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China Enters Currency War - Devalues Yuan By Most On Record
Update: The Chinese currency complex is collapsing... 12 month NDFs just hit a new 5 year lows against the USD - biggest plunge since Lehman
S&P futures have retraced most of the day-session gains...
And Treasury yield stumble and have unwound Monday's losses...
And then there's this....
#China new loans 2x the size of Total Social Finance?! Do even THEY know what's going on post PPT & LGV bail-out? pic.twitter.com/QCkLWiI5TA
— Wild Goose (@TrueSinews) August 11, 2015
* * *
As we detailed earlier...
Chinese stocks are holding on to modest losses in the pre-open as, just as we have been warning, the PBOC weakens the Yuan fix by the most on record.
As we first warned in March, and as became abundantly clear over the weekend when weaker than expected export data as well as the steepest decline in factory gate prices in six years underscored the extent to which the engine of global growth and trade has officially stalled, Beijing has no choice but to join the global currency wars, as the yuan's dollar peg will ultimately prove to be too painful going forward. The renminbi has appreciated on a REER basis by double digits over the past 12 months, weighing heavily on already depressed exports. With multiple policy rate cuts having proven to be largely ineffective at resurrecting the flagging economy, the PBoC, despite the notion that this represents a "one-off"move, has been left with little choice. The bottom line: the danger posed by the country's deepening economic slump now definitively outweighs the risk of accelerating capital outflows - especially after the latter moderated slightly in Q2.
As we noted over the weekend, "one can repeat that the PBOC will have to lower rates again until one is blue in the face (even as out of control soaring pork prices make it virtually impossible for the local authorities to ease any more), the realty is that Chinese QE is now inevitable. Why? Because while the government is already clearly buying stocks thereby validating the "other" transmission mechanism, the only thing the PBOC still hasn't tried is to devalue the yuan. As global trade continues to disintegrate, and as a desperate China finally joins the global currency war, it will have no choice but to devalued next."
Recall also what SocGen's Albert Edwards said some five months ago:
We have long believed that China's growth and deflation problems will necessitate a devaluation of the renminbi in a strong dollar environment. There is mounting evidence that this process may already be underway as the currency falls to a 28-month low against the dollar…
In the current deflationary environment the Chinese authorities simply can no longer tolerate the continued appreciation of their real exchange rate caused by the dollar link.
The 1.9% devaluation sends the Yuan to its weakest since April 2013. Gold is leaking lower as the offshore Renminbi collapses by the most since Oct 2011.
PBOC weakens Yuan fix by 1.9% - the most ever...
Offshore Renminbi is plunging..
Quite a shocking move, clearly aimed at regaining some competitiveness, one must wonder, given the lackluster response in stocks whether this will merely exacerbate capital outflows... though it does make one wonder who was buying yesterday ahead of the news...
Given The IMF's delay decision, it seems that PBOC has decided maintaining a stable FX rate in the face of collapsing stock market is no longer in its best interest. Although the spin is already out...
- *PBOC SAYS YUAN EFFECTIVE FX RATE STRONGER THAN OTHER CURRENCIES
- *PBOC SAYS TODAY'S YUAN FIXING IS ONE-OFF ADJUSTMENT
- *CHINA TO KEEP YUAN STABLE AT REASONABLE, EQUILIBIRIUM LEVEL
- *PBOC SAYS YUAN EXCHANGE RATE DEVIATED FROM MARKET EXPECTATION
Officials say this is a one-off adjustment and we note that USDCNY has been trading 1t around 10 points cheap to the fix for 6 months.
- *PBOC PROPOSES TO EXTEND CNY TRADING HOURS
- *CHINA PBOC SAYS TO STRENGTHEN MARKET ROLE IN YUAN FIXING
- *PBOC TO PROMOTE CONVERGED ONSHORE, OFFSHORE YUAN EXCHANGE RATE
- *PBOC SAYS TO CONVERGE ONSHORE, OFFSHORE YUAN EXCHANGE RATES
And the reaction in gold:
* * *
1.Why choosing the current time to improve quotation of the central parity of RMB against US dollar?
Currently, the international economic and financial conditions are very complex. The U.S. economy is recovering and markets are expecting at least one interest rate hike by the FOMC this year. As such, the U.S. dollar is strengthening, while the Euro and Japanese Yen are weakening. Emerging market and commodities currencies are facing downward pressure, and we are seeing increasing volatilities in international capital flow. This complex situation is posing new challenges. As China is maintaining a relatively large trade surplus, RMB’s real effective exchange rate is relatively strong, which is not entirely consistent with market expectation. Therefore, it is a good time to improve quotation of the RMB central parity to make it more consistent with the needs of market development.
