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A Quick Note On China's Rate Cut

Reggie Middleton's picture




 

The MSM reported U.S. Stocks Rise as China Cuts Interest Rates this morning. China Cut Their Rates for First Time Since '08, and we all know what happened in 2008, right? As the momentum driven, server controlled trades ramped the markets up, I placed Armageddon put (way out of the money, with a material time value) purchases on throughout the morning - for literally pennies. This was to accent the FIRE sector work that I have been putting on throughout the month (see Reggie Middleton Sets CNBC on FIRE!!!). As you can see from the archived posts and videos below, I always believed that China was a Ponzified bubble with no true organic growth to speak of, and if the Europeans and the global economy was waiting for this country that ramped up lending into a pile of expanding NPAs to bailout out the world, then put profit expansion, here I come!

Monday, 06 February 2012 11:20reggie_speaks

 reggie_speaks

A 7 minute video of my opinions on Greek haircuts, US and Manhattan real estate overvaluation, China bubble busting and hard landings, Case Shiller shortcomings and Germany's penthouse suite in the EU roach motel.

My stance on China's comeuppance for attempting to pack 50 years of growth in to 3 years is still quite unchanged. I am fully aware that many "smart" bankers and analysts have different perspectives, but as I posted a couple of weeks ago, "Currency Crisis! Inflation! Sovereign Defaults! Bahhhh… Who Are ‘Ya Gonna Believe, The Government Or Your Lyin’ Eyes?". From Bloomberg, this morning: U.S. Index Futures Fall After China Raises Banks’ Reserve Ratio

 

I have not had a chance to revisit my China thesis in a while, but it is coming once I round off the European recap and finish up my US technology thesis. China will most likely play a key portion in global financial and economic contagion that is simmering over in Europe. A commenter on another popular blog had this to say of my most recent post regarding Ireland (Erin Gone Broken Bank: The 2nd EMU Nation That Didn’t Need a Bailout Get’s Bailed Out Within Months, Next Up???):

Look, Big Surprises Coming from the UK and China!!! UK and Chinese Growth Slower Than Expected, but Exactly Where BoomBustBlog Said It Would Be

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Thu, 06/07/2012 - 18:35 | 2505588 stocktivity
stocktivity's picture

If Hong Kong is that great, all you asswipes should move there....and don't let the American door hit you in your big fat asses on the way out.

Thu, 06/07/2012 - 21:57 | 2505965 williambanzai7
williambanzai7's picture

Don't be an asshole. Factual observations have nothing to do with opinions on where to live.

It just so happens that young post graduates fluent in mandarin are in higher demand here than anywhere else in the world.

Thu, 06/07/2012 - 16:15 | 2505239 Jack Sheet
Jack Sheet's picture

NIce content Reggie, but looking at the video for more than 2 min without the room rotating requires a bigger dose of dramamine than Blair Witch Part 1!

Thu, 06/07/2012 - 15:57 | 2505164 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Who crashes first?  The US, Europe, or China?

And here they come around the final corner now!

Thu, 06/07/2012 - 12:27 | 2504241 JohnKozac
JohnKozac's picture

Why so quiet in that Mall? I thought HK was 'overcrowded.'

Thu, 06/07/2012 - 15:49 | 2505114 Dermasolarapate...
Dermasolarapaterraphatrima's picture

Quiet, so far. They have not heard that "Thingamajigs" go on sale at 5pm.

Just wait and take a picture when the news leaks out.

Thu, 06/07/2012 - 12:41 | 2504300 CPL
CPL's picture

Anyone with money in HK moved to Vancouver, Seattle and Portland.

 

There's a reason shit shacks are selling for a fortune.

Thu, 06/07/2012 - 18:01 | 2505500 JohnKozac
JohnKozac's picture

Vancouver is now "Little Bombay" (Great Masala food!) and Seattle is now more dangerous then LA...and as for Portland, they are all moving to Texas and Arizona...tired of the rain.

Thu, 06/07/2012 - 15:45 | 2505096 williambanzai7
williambanzai7's picture

Hong Kong is very different now. It is the global financial center for North Asia and a world class city. The place is oozing with money not only from the mainland. All the Banks, accounting firms, law firms etc have bulked up dramatically. Most of the Hong Kong Chinese young professionals schooled in the West want to return here simply because this is where the greatest opportunity is for them. 

There are a slew of HK super tycoons who may own real estate in the US, Canada, England and Australia. But they live here.

A substantial portion of the Chinese moving to North America now are Mainland Chinese. Many are party bureaucrats or SOE executives nearing retirement. They move their families and bank accounts overseas and then spring at an opportune moment. This is a corruption issue that the Chinese government is apparently starting to address much more seriously.

 

Thu, 06/07/2012 - 15:53 | 2505146 Arnold Ziffel
Arnold Ziffel's picture

Banzai speak with silver tongue. My friend graduated near top of his class at a top Univeristy here with degrees in law AND an MBA and turned down Wall Street for HK. He speaks Mandarin fluently (as well as English).

Jim Rogers, Peter Schiff and even my Grandpa called it ten years ago----the Great Asia Pacific Basin Prosperity. They are all correct (as you are too--correct).

Thu, 06/07/2012 - 14:50 | 2504871 NotApplicable
NotApplicable's picture

I've got friends in Port Townsend who just sold their over-priced house in a gated community in under a month, at their price.

I guess the folks out there don't pay much attention to the Cesium piling up... yet. Or they stay indoors.

