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China's Record Dumping Of US Treasuries Leaves Goldman Speechless
On Friday, alongside China's announcement that it had bought over 600 tons of gold in "one month", the PBOC released another very important data point: its total foreign exchange reserves, which declined by $17.3 billion to $3,694 billion.
We then put China's change in FX reserves alongside the total Treasury holdings of China and its "anonymous" offshore Treasury dealer Euroclear (aka "Belgium") as released by TIC, and found that the dramatic relationship which we first discovered back in May, has persisted - namely virtually the entire delta in Chinese FX reserves come via China's US Treasury holdings. As in they are being aggressively sold, to the tune of $107 billion in Treasury sales so far in 2015.
We explained all of his on Friday in "China Dumps Record $143 Billion In US Treasurys In Three Months Via Belgium", and frankly we have been surprised that this extremely important topic has not gotten broader attention.
Then, to our relief, first JPM noticed. This is what Nikolaos Panigirtzoglou, author of Flows and Liquidity had to say on the topic of China's dramatic reserve liquidation
Looking at China more specifically, it appears that, after adjusting for currency changes, Chinese FX reserves were depleted for a fourth straight quarter by around $50bn in Q2. The cumulative reserve depletion between Q3 2014 and Q2 2015 is $160bn after adjusting for currency changes. At the same time, a current account surplus in Q2 combined with a drawdown in reserves suggests that capital outflows from China continued for the fifth straight quarter. Assuming a current account surplus in Q2 of around $92bn, i.e. $16bn higher than in Q1 due to higher merchandise trade surplus, we estimate that around $142bn of capital left China in Q2, similar to the previous quarter.
JPM conclusion is actually quite stunning:
This brings the cumulative capital outflow over the past five quarters to $520bn. Again, we approximate capital flow from the change in FX reserves minus the current account balance for each previous quarter to arrive at this estimate (Figure 2).
Incidentally, $520 billion is roughly triple what implied Treasury sales would suggest as China's capital outflow, meaning that China is also liquidating some other USD-denominated asset(s) at a feverish pace. So far we do not know which, but the chart above and the magnitude of the Chinese capital outflow is certainly the biggest story surrounding the world's most populous nation: what is happening in its stock market is just a diversion.
At this point JPM goes into a tangent explaining what the practical implications of a massive capital outflow from China are for the global economy. Regular readers, especially those who have read our previous piece on the collapse in the Petrodollar, the plunge in EM capital inflows, and their impact on capital markets and global economies can skip this part. Those for whom the interplay of capital flows and the global economy are new, are urged to read the following:
One way that slower EM capital flows and credit creation affect the rest of the world is via trade and trade finance. Trade finance datasets are unfortunately not homogeneous and different measures capture different aspects of trade finance activity. Reuters data on trade finance only aggregates loan syndication deals, which have mandated lead arrangers and thus capture the trends in the large-scale trade lending business, rather than providing an all-inclusive loans database. Perhaps the largest source of regularly collected and methodologically consistent data on trade finance is credit insurers (see “Testing the Trade Credit and Trade Link: Evidence from Data on Export Credit Insurance”, Auboin and Engemann, 2013). The Berne Union, the international trade association for credit and investment insurers with 79 members, includes the world’s largest private credit insurers and public export credit agencies. The volume of trade credit insured by members of the Berne Union covered more than 10% of international trade in 2012. The Berne Union provides data on insured trade credit, for both short-term (ST) and medium- and long-term transactions (MLT). Short-term trade credit insurance accounts for the vast majority at around 90% of new business in line with IMF estimates that the vast majority 80%-90% of trade credit is short term.
Figure 4 shows both the Reuters (quarterly) and the Berne Union (annual) data on trade finance loan syndication and trade credit insurance volumes, respectively. The quarterly Reuters data showed a clear deceleration this year from the very high levels seen at the end of last year. Looking at the first two quarters of the year, Reuters volumes were down by 25% vs. the 2014 average (Figure 4). The more comprehensive Berne Union annual volumes are only available annually and the last observation is for 2014. These data showed a very benign trade finance picture up until the end of 2014. Trade finance volumes had been trending up since 2010 at an annual pace of 8.8% per annum (between 2010 and 2014) which is faster than global nominal GDP growth of 6% per annum, i.e. the trend in trade finance had been rather healthy up until 2014, but there are indications of material slowing this year. This is also reflected in world trade volumes which have also decelerated this year vs. strong growth in previous years (Figure 5).
Summarizing the above as simply as possible: for all those confounded by why not only the US, but the global economy, hit another brick wall in Q1 the answer was neither snow, nor the West Coast strike, nor some other, arbitrary, goal-seeked excuse, but China, and specifically over half a trillion in still largely unexplained Chinese capital outflows.
* * *
But wait, because it wasn't just JPM whose attention perked up over the weekend. This morning Goldman Sachs itself had a note titled "the Curious Case of China's Capital Outflows":
China’s balance of payments has been undergoing important changes in recent quarters. The trade surplus has grown far above previous norms, running around $260bn in the first half of this year, compared with about $100bn during the same period last year and roughly $75bn on average during the previous seven years. Ordinarily, these kinds of numbers would see very rapid reserve accumulation, but this is not the case. Partly that is because China’s services balance has swung into meaningful deficit, so that the current account is quite a bit lower than the headline numbers from trade in goods would suggest. But the more important reason is that capital outflows have become very sizeable and now eclipse anything seen in the recent past.
Headline FX reserves in the second quarter fell $36bn, from $3,730bn at end-March to $3,694bn at end-June. While we estimate that there was a large negative valuation effect in Q1 (due to the drop in EUR/$ on the ECB’s QE announcement), there was likely a positive valuation effect in Q2, which we put around $48bn. That means that our proxy for reserve accumulation in the second quarter is around -$85bn, i.e. the actual “flow” drop in reserves was bigger than the headline numbers suggest because of a flattering valuation effect. If we put that number together with the trade surplus in Q2 of $140bn, net capital outflows could be around -$224bn in the quarter, meaningfully up from the first quarter. There are caveats to this calculation, of course. There is obviously the services deficit that we mention above, which will tend to make this estimate less dramatic. It is also possible that our estimate for valuation effects is wrong. Indeed, there is some indication that valuation-related losses in Q1 were not nearly as large as implied by our calculations. But even if we adjust for these factors, net capital outflows might conceivably have run around -$200bn, an acceleration from Q1 and beyond anything seen historically.
Granted, this is smaller than JPM's $520 billion number but this also captures a far shorter time period. Annualizing a $224 billion outflow in one quarter would lead to a unprecedented $1 trillion capital outflow out of China for the year. Needless to say, a capital exodus of that pace and magnitude would suggest that something is very, very wrong with not only China's economy, but its capital markets, and last but not least, its capital controls, which prohibit any substantial outbound capital flight (at least for ordinary people, the Politburo is clearly exempt from the regulations for the "common folk").