Since the reform of the foreign exchange rate formation mechanism in 2005, the RMB central parity, which serves as the benchmark of China’s exchange rate, has played an important role in market expectation and stabilizing RMB exchange rate. Recently, however, the central parity of RMB has deviated from the market rate to a large extent and with a larger duration, which, to some extent, has undermined the market benchmark status and the authority of the central parity. Currently, the foreign exchange market is developing in a sound manner, and market participants are increasingly strengthening their pricing and risk management capacities. The market expectation of RMB exchange rate is diverging, and the preconditions for improving quotation of the RMB central parity are becoming mature. Improving the market makers’ quotation will help enhance the market-orientation of RMB central parity, enlarging the operation room of market rate and enabling the exchange rate to play a key role in adjusting foreign exchange demand and supply.
2.Why did the central parity of RMB against US dollar of 11 August change by nearly 2% compared to that of 10 August?
We noticed that the central parity of RMB against US dollar of 11 August changed(in the depreciation direction) by nearly 2% compared to that of 10 August. The following two factors may be relevent. First, after the improvement of the quotation of the RMB central parity, the market makers may quote by reference to the closing rate of the previous day and, therefore, the accumulated gap between the central parity and the market rate received a one-time correction. Second, a series of macro economic and financial data released recently made the market expectation diverge. Market makers paid more attention to the changes of market demand and supply. Compared with the closing rate of 6.2097 Yuan per dollar in the previous day, today’s central parity depreciated by about 200 bps. The market still needs some time to adapt. The PBC will monitor the market condition closely, stabilizing the market expectation and ensuring the improvement of the formation mechanism of the RMB central parity in an orderly manner.
3.RMB exchange rate reform: what’s next?
Next, the reform of RMB exchange rate formation mechanism will continued to be pushed forward with a market orientation. Market will play a bigger role in exchange rate determination to facilitate the balancing of international payments. Foreign exchange market development will be accelerated and foreign exchange products will be enriched. In addition, the PBC will push forward the opening-up of the foreign exchange market, extending FX trading hours, introducing qualified foreign institutions and promoting the formation of a single exchange rate in both on-shore and off-shore markets. Based on the developing condition of foreign exchange market and the macroeconomic and financial, the PBC will enhance the flexibility of RMB exchange rate in both directions and keep the exchange rate basically stable at an adaptive and equilibrium level, enabling the market rate to play its role environment, retiring from the routine FX intervention, and improving the managed floating exchange rate regime based on market demand and supply.
Currently, under the complex international economic and financial condition, we are seeing increasingly large and volatile cross-border capital flow. As such, the PBC and SAFE will strengthen the examination of banks’ FX transactions according to relevant laws and regulations, adopt effective measures to fight money laundering, terrorist financing and tax evasion activities, and improve the monitoring of suspicious cross-border capital flow. The PBC and SAFE will severely punish illegal FX transactions, including underground banks, and maintain a compliant and orderly capital flow.
* * *
It is unclear what the potential losses for hedging/trading vehicles will be in the 'most stable carry currency' but as we noted in April 2014, TRF losses would be the 10s of billions...
The total size of the carry trade is hard to estimate although even just looking at some of the onshore CNY positions accumulated, DB Asia FX strategist Perry Kojodjojo estimates that corporate USD/CNY short positions are around $500bn. The size of the carry trade and the fact that China saw significant capital outflows during the last period of substantial Renminbi depreciation in the summer of 2012 has led to concerns over what this might mean for both the Chinese economy and financial markets as well as broader global financial implications.
Morgan Stanley believes that one such carry-trade structured product that will be the "pressure point" for this - should the Yuan continue to depreciate - is the Target Redemption Forward (TRF) which has a payoff that looks as follows...
While this is just an example of a product payoff matrix to the holder, the broader point is that the USD/CNH market has a particular level (or range of potential levels) at which three factors can create non-linear price action. These are:
1. Losses on TRF products will (on average) crystallize if USD/CNH goes above a certain level. This has implications for holders of TRF products, who are mostly corporates;
2. The hedging needs of writers of TRF products (banks) mean that there is a point of maximum vega for banks in USD/CNH. Below this level banks need to sell USD/CNH vol; above this level banks need to buy USD/CNH vol;
3. The delta-hedging needs of banks are complex. As we approach the average strike (the 6.15 in the theoretical point of Exhibit 1), banks need to buy spot USD/CNH. Above this point but below the European Knock-in (EKI) (i.e., between 6.15 and 6.20 in Exhibit 1), banks need to sell spot. Then above the EKI, banks don’t need to do anything in spot.
From internal Morgan Stanley data, we estimate that the point of maximum vega is somewhere in the range of 6.15-6.20, and that the 6.15-6.20 in Exhibit 1 is reasonably indicative of the average strikes and EKIs in the market.
