The last time global equity markets were falling at this pace (on a growth scare) was the fall of 2011. That time, after a big push lower, November saw a mass co-ordinated easing by central banks to save the world... stock jumped, the global economy spurted into action briefly, and all was well. This time, it's different. The Fed is tapering (and the hurdle to change course is high), the ECB balance sheet is shrinking (and there's nothing but promises), the PBOC tonight said "anyone anticipating additional stimulus would be disappointed," and then the BoJ failed to increase their already-ridiculous QE (ETF purchase) programs. The JPY is strengthening, Asian and US stocks are dropping, CNY is weakening, and gold rising.
The last time stocks were stumbling on the back of a high-growth hopium scare... central banks saved the world...
Commentary from China's Xinhua News Agency (implicitly the point of exit for open mouth operations by the PBOC) suggest hope is fading for a big save...as Bloomberg reports,
China won’t rely on a large stimulus like the one following the 2008 global financial crisis to boost its economy after a “string of lukewarm economic indicators,” according to a commentary from Xinhua News Agency written by Zhang Zhengfu.
Talk about an incoming stimulus is “misleading” and those anticipating a package will likely be “disappointed,” the commentary says. A “mini stimulus” theory started after the State Council announced a set of policies including tax breaks and support for poor areas, the commentary says. China’s economy needs “a little” but not a “fully fledged” stimulus, the commentary says
and then the defaulting names started to fall
- *CHAORI SHRS FALL AFTER BONDHOLDER SEEKS BANKRUPTCY RESTRUCTURE
- *CHAORI SOLAR SHARES FALL 5.02% TO 2.46 YUAN IN SHENZHEN
But they promise dthey would pay in July
Shanghai Property stocks are lower once again
Then the BoJ disappointed... (even as Kuroda hinted last month inflation was well on its way to target)
Expectatations were for static monetary base expansion, a doubling of ETF purchases, and boosting bond purchases by 10 trillion yen
They did not...
*BOJ RETAINS PLAN FOR 60T-70T YEN ANNUAL RISE IN MONETARY BASE
No change to bond purchases
No change to ETF purchases
And JPY remains stronger and NKY weaker...
Japan is pumping the propoganda...
*BOJ: JAPAN'S ECONOMY HAS CONTINUED TO RECOVER MODERATELY
Except it hasn't...
The last time Japan attempted a consumption tax hike without the aid of monetary stimulus satefy net, this happened...
With broad-based currency volatility at 7-year lows, we suspect the ongoing currency war escalation with China may see this rise... and of course, FX traders' complacency handed Kuroda an opportunity to have maximal impact with any changes - but he didn't - which makes you wonder if/when he will given how high inflation is...
- Chinese stocks are up modestly (led by banks) but property developers are being sold hard
- Japan, Shenzhen, Australia, India, Malaysia, New Zealand, Philippines, and Taiwan are all red
As a reminder Fed minutes are released tomorrow.