Back to Goldman:
The big question is obviously what is driving these flows and how long they are likely to continue. We continue to take the view that a stock adjustment is at work, although it is clear that the turning point is yet to come. We will look at this in one of our next FX Views. In the interim, we think an easier question is what this means for G10 FX. This is because this shift in China’s balance of payments is sure to depress reserve accumulation across EM as a whole, such that reserve recycling – a factor associated with Euro strength in the past – is unlikely to be sizeable for quite some time.
In other words, for once Goldman is speechless, however it is quick to point out that what traditionally has been a major source of reserve reflow, the Chinese current and capital accounts, is no longer there.
It also means that what may have been one of the biggest drivers of DM FX strength in recent years, if only against the pegged Renminbi, is suddenly no longer present.
While the implications of this on the global FX scene are profound, they tie in to what we said last November when explaining the death of the petrodollar. For the most part, the country most and first impacted from this capital outflow will be China, something its stock market has already noticed in recent weeks.
But what is likely the take home message for non-Chinese readers from all of this, is that while there has been latent speculation over the years that China will dump US treasuries voluntarily because it wants to (as punishment or some other reason), suddenly China is forced to liquidate US Treasury paper even though it does not want to, merely to fund a capital outflow unlike anything it has seen in history. It still has a lot of 10 Year paper, aka FX reserves, left: about $1.3 trillion at last check, however this raises two critical questions: i) what happens to 10 Year rates when whoever has been absorbing China's Treasury dump no longer bids the paper and ii) how much more paper can China sell before the entire world starts paying attention, besides just JPM and Goldman... and this website of course.
Finally, if China's selling is only getting started, just what does this mean for future Fed strategy. Because one can easily forget a rate hike if in addition to rising short-term rates, China is about to dump a few hundred billion in paper on a vastly illiquid market.
Or let us paraphrase: how soon until QE 4?
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Lube up bitches, 'cause its going to hurt!
SH
Curious?!?!
China has a full fledged debt contraction starting, it needs to raise funds from any source possible to pay for all the measures they are taking to prop up their stock and construction markets. That means selling CB assets to pay for things.
It's just getting started, China has a long way to unwind.
so what's the forecast?
if PBOC does this for too long, they're going to further destroy their exports... seems like it's good be a rather careful and short term balance as liquidating to fund stimulus (indirectly through liquidity and rates) but also not strengthening the renminbi too much
if they sell too much to support stimulus and liquidity, it won't make cuz crashing exports will undo it. but if they do too little, exports won't matter when the economy and markets are in shambles.
That article was a dense tome to sift through, but well worth it if you can hang with the linkages. This is like an old school ZH article in a lot of ways (good ways). I like shit I still can't completely understand, even after several readings.
I believe it can be summarized thusly:
1. Chinese rats from a sinking ship, desperately clawing over eachother to get above the fray. "Sell everything and get me the hell outta this mess." In other words, there are very powerful people in China in some very deep shit. And the PBOC is selling USTs en masse to back-fill the hole of capital fleeing the country.
2. Pegging your currency to the dollar in the midst of de-dollarization is dangerous.
Point 1 I think we all understand at a certain level, and is probably the more important point. I'm not smart enough to weave de-dollarization into this theme, though.
<<This is like an old school ZH article in a lot of ways>>
Seconded. They changed owners but seem to have kept at least some of the old crack staff. It used to take me a half hour to plow my way thru an article, and when I got thru it my brain was full. He didn't hold your hand, that Tyler of old.
crap ... that's it
I'm buying all of the Vasoline stock I can get my hands on.
I just hope “God’s work” Blank-F has huge positions in Chinatown.
"offshore Treasury dealer Euroclear (aka "Belgium").."
...sounds like collusion to me..
but WTF do I know anyway?
f them belchish waffles and sprouts
It has to happen sooner or later..
Just wait until they announce 10K tons of AG..
..then the next trillion UST’s goes down the tubes and they won’t care,
and actually I am a bit amazed.. I grokked everything of the above.
apologies to R.A.H.
One way that slower EM capital flows and credit creation affect the rest of the world is via trade and trade finance. Trade finance datasets are unfortunately not homogeneous and different measures capture different aspects of trade finance activity. “
Well the good news is that TTIP and TAP will fix all of that Ha Ha Ha Ha Ha Ha Ha Ha Ha Ha
F me with a spoon
I remember lurking here a year before I could get a sentence to parse.
Anyone wanna play the shuffle game??? You know the game of follow the ball, where's the ball, go ahead place your bets, and pick a cup... It's a game of fool the guessers...
http://galeinnes.blogspot.com/2015/07/mouse-traps-galore.html
"...leaves Goldman speechless."
Don't worry,
you can still commit a crime without talking
Wow almost 250,000 reads on this article. It must be up in the top 10 all time on ZH (just guessing).
And this:
BRICS bank opens for operations in Shanghaihttps://www.rt.com/business/310321-brics-bank-begins-operations/
OH MY GOD ZeroHedgers. OMG!
Here comez the big crash. Hang on to your hats.
OMG!
I suspect they are simply raising cash and have been buying stocks directly from their own stock market without telling anyone.
And lets not forget that once the sanctions on Iran are lifted China owes Iran over 100 Billion USD's for oil... Lot's of reasons for China to be raising USD's right now.
"The big question is obviously what is driving these flows and how long they are likely to continue." whats so hard in understanding about 'selling' future worthless paper, usts, and buying gold on the cheap here lately, to back the NEW WORLD RESERVE CURRENCY? is everyone fucking clueless out there?
China owns a mere trillion dollars of our debt. The real liabilities are social security and medicare. We've got to jack the retirement age till 90. No other approach will work.
Now 330,000 reads!!!
i am amazed at the very american attitude taken by this article. "savings are bad" is the mantra of the day. china has accumulated a staggering war chest of savings (FX reserves and other government assets), and now that they are deploying a small fraction of that war chest people think they are panicking. if you think critically from the perspective of someone who saves for a rainy day, here are some alternative conclusions one can make:
1) capital outflows are from individuals and businesses, and they occur as capital controls are being lifted. this has been predicted, and even planned, by the central government because they acknowledged over that their FX reserves had become so large as to be a liability. if private people and companies are buying FX-denominated assets, that gives the government a coincident opportunity to sell their reserves.
2) china is selling treasuries because they have made enormous gains on them. having accumulated a huge amount of treasuries over the past decade+, with treasuries yields near all-time lows, and with the dollar at multi-year highs... it is perfectly sensible to liquidate some of the best-performing assets. or perhaps they think that yields will rise either voluntarily via the fed or involuntarily if the rest of the market decides to sell treasuries.