In other words, so long as the TRF products remain in place (i.e., are not closed out) and we remain below the maximum vega point (somewhere between 6.15 and 6.20), there is natural selling pressure by banks in USD/CNH vol. When we get above that level, there is natural vol buying pressure.
Of course, in the scenario that USD/CNH keeps trading higher and goes above the average EKI level, the removal of spot selling flow by banks and the need to buy vol means the topside move may accelerate.
Simply put, if the CNY keeps going (whether by PBOC hand or a break of the virtuous cycle above), then things get ugly fast...
How Much Is at Stake?
In their previous note, MS estimated that US$350 billion of TRF have been sold since the beginning of 2013. When we dig deeper, we think it is reasonable to assume that most of what was sold in 2013 has been knocked out (at the lower knock-outs), given the price action seen in 2013.
Given that, and given what business we’ve done in 2014 calendar year to date, we think a reasonable estimate is that US$150 billion of product remains.
Taking that as a base case, we can then estimate the size of potential losses to holders of these products if USD/CNH keeps trading higher.
In round numbers, we estimate that for every 0.1 move in USD/CNH above the average EKI (which we have assumed here is 6.20), corporates will lose US$200 million a month. The real pain comes if USD/CNH stays above this level, as these losses will accrue every month until the contract expires. Given contracts are 24 months in tenor, this implies around US$4.8 billion in total losses for every 0.1 above the average EKI.
Deutsche Bank concludes...
Looking forward it’s possible that the PBOC is not attempting to actively engineer a sustained depreciation of the Renminbi but rather is attempting to increase the level of two-way volatility in the market to discourage the carry trade and also excessive capital inflows. In terms of the broad risk going forward the sheer scale of the challenge the PBOC has set out to tackle likely means they will have to move with restraint. This is certainly a story to watch...
As Morgan Stanley warns however, this has much broader implications for China...
The potential for US$4.8 billion in losses for every 0.1 above the average EKI could have significant implications for corporate China in its own right, as could the need to post collateral on positions even if the EKI level is not breached.
However, the real concern for corporate China is linked to broader credit issues. On that, it’s worth reiterating that the corporate sector in China is the most leveraged in the world. Further loss due to structured products would add further stress to corporates and potentially some of those might get funding from the shadow banking sector. Investment loss would weaken their balance sheets further and increase repayment risk of their debt.
In this regard, it would potentially cause investors to become more concerned about trust products if any of these corporates get involved in borrowing through trust products. In this regard, this would raise concerns among investors, given that there is already significant risk of credit defaults to happen in 2014.
Remember, as we noted previously, these potential losses are pure levered derivative losses... not some "well we are losing so let's greatly rotate this bet to US equities" which means it has a real tightening impact on both collateral and liquidity around the world... yet again, as we noted previously, it appears the PBOC is trying to break the world's most profitable and easy carry trade - which has created a massive real estate bubble in their nation (and that will have consequences).
* * *
As we noted then, and seems just as applicable now, The Bottom Line is the question of whether the PBOC's engineering this CNY weakness is merely a strategy to increase volatility and thus deter carry-trade malevolence (in line with reform policies to tamp down bubbles) OR is it a more aggressive entry into the currency wars as China focuses on its trade (exports) and keeping the dream alive? (Or, one more thing, the former morphs into the latter as a vicious unwind ensues OR the market tests the PBOC's willingness to break their momentum spirit).
Finally, putting aside speculative trader P&L losses, many of which are said to be of Japanese origin and thus will hardly enjoy much or any PBOC sympathies, here is CLSA's Russel Napier on what the long-term fate of the Renminbi will be:
“Mercantilist alchemy transmutes China’s external surpluses into foreign exchange reserves and renminbi. But with capital outflows from China at record highs, those surpluses are only maintained due to its citizens’ foreign-currency borrowing. Bank-reserve and M2 growth are already near historical lows and are driving tighter monetary policy. This will lead to severe credit-quality issues and force the authorities to accept a credit crunch or opt for a major devaluation of the renminbi. They will do the latter; and despite five years of QE, the world will get deflation anyway.”
One now wonders how the Bank of Japan and The Bank of Korea will respond.. especially as protectionism rears it ugly head also...
- RTRS - CHINA TO RESUME 13 PCT VALUE ADDED TAX RATE ON FERTILISER IMPORTS AND SALES FROM SEPT 1 - GOVT
Charts: Bloomberg
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That bodes well for old Yeller raising rates in September to make the dollar even stronger. Perhaps, September 2020. But that would be an election year. So September 2021, it is.
even though it kinda sucks, if you no longer make anything to export it would be prudent for buying even MOAR cheap crap I suppose.
Welcome to WWIII The Global Currency Devaluaiton War Part II All Over Again....
Risk On!
