is happening is that after ignoring Trump, the market is starting to finally price in the possible reality of the Donald in the White House (although as Jeff Gundlach pointed out, Trump would be a far better president for the economy and the market than Hillary or Bernie).

US Futures Tumble After China Devalues Yuan By Most Since August Collapse

The 'odd' regime shift in the relationship between USDJPY and US equities continues overnight. Following some visible-handedness and follow-through momentum, Yen is weakening against the USD - normally a big flashing green sign for risk-on pajama traders but China's biggest Yuan devaluation in 9 months (since the August turmoil) seems to have stolen the jam out of the bull's donut as US equity futures extend losses, AsiaPac credit risk jumps, and USD strength is weighing on crude prices.