3) china's FX reserves drawdowns are significant, but a much smaller amount has been actually liquidated to buy RMB than any of the zerohedge or quoted bank analysis suggests. very simply, the FX reserves are (i guess) roughly half in non-USD assets. if the USD has gained roughly 10% over the past year, then that would suggest a roughly 5% drawdown (200 billion) is simply revaluation of the non-USD assets. this is emphasized because the western media always converts china's reserve reports into USD. if you reported the reserves in EUR, then i am pretty sure they would actually be up on the year. bottom line is that they have only done minimal RMB purchases to account for treasury/USD sales. there have certainly been *some* capital outflows which the government has happily traded back into RMB for, but it's been an entirely inconsequential amount.
They aren't panicking, it's an act of war. The target is the Eurodollar which is getting kicked in the teeth because all those trade imbalances won't get covered.
There is another point to be added:
4) China has concluded that their USD assets risk being worth substantially less (in real terms) in the future, which should come as no surprise to those who spend as much time on ZeroHedge as do I. So why wouldn't they try to maximize their return now, when all that does, apparently, is raise a few eyebrows amongst the cognoscenti? At the current rate, it'll be years after China's finished before any in Congress or this administration even notice, much less do anything (assuming there is anything to be done).
How much silver at current prices does 1 trillion dollars of those reserves buy? 50 years of world mining supply. China's calling the shots.
Obumbler needs to hose Kerry and put me charge of State
I might be a little shorter than Mr Ribbon Man, but I have way bigger pecks, tricepts, biceps, and toned abs….and maybe I am a better shot and have a slighly better tan than Vtlad. .. even though he is a couple years younger than me.
but I would not prefer to put on the kido and do some judo with him.
I have seen his soul... not unlike the 43rd pres liar and destroyer of the 4th Amendment....
..but I can never be orange enough to beat Boehner.
i'm done here
^^^THIS!!!! Very simply put, the exchange of real goods and services is the only thing that matters!!!
All those SNAP babies in the U.S. better start learning some tradable fucking skills!!!!
Now THAT is a worthy counter-point. Everyone here now understanding why good articles beget good discussion?
Put up an adult article and you get adult replies like this one. Green arrow.
I don't mind being the back-marker in understanding in threads like this one.
You cant taper a ponzi scheme. If you pile up checks and you don't cash them, you don't know how much real purchasing power is there regardless of the size of the pile. They might be half way through the real purchasing power.
You don't know. Nobody does.
Geez.. well considered thoughts.
China seems to be handling their situation and transition well imo. So far, I have not seen the Chinese equivalent of a trembling Hank Paulson scaring and threatening the end of the world. I also have not seen any Chinese versions of IndyMac that screwed its depositors big time..or a WaMu and so on.
Seems pretty normal to me.
They skipped Hank and went straight to, we will arrest and possibly shot sellers.
I don't think that is "Handling it" well.
#41
Maybe someone should have given Hank a gun. Hopefully he would think it was a hot dog and eat it.
The points are all good. One I thought especially needed raising is the last one. All this talk of a rate hike is probably just cover for the inevitable. The Fed knows China's selling, but wants to look to be in command.
Why not sell treasuries and buy cheap commodities like gold, more iron, coal, oil, etc. After all they're very cheap right now.
often wonder if China
beats the paper price down
then scoop up the physical..
works for me
Patience, Grasshopper
That's what I think they are doing; selling their paper while it's too high an dbuying gold an doil, copper, etc. Converting paper into hard assets they can actually use for construction, military, etc.
Just read a line or two and it reminded me of a book I read a little of.
USSR owned the DDR(East Germany after WWII) and they wanted control even after Stalin Died. There was a German Communist who fleed to Moscow who was swiftly put in place in East Germany after the victory. They wanted to use the old Communist Germans, but created a fake 2 party system that they then just dominated and even broke laws (Like the USA). Then They had Brain Drain with the open borders the smartest people fled, they couldn't really assemble factories very well in USSR even with plans from what I heard.
But then the communists started taking wealth & property and they disassembled the factories or industrial activities and shipping them to Russia or parts of USSR.
Sounds like Free Trade in the USA. The wealth gone(Capital), Technology gone to China, Skilled People now in China with the R&D, Factories now in China.
Almost like the Communist took over in the West under Bill Clinton or H.W.Bush.
Yeah, those frick'n consumers, huh? Can you beleive that they REFUSE to purchase products at double the price that are made in the USA?
Tip: Markets do what consumers demand. If consumers demanded that everything that they buy be made in the USA, no matter the price, they would be made in the USA. At the present time wages in the USA are too high compared to slave labor wages in China. Also, the extreme government regulation burden in th USA drives prices up and consumers to purchase less expensive made in China products.
Of course there are exceptions to this but in general the global economy will drive US wages down because people/businesses continue to refuse to buy more expensive, made in the USA, products.
Yes. read Moldbug. America is a communist country.
Totoaly ironic in light of my school days in the 70' and 80's...nuclear drills in the hallway (cover your head with your books, line up against the lockers), commie this commie that, the RED SCARE we learned about....haha...the commie's get the last laugh cuase folks, what america is now, is a commie ideologocal society. These are commie code words: egaltarian, equality, progressive, democrat, political correctness, diversity...so may more. feel free to add on anyone.
wow A-Man a really good read.. thank you
"FX reserves had become so large as to be a liability"
you are a pro
but y'know maybe it will be negative interest time for them... :-D
+1, excellent counterpoint to an excellent comment to an excellent article
+1 for "...attitude taken by this article. "savings are bad" is the mantra of the day"
+1 for"this is emphasized because the western media always converts china's reserve reports into USD. if you reported the reserves in EUR, then i am pretty sure they would actually be up on the year"
though... "but it's been an entirely inconsequential amount"
it does have consequences if it's enough to reverse the course of the FED and unleash QE4. the usual search or worry about the one straw that is too much for the camel's back
as I am fond of writing here since years, the monetary game becomes hotter only when the the talk is about FX Reserves
it does have consequences if it's enough to reverse the course of the FED and unleash QE4.
I'm not convinced that the Chinese haven't already obtained permission by the FED for these actions, and more... There is this consensus dominant view that the U.S. and China are diametrically opposed, but most of the conflict I see is little more than bickering between professional wrestlers.
+1 MachoMan. well, professional wrestler aren't that different from nuclear-armed superpowers: in both cases, smashing the face of the opponent too hard is a lose-lose scenario
yes, I know, professional wrestler decide beforehand who is going to win, and what, and how, and that is where this simile ends
(nevertheless, the Soviet Union lost, remember? ergo long live the Russian Federation)
opponent and competitor are not the same as enemy-to-the-death
LOL!!! What exactly did the Soviets lose again? I see a great number of real assets in Russia today.
Looks like the yanks will get to choose between another Bush/Clinton, but then again that's freedom not an oligarchy right?