KING DOLLAR, the only way to win is to not play.
its on like Donkey Kong......now it gets serious.......raise those rates BIATCH!!
More free shit from China. Wooee.
problem is we can't even afford free shit anymore
Problem is? Free shit from China sucks ass. Don't be a consumer, be a saver, buy silver.
Don't worry, the chinks are financing our free shit. Literally. They are buying our bonds, which finances the MIC, social programs and everything else. They just lowered the price on all their slave labor made products. While handing their poor a tasty dose of inflation.
How ironic that they are at war with us, while they finance the MIC. Chinks aren't so smart after all. I'll still take our side of the chess board for a few more decades.
Uhm, bad news, I'm afraid. They buy our bonds and we have to pay them interest, the amount of which pays for their military expenditures.
Well now they have moar yuan to buy USTs with.
Print Moar Right Mao!
Shitshow.
The fore-seers (golfers?) had seen this coming loooooooong ago. I wrote in 2006/2007 that this shit would crash. On record.
This was when PE was furiously parking money all over the world as the US complex was crashing.
I think the intended distribution/system of financial control is now mostly in place.
Just games from here on out, devalue this, revalue that...
You can buy your way out of a lot of trouble when you have 4 Trillion dollars in foreign reserves…
and likely more than 5,000 tons of gold.
China devalues yet again. Ha ha ha ha. So much for Peter Schiff's decoupling theory. Suck on that, Schiff.
This wasn't that big of a move, but it will be interesting to see losses reported as "extraordinary events" on Q3 financials in Q4.
I wonder if we lost anybody yesterday.
It wasn't the last either...
for all practical purposes, CNY has strengthened massively vs. most currencies since the markets recovered post- global financial crisis. giving back 2% overnight hurts carry traders (particularly leveraged ones), but against a backdrop of having carried +4% per year over the past several years it's really just giving back gains from the past 6 months. some of the knock-in puts embedded in the "TRF" described could cause some pain for some wall street muppets, er clients (shorting knock-in puts for a lower premium than the carry you could earn with vanilla forwards is a terrible idea that only a wall street bank could sell with a smile), but as ZH suggests the pboc couldn't care less about those muppets given their demographic profile.
what's interesting is why they chose to move the fix in such a relatively large fashion. ZH and wall street do a great job of speculating on how this signals the pboc is desperate to weaken the currency, join the currency wars, and bolster exports. as for the validity of that particular argument, i would just suggest you take an independent look at the CNY crosses against EUR, JPY, AUD, NZD, and other major currencies over the past few years. a 2% revaluation is a *historically large* move, but *economically small* at the same time. note that today, most of the other USD crosses have weakend as well, some up to 1.5%. if china were desperate to weaken FX to bolster exports, that would require a currency that is ~20% weaker vs. non-USD currencies... requiring probably a ~30% fixing adjustment.
it's possible, even likely, that the fixing partially reflect the "china's sky is falling" theories, but there are also two very real and very significant reasons why this fix could be a stroke of genius by the pboc against wall street an USA's k street.
1) if there is a plan to continue rapidly decreasing US treasury and USD assets, then a weaker CNY is beneficial to the pboc. note that the pboc has already been publicly selling treasuries over the past few quarters. while US congressmen and presidential candidates argue about how china is manipulating it's currency weaker (suggesting that china is selling it's currency to weaken it), china has actually been buying back it's currency. the pboc fixing and other "open mouth operations" have served to cheapen what it is buying. you might imagine if there were a buyer of 10-20 trillion CNY vs. USD, the CNY would massively appreciate as traders front-run your predicatble trade. what an amazing act of misdirection this would be if the pboc manages to buy CNY into artificially engineered weakness! imagine what a shock it will when the wall street and k street geniuses realize that china has managed to sell a huge portion of its USD holdings and to receive more CNY than they otherwise should have for them!
2) a historically large (but economically small) weakening on the fix strongly discourages carry traders, who effectively earn free interest from the pboc and eventually take it abroad rather than spend it locally. the pboc is aware of and absolutely hates carry-trade capital inflows. china encourages capital inflows for the purpose of investment and consumption, but they absolutely hate capital inflows for the sole purpose of generating carry interest and taking the principal and interest back abroad later. the pboc has always wanted carry capital to exit china, and their fixing today serves to decrease the value of the carry capital that is sure to panic-flight away over the next few weeks. it's simply gravy that they manage to cause carry capital flight to happen at a weaker CNY level *and* concurrent with their own CNY repurchases.
What an astute comment. +1
Russians did the same thing last year. (Bought back their currency using high USD.)
"
You can buy your way out of a lot of trouble when you have 4 Trillion dollars in foreign reserves…
and likely more than 5,000 tons of gold."