Thu, 06/07/2012 - 14:04 | 2504680 unionbroker
unionbroker's picture

you calling my house a shit shack i resent that remark :)

Thu, 06/07/2012 - 12:19 | 2504210 williambanzai7
williambanzai7's picture

HARBOR CITY MALL HONG KONG

Harbor City Mall Hong Kong 4PM. June 6

Thu, 06/07/2012 - 15:21 | 2505013 HD
HD's picture

You can tell it's not an American mall as no one is riding a motorized scooter, drinking a 64oz Big Gulp or wearing a "Twilight" T-shirt...

Thu, 06/07/2012 - 15:31 | 2505048 williambanzai7
williambanzai7's picture

No, when its packed they are all wearing black and carrying LV bags.

Thu, 06/07/2012 - 15:40 | 2505079 HD
HD's picture

Foxconn pays better than I thought!

Thu, 06/07/2012 - 13:44 | 2504597 Bastiat
Bastiat's picture

The $/sqft don't seem to be happening, WB.

Thu, 06/07/2012 - 13:51 | 2504574 hedgeless_horseman
hedgeless_horseman's picture

 

 

Come on, William.  Everyone is outside shopping on the streets in Mong Kok.  Not even a guilo like me shops at that mall...it is only for Jap tourists just off the cruise ship for an hour.  Take a photo that time of day on Nathan Road, just a few blocks away, for a real indicator of retail foot traffic.

Thu, 06/07/2012 - 14:02 | 2504663 williambanzai7
williambanzai7's picture

Actually this is the main mall for mainlanders to buy high end designor brands. I got this from someone in the branded retail business. All the main ones such as LV, Gucci etc have their flagship greater China stores there. All of them are usually jam packed with lines on the street. I posted a YouTube of it last Christmas.

There haven't been Japanese tourists in there for years and the cruise ships are now full of guess who? Mainlanders with HK bank accounts.

But you would know this if you were here and knew what you are talking about..

Thu, 06/07/2012 - 16:59 | 2505369 zebra
zebra's picture

I agree. it is probabaly like 101 mall in Tapei.

 

Thu, 06/07/2012 - 16:00 | 2505175 Arnold Ziffel
Arnold Ziffel's picture

I saw your Christmas video and was really surprised. Keep posting those things.

I just finished reading most of a web site on the China Expeditionary Forces in Burma and the Chinese Army in India workign with the Allies during WW II. As the author says, it is "The Forgotten War" but extremely fascinating.

Thu, 06/07/2012 - 14:09 | 2504689 hedgeless_horseman
hedgeless_horseman's picture

 

 

I got this from someone in the branded retail business. All the main ones such as LV, Gucci etc have their flagship greater China stores there.

You are telling me Nathan Road and Mong Kok are not packed to the gills with shoppers nearly 24 hours a day?

Bullshit. 

LV, Gucci etc. have store fronts in almost every mall and shopping district in TST, HK, the NT, and even many mainland cities. 

That mall is a cruise ship tourist trap.  Nothing more.  People pass through it to get from the ship to the cab, and not much more, even during the New Year.  The prices are way too high.

 

Thu, 06/07/2012 - 14:24 | 2504729 williambanzai7
williambanzai7's picture

The Golden Triangle for wealthy Mainland shoppers is Harbor City Canton Road, IFC Mall and Time Square Mall in Causeway Bay. The rents in these locations, and revenue generation, now rival or exceed Fifth Avenue in NYC.

The source of my information is someone who sites retail locations for a very high profile European brand. This person knows much more about it than you or I. These kinds of people look at retail traffic flows on a 365 day in day out basis.

Nathan Road is not deserted, but when a venue like Harbor City is suddenly empty, it is certainly worthy of the question what gives?

The picture doesn't lie.

Respectfully, you don't know ass shit about what is going on here. That mall has been a goldmine. It is ground zero for mindless mainland Chinese cash chucking.

And you never see me babbling nonsense about the China bubble, simply because ten years of doing business here has taught me one thing: if you think you know exactly what is happening in China you are probably wrong.

Thu, 06/07/2012 - 14:35 | 2504794 hedgeless_horseman
hedgeless_horseman's picture

 

 

...when a venue like Harbor City is suddenly empty, it is certainly worthy of the question what gives?

In between cruise ships.  I have personally seen it that empty for this reason dozens of times.

Thu, 06/07/2012 - 14:42 | 2504830 williambanzai7
williambanzai7's picture

There are something's here that haven't changed much. But sadly, between the bankers and the millionaire mainlanders, the center is changing extremely fast. The rents are really changing the look of the streets of Central and Tsim Sha Tsui. The quaint little retail establishments are being swallowed up. This has really happened in the last five years.

They have even torn apart LAN Kwai Fong which I avoid because it is like the pub scene in Soho London. Wanchai is pretty much the same. Mongkok is in the process of being gentrified.

Thu, 06/07/2012 - 18:31 | 2505579 CreativeDestructor
CreativeDestructor's picture

HK is a bubble of China bubble. It will not be a pretty sight when motherland releases hot air from the backside...

Thu, 06/07/2012 - 15:10 | 2504861 hedgeless_horseman
hedgeless_horseman's picture

 

 

It could be worse.  You could live in Macau.

Maybe move to the mainland and buy a lychee farm? 

Peace.

 

PS:  Go buy Reggie a cheap made-in-China monopod for his video recorder, please!  It is like he is filming during an earthquake.

Thu, 06/07/2012 - 15:29 | 2505042 williambanzai7
williambanzai7's picture

Macau is a travesty. We can thank our own Las Vegas schlemiels for that.

I heard Reggie records his programs with an iPhone... ;-)

Thu, 06/07/2012 - 12:00 | 2504105 Jack Sheet
Jack Sheet's picture

That a TSA holding cell you're sitting in?

Do NOT follow this link or you will be banned from the site!