The exchange of real goods and services is the only thing that matters so all those SNAP babies in the U.S. had better learn some tradable skills in a fucking hurry.
and are those assets at the disposal of the ruling Communist Party? no. so the One Party lost, and so the SU ceased to exist
methinks that many on this blog make too little difference between a State and the People
Again, LOL!!! "At this point, what difference does it really make?"
yes, there are certainly global consequences to China's trade/current account surplus and FX transactions; i didn't mean to imply otherwise.
all i meant is that the amount of USD/RMB traded was inconsequential from China's perspective; i.e. they aren't panicking about selling a couple hundred billion USD. if anything they are happy to do it at a measured but significant pace.
In response to americhinaman:
Para 1: FX reserves are not savings. They are borrowings. The PBOC has to borrow yuan to purchase FX.
1. Capital outflows may have been predicted, but they are certainly not welcomed.
2. China bought most of the treasuries as the yuan was appreciating against the US$, so the treasuries have mostly declined in value against the yuan that was borrowed to purchase them.
3. (a) It is almost certain that over two thirds of China's FX are in USD assets, not 50%.
(b) a year ago the RMB-USD exchange rate was 6.2:1, exactly the same as today, so the USD has not gaines a penny against the yuan, let alone 10%.
Not all fx reserves are borrowings. You will also accumulate fx reserves from a positive trade imbalance. That a small part of that trade imbalance is leaving china or more specifically leaving paper asset and moving to physical asset ( in real estate and gold ) is no great surprise. I thought I was an article on ZH that said china was also wanting to transition from a producer/exporter economy to a domestic consumer economy.
Freemoney addresses a couple of these, but i would like to clarify INLINE for anyone who is confused by these comments.
In response to americhinaman:
Para 1: FX reserves are not savings. They are borrowings. The PBOC has to borrow yuan to purchase FX.
FX RESERVES ARE SAVINGS. YOU CAN ARGUE WHETHER THEY ARE THE GOVERNMENT'S OR THE CITIZENS/COMPANIES', BUT NOT WHETHER THEY ARE SAVINGS. TECHNICALLY, THE PBOC HAS PRINTED RMB TO BUY USD AND EUR FROM INDIVIDUALS AND COMPANIES WHO HAVE PROFITED FROM DOING BUSINESS ABROAD AND HAVE... FOREX SAVINGS! INDIVIDUALS AND COMPANIES ARE INCENTIVIZED/REQUIRED TO CONVERT THEIR FOREX SAVINGS INTO RMB. YOU CAN ARGUE THAT THESE SAVINGS REALLY BELONG TO THE PEOPLE/COMPANIES OF CHINA, SINCE THE ACT OF BUYING FX LOWERS THE VALUE OF THE RMB AND TAKES AWAY PURCHASING POWER, AND THAT SOME THEORETICAL DAY IN THE FUTURE THEY SHOULD SELL THE FX AND BUY BACK THE PRINTED RMB, BUT WHO KNOWS WHETHER THEY WILL.
ANOTHER WAY TO RECOGNIZE THAT FX RESERVES ARE SAVINGS IS THE FOLLOWING THOUGHT EXERCISE. IF THEY ARE SIMPLY PRINTED DEBT WITHOUT THE BACKING OF SAVINGS, THEN WHY DON'T ARGENTINA, ZIMBABWE, PIIGS, ETC. ALL PRINT LOTS OF CURRENCY TO BUILD UP ENORMOUS FX RESERVES? THE REASON IS THAT THEIR COUNTRIES DO NOT HAVE THE PRODUCTIVE/PROFIT CAPACITY TO SUPPORT DOMESTIC CURRENCY PRINTING TO BUY FOREX. THEIR DOMESTIC CURRENCY WOULD DROP IN VALUE FASTER THAN THEY COULD ACCUMULATE FX RESERVES... THINK ZIMBABWE.
1. Capital outflows may have been predicted, but they are certainly not welcomed.
THEY ARE WELCOMED AT THE PACE THAT THEY HAVE BEEN HAPPENING. IF THEY WERE FORCED TO SAY SELL 1 TRILLION USD IN A YEAR TO SUPPORT THE RMB, THAT WOULD BE A PROBLEM. A COUPLE HUNDRED BILLION IS FANTASTIC... A PACE OF 20 YEARS TO COMPLETELY CONVERT BACK TO RMB (IF THEY SO CHOSE TO DO SO) OR PERHAPS A PACE OF 10 YEARS TO GET DOWN TO A MORE "MANAGEABLE" 2 TRILLION USD WORTH.
2. China bought most of the treasuries as the yuan was appreciating against the US$, so the treasuries have mostly declined in value against the yuan that was borrowed to purchase them.
CHINA NET PURCHASED BOUGHT TREASURIES AT YIELDS FROM 20% DOWN TO ABOUT 2%. THE INTEREST HAS BEEN COMPOUNDING FOR ABOUT A DECADE OR SO. LET'S SAY THAT THEY AVERAGED 5% YIELD ON THEIR TREASURIES (THIS IS SUPER-CONSERVATIVE... MORE LIKELY THEY NETTED 7-8% ON AVERAGE), OVER AN AVERAGE LIFE OF 10 YEARS. AFTER COMPOUNDING AND REINVESTMENT THAT'S A 63% GAIN I.E. 1.05^10 - 1. USDRMB HAS DROPPED ABOUT 25% IN THE LAST 10 YEARS. LEAVES A GAIN OF 38%. ALSO YOU HAVE TO NOTE THAT SINCE THESE ARE ACTUALLY DEDICATED FX RESERVES, THE ALTERNATIVE WOULD HAVE BEEN TO BUY EUR OR JPY SOVEREIGN DEBT (NOT MANY OTHER COUNTRIES WITH MARKETS DEEP ENOUGH TO SUPPORT THE LEVEL OF PURCHASES). I'M PRETTY SURE THOSE HAVEN'T DONE AS WELL.
3. (a) It is almost certain that over two thirds of China's FX are in USD assets, not 50%.
IF SO EVEN BETTER FOR THEM FROM THE PERSPECTIVE OF HOW MUCH THEY HAVE GAINED. I DON'T KNOW FOR SURE, AND I DOUBT ANYONE OUTSIDE OF A HANDFUL OF CHINESE LEADERS KNOW FOR SURE.
(b) a year ago the RMB-USD exchange rate was 6.2:1, exactly the same as today, so the USD has not gaines a penny against the yuan, let alone 10%.