... aaaaaand it's gone
just stopping for a moment to give tyler some kudos for posting so much detailed content so soon after the event
it really gives bloomberg something to cut n paste when they report on it next year
Ha Ha .. logged in to up vote. I would give a Hat tip to Z hedge for prewarning of this possible move, only a few days ago. Well done!!
But seriously folks that devaluation may be around 1.9% but its going to rip the $USD trade a new orifice. However the most telling thing is it confirms China story has failed.
Recession is upon the entire World now as this defibrillator move is desperate and is way to late.
China does what Smellin wouldn't...thank you China for reversing the path of dollar destruction the fed has had us on for 7 years!
They devalue the Yuan, all the while holding USTs. So the UST's will get them more Yuan, kind of like a store of wealth. But all the while they are trying to divest of so much Treasury paper. Unless they know that it's all going to come down at some point. My guess is you'll see some more slow and steady selling of USTs by the Chinese. Don't want to raise any eyebrows though. Just like Russia, slow and steady, sell sell sell.
Soul glow -
Savers buy seeds, ways to "purify" water, tools needed to grow food, and maybe a still... and of course lead/brass insurance. Silver might be a bit down the line, if at all. Welcome to Utopia!
Apply Force: where can one buy a still. I have everything else for my prepper collection, including 25,000 M855's green points for trade...
Simple:
http://coppermoonshinestills.com/
Easiest with just a pressure cooker and assorted add-ons, and reading is fundamental
ebay has a bunch
http://www.ebay.com/sch/i.html?_from=R40&_trksid=p2060353.m570.l1313.TR1...
http://www.milehidistilling.com/
coppermoonshinestills.com
http://www.hillbillystills.com/
Just google "home distilling".
Thank you all. All upvoted, would give you +1000 if I could!
Must give credit where credit is due. The Tylers nailed this one.
capitulate, bitchez!
Crap...this is great news! I get "squishy" just thinking about all the weekend "blowout" tool sales coming up at Harbor Freight.
Fate the Magnificent
"Push the Button, max"
Looks like I overpaid when I bought those "Hecho en China" T-shirts for $2 apiece. They're gonna get even cheaper.
There is no reason for a war of old. Both my parents were born durring WWII and shitting in an out house; grandparents didn't much notice the Great Depression. The first rule of war is to be able to feed your supply line. If the uber complex system that is the United States shits the bed, nobody will be able to take care of themselves or know what to do. Even the Europeans have a better sense how to do simple things like preserve food or grow a garden, but you can't do that in a month. Now, where would that leave eastern Asia? Billions of people that can't feed themselves, either? There is no debt jubilee, there is no World Wide War. There are Civil Wars. Culling the herd from within and reminding most asshats that they are completely interdependent on others even to eat. Let them turn on and cannibalize each other. It's both brilliant and logical, actually. By the way, how useful is gold when people are starving and cold? People are always four meals away from uprising.
When people starving and cold they want cigarettes.
tobacco seeds are cheap, so is skinning sheep. rum comes from all sorts of sweets and potasium nitrate from a compost heap. be usefull and informed and you wiill make it out just fine.
You are speaking a language so very many can not comprehend... best you also have skillz of the armed guard
and a defensible position. check.
Good on ya.
And how many here have a simple fire hose (able to reach your home, bitchez) and hydrant wrench...? Check your American cities burning in the past and multiply by 3 or 4 times. And night scopes can help with unexpected post-dusk or pre-dawn fires
my irrigation pumps do 300 gallons per hour from spring houses that bubble out of the ground. but in lieu of the gas that it takes to run them, there is always an archimedes screw from flow. never mix fire on your house without water. for example, build a fire fed rock chimney with water on the top third? you have air conditioning.
Well thought through, compadre.
I am speaking only of short-term needs however, and hopefully you have access to 200 or 300 GPM before the SHTF in total... otherwise I fear you might be but an ember in our memories
yes, that was a typo. 300 gallons a minute on a good 5HP pump with low head. but that's moot compared to good flow.
Hey, can you guys get a room?
j/k ;)
most of you would die from exhaustion or heart failure lugging around fire hose, let alone handling it once it's on...
doom preppers crack me up... ammo etc. as far as the eye can see, except their eyes can't see because they forgot spare glasses and their diabetes meds...
Get Lasik; the up close stuff you can handle in a number of ways. Diabetes can be controlled in nearly all cases by changing the diet.
my point is, it's amazing how everyone thinks they're the "one" that will survive while everyone else around them goes down... they think they're ready, and prepared, and their extra time and effort is what will make them stand apart... maybe so to a certain extent, but time and chance are always king in such situations...
you need a broad community that provides an equally broad level of skill to truly make it... I think many of the typical preppers would benefit well from reading "World War Z" again... it's all about coordination and logistics, you can't just go it alone...
My irrigation hose is 3 inches in diameter. It does get really heavy when a couple hundred feet are full of water. I've lived an Arcadian rural farm life for 15 years, now. It is hard work, but I enjoy it. It's a way of life, not a strategy. You are correct about needing a community. I live in a very nice one. We take care of each other quite well. It's my belief that the trend of globalization and not knowing who lives 5 doors down from you will reverse. The trend will revert back towards smaller more intimate communities.
I learned you have to read about it, then learn it for yourself by doing. I've raised tobacco, skinned my own animals, and even fermented my own rum. Potassium nitrate (crude niter) can come from many sources, but you have to recrystallize it. Knowledge is cheap; the expensive part is being able to replicate what you've read. It takes time; and while you may survive the coming doom, the first thing to survive is the zombie onslaught, especially if you appear to be survivng and they aren't.
and liquor.
Indeed, yeast and sweet stuff. All these boys living in banker's heads thinking something like gold or silver will be in the minds of the masses. As the kinks so famously sang, 'give the people what they want'. Gold and silver might be useful AFTER. Though, I don't blame them. What else do they have going on? WEALTH ONLY OCCURS AFTER AN ABUNDANCE OF NEEDS ARE MET.
From the perspective of a British European we have no idea how to look after ourselves. Even if the UK was self sufficient in food (we only produce around 60%of what we eat), no one here would know who to cook it. We're great at stealing and dreaming up complex financial instruments, but not much else.
Our kids have never known anything but plenty, and they work their nuts off at things that will most likely never be of any use to anyone. Reality is going to be tragic for them.
Even if the UK was self sufficient in food (we only produce around 60%of what we eat), no one here would know who to cook it
That's right. Didn't you Brits ban knives?
Knives are not banned here. Carrying a knife in a 'public space' without a 'good reason' is committing a criminal offense. You can have any kind of knife, as long as you can 'justify' why you're carrying it if you get searched by a police officer.
The banning of guns in the U.K. is a common misconception too. Members of the public are still able to obtain firearms certificates/licenses, and purchase guns. The type of gun is very much restricted in the UK. Mostly hunting rifles and shotguns are what is allowed. Not sure about pistols, I think they are now illegal to posses if you're a member of the public.
.
Thats the best fucking thought you've had all night.
I upvoted him so maybe he'll shut up.
I was going to offer him a free super absorbent Maxi-pad
Send him a tampon. According to the TV ads, inserting one of them turns you into a tennis player, horse rider, golfer, hang glider, water skier, rock climber or successful person in any field you chose.
FOX News political yank-n'-tug moderator?
Megyn looks so sexy.
LOL!! Tried to upvote but my botton's broke. +2
I'd say 2121.
2112.
Because Rush.
twilight zone, good call
Old Yeller will be out a job long before 2020 I think. The Fed Building should become a soup kitchen.
They only serve matzoh ball soup.
SINCE LEHMAN !!!!
DRINK UP BOYS & GIRLS
Gold taking a beating now. China swapping Treasuries for bullion?
Algos interpreting as dollar strength thus smash gold.
At the time of posting the CNY devalue hasn't shown up here yet:
http://www.investing.com/currencies/usd-cny-advanced-chart
What kind of algos do those guys use? Sheesh. I won't be counting on them for my billion $ front running trades.
So see how this fits:
every month PBOC announces increase in Au holdings, USD moves lower, more bad economic news out of the US econ, PBOC revalues CNY lower and sells more USTs. hahaha
It fits very poorly with their just announced policy of devaluation. How does dropping the USD help them in their quest to make Chinese goods more affordable in the USA? They want their currency to weaken vis-à-vis their trading partners, not strengthen.
Looks like the algos are having second thoughts now. Silver back to flat.
To weaken domestic ccy, you buy US Treasuries, sell your own ccy. Watch this rate gravity...plus, what asset would be a good hedge for the billions in Chinese stocks the government now owns via "qe with chinese characteristics"?
I recall the Tylers predicting this a couple of days ago. Great work guys, and thank you for reminding me why I still spend time here even though it has become somewhat of a circus.
And this circus needs a clown, like you!
LTER;
You have been outed as a closet Liberal Technocrat long ago, the only circus is the time it has taken to show pukes like you the fuck off door.....
HOPE! HOPE and CHANGE!!!!!!
You feel the Burn?
China stocks up 4%, they like devaulation.
Everyone loves devaluation. Except for most people. We don't care about "most people" because they're the ones who don't own anything. We only care about everyone. The everyones who own things. Anyone who is an everyone who owns nothing should be considered "most people" and immediately not cared about.
I hope that clears things up.
sigh, I'm in love
See, and you thought I was just another pretty nail gun, didn't you?
+100 Epic rant. Can I quote that?