FROM THE CONTEXT I THOUGHT IT WAS CLEAR THE USD'S GAIN WAS RELATIVE TO A BASKET OF NON-USD CURRENCIES. FOR EXAMPLE, THE DXY HAS GAINED ABOUT 20% IN THE PAST YEAR (ROUGHLY THE SAME AS WHAT THE USDEUR HAS GAINED). SO IF THEY HAD 4 TRILLION USD OF CASH UNDER THE MATTRESS SPLIT 50/50 IN USD AND EUR (OR DXY BASKET), THEN THIS YEAR THERE IS A 10% LOSS IN USD (400 BILLION) OR 10% GAIN IN EUR. BUT IN THIS ILLUSTRATIVE EXAMPLE, THE LOSS OF 400 BILLION USD VALUE IMPLIES A PURCHASE OF.... 0 RMB.
amchina,
thank you for your indepth reply, i learned alot.
Also if they are slowing down on exports to the US then China would also need to look at diversifiying their horde. Russia, south Asia and eastern Europe may be the next positions they would think of expanding into, could even be some of Africa. Easiest way to do that is to not roll over some of the more profitable US treasury positions.
I think I have a note here from a guy named Greg Morse or something... he said Euroclear was put together my part of JMP.
"Brussels Office of JP Morgan owns & created Euroclear."
..good observation
JPM.. just a typo like often happens on threads like this..
but FU Jamie Dimon anyway.
Euroclear.. Everclear.. I will take the latter and put it in my Sangria.
..watch out for us little f's... big dude....
..jet fuel
"He didn't hold your hand, that Tyler of old."
Exactly. Put on your big boy pants and try to keep up. I used to consider it an accomplishment if I understood 100% of an article the first time through.
Apparently there are still some lurking about 'round here who agree.
I got through the article too. When I first started reading here over 4 years ago, that would have been impossible with my non financial background. I've learned a lot here. And yeah, the older articles didn't have training wheels.
Yep...a family member of mine recommended ZH after I mentioned that I wanted to raise my financial IQ. This is the type of article that would, and still does, take me 3 or 4 reads to wrap my head around. The red meat articles were fewer and farther between back then.
ZH is like a library with an open bar and hookers in the back. It's good to see that the librarians are still busy.
and topless
But with pasties =/
"a library with an open bar and hookers in the back" -- Now that's a business model I can get behind!
When I first began reading ZH I had to refrence 10 acronyms per article, at least. Then monetary theories. Then, you name it. I have no background in finance, but eventually caught on. I agree that this article is remenicent of those that hooked me to this site. I still read ZH for the diamonds in the rough, like this one. I miss doing research to understand the subject matter of this site.
Yep, ND, I consider these articles to be like a mini thesis....love that I can't fully comprehend. Makes me read more so I can.
What "owners"? ZH has never had owners for them to "change"
Those rumors started when readers noticed the ABC Media Ltd. at the bottom of the page.
“China’s services balance has swung into meaningful deficit,”
..not like that means anything, really
Do the Japanese thing.. Kabuki
They all look alike, don’t they?
Gosh.. sorry.. I have some Korean relatives.
gotta admit that statement made me a little nervous. Glad Tyler chimed in (..but still would like more clarification)
Crud.. how much do you need to know that something about the dollar is starting to fail?????
So the "ABC Media" reference at the bottom of your pages is meaningless then right? <eye roll>
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// //Newsflash you have "owners"
it's called an offshore holding company for legal liability purposes. And here is the non-eyerolling "newsflash" - if ZH had "secret" owners they wouldn't be disclosed on the front page
Great to see you here TD. I've been around for a while, first as Falun Bong, and I remember the good old days, Chumbawamba etc. You should chime in more often, keep up the good work
Many of us miss the early days of Fight Club, and this article reminds us of why we come here.
#41
Legal entity = the system has leverage over you.
Hence, the misdirection / redirection, to dissipate any leverage.
Ya know, if you would have put a footnote (1) explaining ZH is not in any way affiliated with ABC Noooz we wouldn't have to go through this every six months ;-)
let's compare abs and see who can take the punches.
:-)
I told TD by personal message that 2015 would be the BIG YEAR in early January. I seem to have weird visions around that time. I just hope it actually shows up in the numbers on the BIG SCREEN when EVERYBODY'S WATCHING. Not that it matters, the market is such a lagging indicator now.
Newsflash for nuke ISIS now: Your account is "deleted"
http://www.zerohedge.com/users/nuke-isis-now.
Well there is a Santa Claus after all.
No owners? You mean ZH is some kind of hippie commune sort of thing??!! I freaking knew it!
yes that's why i luv this site :) !
My favorite is "Brown Acid Day."
I think the chinese r getting ahead of the run for one. But to a more delightful tale the western bankers and their fraudsters arte manipulating the gold price? What are ur thoughts on that. I personally think gold will hit 5000 a try ounce by sept 2016. I pwrsonally think they r manipulating the price , hence driving it down to then buy it up a a reduce price like I can c the price of gold hitting the 1050 mark but that is paper asset gold not actual bullion. That is why the Russians and the chinese have been buying actualo bullion. Its only my un solicited oppinion. Keep up the great work . You r a definate godsend when it comes to deconstructing neo-liberal con jobs at the best of times. These modern day gangsterf/banksters/hedge fund managers got nufin on Capone, Luciano or Malone. Yesterdays news gets wrapped in todays fish.
You must be WAY smarter than I am. It usually took me three hours just to google terms they were talking about [and that was just in the comments!], let alone read the article. [fuck, I used to have to pull up excel just to comment.]
The interns currently running it need an old school dose of Zero Hedge to compare with the current pablum they feed us.
ORIGINAL TYLER DUDEN, please look at what you have wrought...unrefined, shapeless, and nearly unuseable.
In other words, some Chinese Big Boyz are getting out now, before the muppets head for the exits.
It could be for hard assets. It could also be that they are writing down all the vacant cities and other forms of malinvestment. That would suck up trillions.
my gap..I get it, they dump treasuries. But, what are they getting in exchange? More dollars? Then what?
Hard assets especially gold & silver.
Can't be. Spot prices of PMs have not changed.
They are spending the BIG amounts of US dollars on something, but what?
Paying down the international debts of their third world allies maybe?
Fuel for the war machine....
They go short leveraged via paper and suck up the real thing for pennies on the dollar. They cover their shorts at lower prices, have the metal and are still even (or likely positive, given the volumes on the CONeX). But that's just my own hypothesis, we'll likely never know who the big shorts are.
kilo bars of Gold
99.999
I third No Debt - like old times, this article makes my head ache, but it is worth it.
Some of the older articles on how the market really works, and how HFTs fuck around in the cracks, and some of the Nanex analysis would take me three reads and a headache, but they were worth it.
My question is where are the UST dollars going? The AIIB? US real estate? Gold in Hong Kong banks? Or just PBOC balance sheet, such as it is.
They are converted to RMB
So they sell UST, get dollars, sell dollars for RMB... To what? RMB pegged to the dollar. They burning those RMB to avoid deflation? Hording them to recapitalize banks?