That was epic ND, a classic for the ages.
To further the point, they care so little about you they presume to force you to buy shit immediately from people who care so little about you, as they devalue the very currency they pay you for your labor, all the while claiming they hate deflation with a purple passion and it is to be fought against madly by every central planner in the world.
Lying liars will lie.
Over to you Janet. Raise rates? LOL!
All your labor (paid in fiat) are belong to us. I swear to God, can no one see this?
Here, I'm gonna "give you" a one percent raise, not much but better than nuthin huh, happy? Yes? Good. And then I'm gonna devalue your labor by two percent.
Still happy you SOB? ;-)
A brilliant scheme that relies on everyone being an idiot.
"*PBOC SAYS TODAY'S YUAN FIXING IS ONE-OFF ADJUSTMENT"
Uh Huh. Yeah. Sure. I believe that.
It's true! They only have 1600 tons of gold to their name as well.
This certainly debunks the crazies who think china wants a gold backed currency. Like every gov, they want a currency they can debase at will to steal from their people via inflation.
The world just got a price cut on most of the products they buy. The slave laborers just got it up the ass. Their own fault for having 1.4 billion kids.
What every country wants is a fiat currency that they can devaluate while creating an illusion of a currency backed be real assets, like the good faith and credit of the USofA. They all use illusion to rob us blind while we feel safe secure and protected from criminals just.like.them.
consider me a crazy, still, then.
the 'sudden massive reprice of gold' trick only works if its done suddenly. Until then you have to maintain and participate in total bullshit. This devaluation means only that they still dont think their back is hard up against the wall enough to flip the switch. You dont sing to the world that ur heading back to a gold standard. You STFU. (not you... them)
At least by having 1.4 billion kids, they will be around in 100 years. White westerners, having none, will not.
Lots and lots of kids mean a possible future, 1.9 kids per family means no future at all.
Is there a gold per capita table published? They can have more than anyone else on earth of anything and still be underweight for the number of people they have to control/support/feed.
double post
Didn't the Tylers say that commodity based collateral loans were dependent upon a 6.25 rate about 9 months ago? If I'm remembering that correctly, won't that mean a big unwind of those deals?
Who knows? Are there any rules anymore? Just look how our labour and savings are manipulated and controlled. http://www.goldsheetlinks.com/kitco.htm
Something else just occurred to me:
The China trade data came out on the weekend, but why didn't the currency devaluation happen on Monday? Gold had been between 1080 and 1100 for about 3 weeks, and then suddenly spiked on Monday. Now, the Chinese government announces a currency devaluation and the price of commodities are dropping like a stone.
Did the Chinese use Monday to ramp up the prices so they could sell after the news today? WTF is going on here?
They're paying us back on Tuesday for the hamburger the other day, silly.
In this race to the bottom , the USD floats to the top of the bowl like a corn filled turd. No way Mr. Yellen can raise even .025 ..... This should be so bullish for Gold.....I guess I will never understand the up is down world we now live in...... Just hope this circus ends soon.
Pretty easy to understand. Gold hasn't been money since 1973. 40 years, you might want to wake the fuck up. Some day, under a new system, maybe it will be again. Right now it's just a paper commodity that specs gamble on.
Right on!!! And another vote for normalcy bias it is.
For the benefit of those, like you, who haven't a clue about the value of physical gold as you view it only through the USD prism, I'll repost this:
Although Au has declined in USD about 6% since I crunched these numbers on July 4, they still illustrate why thinking about gold only in U.S. Dollar terms is a mistake, and often used for propaganda purposes.
The percentage change in the value of gold against these currencies for a two year period ending on July 4, 2015:
Euro +11%
Danish Kroner +11%
Japanese Yen +18%
Swedish Kroner +20%
Norwegian Kroner +22%
Turkish Lira +29%
Brazilian Real +37%
Argentine Peso +58%
Russian Ruble +62%
Ukranian Hryvnia +140%
You forgot the 4th most traded curency $AUD and that 40%+
But I do see the deflation thingy happening to keep us all from eating rocks and sand
No.
Gold is up a touch over 9% against the AUD during that two year timeframe.
d/p
China enters currency war. Thats a laugher. When did they leave. Hell their devaluing of their currency in the 90's by 50% id just one example of their war.
Wasn't china the first country in history to deal in paper/fiat currency?
Gold fell on yuan devaluation, but gold appreciated in yuan terms. Most important shift for the gold market.
FWIW, webbots recently forecast notable uptick in private demand for PM in China. Gadzooks, if they actually start getting things right AND with decent timing ... we're in trouble, and maybe kinda soon ... read latest (gloom & doom) reports for details. If you care (I don't care if you care).
thassrite . you gots three hundred million 'middle class' chinese talking to each other with losses in stocks, losses in R/E, now losses in currency. And all of them are looking at comparative gains on their gold.