My question is where are the UST dollars going? "
Round trip. CCB cashes treasuries to bail out stock market - buys stock from current sellers who then park proceeds in US treasuries...lol!
If I'm right, you should see short dated UST bid up while longer stuff gets sold.
Just a theory, mind you. Not like I actually know something...heh.
They're going right back here, eventually. Which means monsterous inflation on land, houses, big capital stuff. Which we're already seeing.
All of which is like an archer pulling on the string to launch an arrow to the sky. We're about 100 feet from the bow...we're headed up, and we all know where our ultimate trajectory will be.
Thing is, the archer is standing on the side of a Grand Canyon cliff, and that arrow is going to fall far more than it ever went up.
It doesn't come back as inflation if they are buying PMs, or are plugging leaks in their own economy. Think about writing off all those vacant cities, and having to recapitalize the zombie banks holding that paper.
That is the beauty of gold, and why it's such a good store of wealth. It soaks up excess liquidity without creating demand for something else.
Old school ZH was more like nothing was sacred...blast the bankers...blast the fed...blast china...blast russia...it didn't matter...all that mattered was the ideas in the fight. Those days are long gone or they never existed. To fit in today, please be pro-gold, pro-Putin, pro-China.
China is dumping treasuries 7 years too late. So let the dumping continue. Let them continue to fake their gold production numbers and send it straight on the PBoC books. Whatever. Capital is not fleeing China fast enough...and that is the problem. I can't wait until the gold numbers double next month. This sh*t will get surreal.
The game looks like it is finally starting...took long enough.
BS, 4 yrs 51 weeks and a year nearly of lurk and read. We had real arguments at that time and had our share of folks who would not fit in, just like we have now, pull up the big boy pants and get in..
I'm with you on that. One just has to realize that no one is perfect or makes perfect moves. Another thing very few take into account is the gold and commodities dump Sunday night was in futures not in the real stuff. So what does that really mean ... panic or outright manipulation? Obviously manipulation. And who has the wherewithall to accomplish such a sell-off feat? The sell off was in paper only, the futures market. Obviously those in power or in the shadow of power who would not arouse any regulators. (oh, it's just Fred again) I also doubt there were that many buyers to pick up that large a dump on CME and COMEX futures paper. There also had to be someone there who would and could gobble up such a large dump and not told that their buying power stopped at $1000. And certainly the bids at that price and for that large a volume had to be already put in place for the sale to occur. After all, if there are a 1000 bids sitting there, I doubt there were even that many at only $1 below the opening, those will get filled and gobbled up in the same split second that the dump occurred and the price drop would have only been $1 having cleaned-up every existing bid rather than $40+ dump.
Bottom line ..... the dump was needed to happen. As in the past, it was a great way for existing shorts to also get rid of their short positions and perhaps even bury an enemy by setting up that enemy to help in selling short and thereby strap him with all of the shorts while you, the prior shorter just closed your shorts out at a profit.
And who has the wherewithall to accomplish such a sell-off feat?
Umm, dunno, it couldn't have been because CitiBank and JP Morgan cornered the market. After all, they're market makers. They wouldn't do something as underhanded as that!
*Fuck* forgot /sarc tag.
"China is dumping treasuries 7 years too late." You are correct, but China has always been very slow and careful not to upset the USA:-) The irony is that what pushed them over the edge was the USA itself and Obama. By pushing Russia into China's arms, China finally got the confidence for obvious reasons: military technologies they can get from Russia make them much stronger. They can even create a kind of "petroyuan" with Russia. With oil and gas from Russia, the USA can never cut China off from energy resources (which was their main worry). It was obvious from Chinese newspapers. They were so careful even in their critics of the USA, but once Russia was firmly on their side, they started blasting the USA every time they can. From then on, you can watch and read in all state media in China: USA - bad. Russia - good. It can't be more clear. And it gets more and more obvious. This year on Russia's V-Day, Chinese troops were marching in Moscow. And in return, Russian troops will be marching in China in September, as China also wants its huge military parade and celebration:-) You can watch this hilarious video made by the Chinese. The wording is still very careful, but the meaning is obvious. And especially notice how the superman (representing the USA) gets pushed aside. We had a funny title for this video in my country's newspaper: "Message from China: USA gets pushed aside. Uncle Xi goes to Russia. He has much more fun with Putin." https://www.youtube.com/watch?v=_dtz1WtEpB4
As a capitalist I salute China for it out-foxing our War Criminal Government. As a Human Being, China still has a long way to go to be a legitimate world power, but I'm hoping they're a much better hegemon than the US has been over the last fifty years.
well, I don't think China really wants to be a "hegemon" on its own. Yes, you never know, but perhaps the world will be luckier this time because Chinese do have a more "collectivist" nature. It can be also seen in their dealings with Russia and it seems to be that at least so far they seem happier leading "together with Russia". There are things Russia does much better, like diplomacy and it is usually Russia, who is luring other countries to this alliance and China is waiting in the background. China does not seem to be so skillful with "soft power" so far. And of course, Russia is the one who is bearing the brunt of the confrontation with the West. Also when the new Chinese bank AIIB was opened, many Western countries joined, but China still wasn't happy and there were panicky titles in Chinese newspapers like: "Why Russia does not want to join our bank? What is with Russia, why arent they joining our bank?" And great happiness when Russia finally joined. Once again, Russia was more important to them than all the others.
Moreover, Russia is very clever to keep propping up the rising India (especially militarily) as a counter-balance to China and China seems OK with this idea. India will now also be accepted to SCO. Moreover, there are countries, which would never be willing to accept the leadership of China (for historic reasons), but they are quite happy to accept the leadership of Russia: one example is Vietnam. Actually, many countries are willingly to join this alliance just because there are two leaders (China and Russia) and gradually perhaps three leaders: China, Russia, india - and not just one. Two or three leaders seem a safer and more balanced bet. Russia certainly does not want another unipolar world with China in charge, so they will be pushing more and more for multipolar world - i.e. more superpowers deciding collectively.
One of the symbols of their amazing cooperation and symbiosis is the new Nicaragua Channel, which will be built and co-owned by Russia and China.
Hey, NSA, I know you just keystroked what I typed a bit ago. I know you recorded it. Every bit of it is heart-felt. None of which will be typed and posted here, because you've already come to my doorstep. Congrats on chilling of the first amendment. I consider you traitors to america. When shtf, you will have no support from me, far be it, I will revel in every story of you dying of slow affixiation, drowning and/or starvation. I actually look forward to it.
[Sorry, Zero Hedge, my contempt for those in civilian goobermint 'service' knows no bounds.]
Think about Corporate America in the period from 1930 - 1933 for some solid perspective.
Insolvent companies were selling everything that was not nailed down in an attempt to remain solvent. They were selling top AAA rated bonds, solid income sources, in order to realize short term goals of staying liquid and not becoming insolvent.
Yes many of those corporations were ultimately bankrupted as the cancer from within ate them alive. This is what happens in Deflationary Depressions.
The PBOC is just another corporation and this is their 1929 moment. And it is just a harbinger of Bond Market collapse as the plethora of Bonds will depress prices.
China is cooked and, unless they stop selling US Bonds, then the USA is also cooked.
Hey Janet Yellen...Be certain to raise those interest rates. You cannot afford to lose your political credibility, can you?
And if we start QE again in a vain attempt to reflate the Chinese Bubble it will be far too little and way too late. Just where in the hell did all of that OE liquidity go anyway?
Hopefuly the American Public enjoyed buying that cheap Chinese shit that you did not need. Those $800 Billion Trade Deficits have to be financed somehow.
We imported Chinese shit and exported our inflation to pay for it.
Now it is time to pay the piper.
Looking forward to September...
Awwwwww..Somebody is butthurt because they do not like history.
Too fucking bad. History does not repeat but it rhymes.
Both China is going to be flushed down the toilet and so is the United States.
And I will be celebrating the collapses of BOTH dishonest and corrupt Governments.
Yes, but are they selling the personal RE is Vancouver, Sydney etc?
If not, but rather the prices go into overdrive then you know it is really crash time. Since i live in a well-off Chinese community, I will know the answer pretty soon.
I also am looking for forward to September.
Cheers
"Yes, but are they selling the personal RE is Vancouver, Sydney etc?"
Most of the Chinese here in Vancouver seem intent on staying, but how much that represents in terms of personal wealth is another matter. If you threw all your eggs into one basket (home in Vancouver) and China blows up, why on earth would sell out and go back? To do what? Pay off your creditors? You're already in a better place and beyond their reach. Then there's your kids. You're going to expose them to that? Don't think so. We may see a sluggish market as buyers thin out, but a rush for the doors is unlikely IMO. Best bet - a sideways roll until things get back to "normal" whatever that is.
There will not be a "normal" again...in your lifetime or in my lifetime.
If you survive this, and that is actually very uncertain, your life, as well as mine if I survive this, which I am not betting on as I do not like the odds, will be fundamentally and profoundly changed.
You had best accept that and mentally prepare for the abysmal and dismal life to which you will end up becoming accustomed.
"You had best accept that and mentally prepare for the abysmal and dismal life to which you will end up becoming accustomed"
I plan on living until I'm dead. What's your strategy?
I'll let Meredith Call take it from here:
https://www.youtube.com/watch?v=Tq8Vpgu6JAY
My plan you ask?
I am just another dead man walking....just another Zombie who is pretending to be alive.
But at least I am not pretending, that I am not pretending to be alive.
(Mellow soothing music. Try this... Jon Anderson with Vangelis, "Olias of Sunhillow". It will sooth the soul. I need the music.)
https://www.youtube.com/watch?v=0Q18QAT6LTo
If word gets out (probably already has) that it can be demonstrated that China's quiet dump is a lot more than most think, then in my opinion, Janet will have to monetize that debt to hold rates from rising as they would otherwise have to rise in order for the dump to clear. A race to the exits, therefore, will force the FED to monetize rather than allow yields to rise. Hence hyper inflation. Its at this moment Janet is probably wondering how many friends she really has to assist her with this endeavor. My guess, given most will shoot first and ask questions later, probably none.
A race to the exits, therefore, will force the FED to monetize rather than allow yields to rise. Hence hyper inflation.
Correct.
She cannot raise rates. The Phoenix Capitol article is correct...
http://www.zerohedge.com/news/2015-07-21/three-huge-reasons-why-fed-cannot-let-rates-normalize
According to Dr Jim Willie, Yellen has already been spending $1 Trillion PER QUARTER,
https://www.youtube.com/watch?v=80K0z9rjQ0g
OUR GOOSE IS COOKED.
+1. you know when you've come across something really good. its not another aggregate sales job about the end of civilization as we know it, and that we need to buy some survival shit. Its math that attempts to delineate the impacts on both sides of a complex trade. It reminds me of an accounting treatment Hussman gave on this site a couple years back. And you're right, they are 3 or 4 read tome's and when you're done, you're brain feels a lot bigger than when you started. Like some of the course work in grad school. Taxing but rewarding because nothing really good ever comes easy. thank you for emphasizing this. I want to see more of it.
And where are they going to evacuate to? US. US Dollar bull. They'll sell all their gold. Yellen will raise interest rates to kill Obama, just like Bernanke killed Bush. This will also kill China. Deflation before inflation.
It was a bit to read. The question I have is how long before it all unravels in China? How much do they have left to sell?
Long term I think the US, and the USD, become like the UK and Sterling post WW1, however, dedollarisation would require an alternative. Recent events, while nor surprising mean this is unlikely to be RUB, EUR or CNY, none of them look stable enough to take on the mantle.
"$3,694 billion"
Is that something like 3.694 trillion? Someone correct me, am I wrong? WTF is this billion shit?
Read like a lot of double-talk to me.
Surplus is going up $40B per month. They don't want USA Treasuries so they're selling them. They bought 600 tons of gold.
What's amazing is the convoluted nonsense JPM and Goldman are going through to analyze and illustrate what is going on ... and then can't figure it out.
It looks like we're still going broke a lot faster than China.
makes sense unless china is selling usts to reduce counterparty risk in the dollar market. the usa banks did something similar to japan to extract the wealth of japan before the bubble burst, kind of like selling mortgage backed securities while taking an equal short position. if they are using the cash from treasury sales to get out of the dollar market to reduce their exposure to private dollar debt then the chinese are ready to decouple from the dollar and let the yuan float.
since we don't know much about yuan trade or the gold assets of china the move out of usts is further confounding.
it could just be a declaration of war since china's original strategy for dollar accumulation was to prevent another 1997 raid on asian currencies. if they don't need dollars because the risk of a raid on the yuan by the zionazi western banks is covered by other means(gold and yuan trade) then the west is fucked. if it is a panic liquidation to prevent collapse of the chinese economy the west is still fucked with a world drowning in dollars.
as i have stated before the usd needs a significant correction. the euro is on life support as is the yen. the yuan is the only vehicle left and the chinese are on it whether the usa or the fed likes it or not since they are obviously buying everything that is hitting the market at par.
They don't have the bond market to be a reserve currency.
Liquidity in the yuan just isn't there for that.
Maybe some day, but not imminent.
Gold reserves may alter the balance of power, but your currency would be so overvalued that your exports would be zilch.
I don't see any silver lining in any of this, for either country.
again, the unknown are the actual numbers for yuan trade. china does not want to be a reserve currency because of the unwanted consequences. they don't want to rule the world. they do want a stable currency. gold does that for them thus enabling a sound trade structure, first within the brics framework and then globally. the chinese have said repeatedly over the last few years that their strategy is to domesticate the economy. a strong yuan enables that. dedollarizing in the meantime enables a smooth transition without dollar interference.
Buying USTs is the mechanism that makes a dollar peg possible. Decreasing your position in USTs makes your currency appreciate. Which is just about opposite of what they would seem to want right now.
A very curious situation, the significance of which should not be underestimated.
You are, I think, correct. They are in very, very deep doo-doo if these numbers are correct.
I did an article today on China's dumping of t-bills over the past 5 quarters, and the rise of the dollar from 81 to 97 during the exact same period.
http://tothedeathmedia.com/more-important-than-chinas-gold-announcement-u-s-banks-scared-of-dollar-dumping-as-buyers-dry-up/
Dovie'andi se tovya sagain (It's time to toss the dice)
Got Karatbars?
"f PBOC does this for too long, they're going to further destroy their exports... seems like it's good be a rather careful and short term balance as liquidating to fund stimulus (indirectly through liquidity and rates) but also not strengthening the renminbi too much"
Your theory doesn't add up. China could just apply QE to provide liquidity and also help devalve its currency to support exports. China would only need to sell of UST to support trade deficits. Considering China is the worlds Manufacturing exports that seems hardly the case.
My guess is that the UST's held in Beligum will show up someplace else. Perhaps China is worried about EU bails-in or an EU meltdown and simply wants them out of the EU. I recall that China use to have its USTs in London before moving them to Beligum. Pehaps China has not sold any of its USTs and they are just being moved elsewhere.
Who's buying?
And why?
Those who are divesting out of the Euro.
Because the Euro is cooked.
and this is the reason the article's title is "China's Record Dumping Of US Treasuries Leaves Goldman Speechless"?
Draghi's Merry Band of NCB's is, for good or bad, in full QE mode. And not finding enough to buy
they would applaud and cheer if there were enough Chinese divesting out of the EUR, at this stage and moment
The US Dollar is the last domino to fall. It has been planned to fail.
Right now there are people in the EU that see the weakness in the Euro as a currency, not just because of Greece, but because of FRANCE. The political winds are changing.
Thus major moves from the Euro to the US Dollar has been happening. The coupling EUR/USD declines as a result of this. This decline is indicative of the move out of Euro and into US Dollars. That is the empirical Evidence and you cannot argue the decline. It has happened and profundly is happening.
The US Dollar is the prettiest pig of the bunch, as far as currencies, or Bonds, are concerned, and it is STILL A PIG.
But do not fret too much. The US Dollar and the US Bond Market is doomed.
Listen to Dr. Jim Willie, sir. You will see it. (I know he rants a bit. He is understandably angry. Aren't you also? But he is informative.)
https://www.youtube.com/watch?v=80K0z9rjQ0g
(A Trillion per QUARTER??? We are so screwed.)
maybe the Cinese govt is deleveraging - even as it encourages its average citizen to lever up. Getting ready to scoop the domestic chips, but at what cost to social stability??
Also - hyperinflation in the US in 3...2...
outflows into gold bullion vis vi Belgium Euroclear to the tune of USD 400 billion, watch and wait
outflows into gold bullion vis vi Belgium Euroclear to the tune of USD 400 billion, watch and wait
Communist party has made numerous descisions based on the concept of social stability.
They fear their own people and know that when they can't deliver anymore they will have a huge problem, and fast.
I doubt they have thrown caution to the wind on social stability, they are preoccupied with it.
This is either to achieve an ends or it is desperation.
like I said, the Fed is truly foolish if they think they have any room to raise rates near term (possibly not even long term)...
"we dig our wells to drink, we cultivate our fields and eat... what is the strength of the emperor to us?"
"Ross Norman, a veteran gold analyst at brokers Sharps Pixley, said sellers dumped 7,600 contracts covering 24 tonnes on the Globex exchange in New York in a two-minute span after it opened late on Sunday night.
"A further 33 tonnes were sold at almost exactly the same time in Shanghai. The combined hit of 57 tonnes in such a short period is an extraordinary event in the world’s relatively small gold market"
http://www.telegraph.co.uk/finance/commodities/11752016/Speculators-smas...
'The squid' has 'no ink' to cover this ('China's Record Dumping Of US Treasuries Leaves Goldman Speechless').
In the original movie 'Batman', the evil guy ('Joker', played flawlessly by Jack Nicholson) stated that 'Gotham City' needed an ENEMA. He's right. It helps the recipient taking the large cock much more comfortable. Do giant life-sucking squids even HAVE anuses? I mean, besides the assholes who RUN this place?
Looks like China has descerned the real value of US Treasuries, and the "last fool" scenario is now being played out.
Keep stacking. folks!
Man, am I happy the US stock market isn't manipulated and everything is above board.
No big deal. The fed will gobble that shit up like Pacman. And boy is gold a silly fucking thing. Record buying and the price keeps dropping. I bet the manipulation job is so easy that a 27 year old non-Ivy Leaguer bangs it out each day before he starts his real work.
But but but, historical graphs involving the price of gold....um...um...ah shut the frick up. How does it feel not to live in kansas enymore toto...Maybe if all the marines click their high heels together three times, they can destroy the evil fricks that are ruining this country, breaking the rules of law and the constitution etc. Interesting, the enemy is in the marines own backyard, and they travel across the planet to guard opium plants in afghanistan, and the heroin is shipped to the USA and when people get adicted they go to pay for profit prisons and...ah never mind.
We are not only, not in Kansas anymore, we are not in the same universe. And watching people use historical graphs is almost hysterical if it wasnt so sad.
Mr. Yellen has been reported to have made several calls to Ben Shalom, begging him to re-activate the B-52 strike force. "STEP ONE: TAKE PRINTER OUT OF BOX."
https://www.youtube.com/watch?v=j2AvU2cfXRk
I agree with B7G - but the wheels have got to pop off of this sometime and woe to us all when they do.
I agree woe to us all. The people here who act as if it will be a good thing have probably never heard a shot fired in anger before. It will not be a good thing. Not at all.
Strangely, I've never heard ONE fired in anger.
I bet the manipulation job is so easy that a 27 year old non-Ivy Leaguer bangs it out each day before he starts his real work.
@ McDonalds
Exactly. This is nothing the U.S. can't CTRL-P away with ease.
Seriously.
China doesn't want a rate hike which it will get by default if the U.S. rises. Talking about selling treasuries should give the Fed pause to reflect.
Exactly, a rate hike fucks China... But more than the west? Tough call that one.
Sadly, this site is shutting down, but while it existed it consistently predicted the collapse of the 10 YR UST and skyrocketing yields on the horizon...
http://www.globaldeflationnews.com/10-year-u-s-treasury-index-yieldellio...