They're gonna be pissed if they can't join the sdr basket.
At this point, not being part is not an option for anyone, including the us.
Fuckin' corner the world's supply of MSG, they will.
Be afraid, very afraid.
And have many sweats after you eat.
There will be many more currency adjustments to the Yuan. Todays is not enough to turn thinks around. The Chinese will start hording all metals. Eventually WWIII, all metals will be needed for arms and reconstruction.
Currency wars, trade wars, hot wars... Here we go again, same old shit again, marching down the avenue, one more war and we'll be through...
Oh you forgot proxy wars and those color revolutions and Nudelman's cookie wars.
A War to End All Wars... Oh Goodie.. never had that before...
It has to be for internal PRC dynamics - it won't do shit for exports since those are already sold under cost and moving at under cost freight rates.
I don't understand all the swaps and derivatives, but just smacks of desperation.
China ENTERS the currency wars? WTF? Is ther some dumb down entry level bullshit going on here? Weve been in a currency war for a long time. can we keep a commentary going with adult intospective? Or are we fishing for newbs to sell investment advice and SHTF ramblings?
Ah yes one step closer to unpeg...enjoy the small nibbling and gamble wisely...
All right!! More even cheaper crap at Wallmart.
Nope, sorry to burst your bubbly, the Waltons and the rest of the Bentonites will pocket the diff...
;-D
But I don't want to buy any more Chinese crap. I want a 787.
We all saw this coming.
Residents of Bejing may experience a 5,000 degree day if this continues.
In a normally functioning economy, imports, exports, etc. This sort of a devaluation might increase Chinese exports.
But, since Oil, Energy and many commodities are in a deflationary spiral.
The only result will be 2% instant inflation for Chinese citizens.
No increase in exports.
If the central economies get "stuck on" currency devaluation, this will only increase the economic instability for their populations.
Inflationary spiral caused by devaluations, concurrent with the commodity deflationary sprial. Ugly.
Here we go...
1.Why choosing the current time to improve quotation of the central parity of RMB against US dollar?
Currently, the international economic and financial conditions are very complex. The U.S. economy is recovering and markets are expecting at least one interest rate hike by the FOMC this year. As such, the U.S. dollar is strengthening...
What a load of horseshit.
When I first came to China in 2009, the RMB:dollar was about 8:1. By 2011 it was 7 to 1. Now it is close to 6 to one. Today's tiny adjustment is no BFD. Insiders here told me 2 years ago that the target is 5 to 1.
It takes a lot of fact twisting and weasel words to make today's tiny move "the largest on record".
That's the funny thing as the numerator gets smaller - the percentage gets larger. And what makes anyone think it will stop at 5:1 or that they can control it?
If I was made of circuit boards and programmed by some CS wiz kid paid way too much money by Goldman Sachs, maybe I'd understand all of this shit.
It looks like the days of creating goods of value traded for other goods of value have been replaced by creating money out of thin air. The winner is who can create enough money that still holds some value over the other.
I think that ends with someone holding one hell of a lot of money, but nothing left to buy because someone forgot you need to be able to produce something in the first place for someone else to buy it.
CHina goes Swiss.
I dunno ya all...china has been stacking the metals, and here is a link to an article that China owns 4 out of the 5 biggest banks...In my humble opinion, this article should be headline on zerohedge..
http://www.thechinamoneyreport.com/2015/08/06/china-now-runs-4-of-the-wo...
For this to be a "Currency War", China would need to RAISE the value of its currency which would increase the wealth of its own citizens. Instead China is decreasing the value of its currency which increases the wealth of U.S. citizens instead. That is not a Currency War, it is a Currency Circle Jerk.
No. In a currency war you devalue your own currency to make your exports cheaper and destroy the manufacturing competitiveness of your rivals while boosting domestic demand for domestic goods. No ones wealth increases or decreases. The US is loosing the war. Look at foreign profits of US corps.... off a cliff.
C’mon now.
For how long would you continue trading the now devalued currency at the previous rate?
Come on think about it.
China misspent $21 trillion in just 3 years 2012 - 14 building the worlds biggest ever infrastructure bubble, with cities, railways and 70 million luxury apartments and the global economy is now going into recession.
The RMB is virtually unchanged against the dollar since at least the beginning of 2013 actually being .34% higher then compared to yesterday.
The rest of the world in the 3 years have seen their currencies devalue on average, against the dollar and thus the RMB by
6.5 % 2013
5.5 % 2014 and
7.44 % so far in 2015
meaning both dollar and RMB has risen against all other currencies by an amazing 18.2 % in just 32 months and its accelerating.
That means that China, having blown $21 trillion , which of course includes new steel mills smelters factory, and not some sweat shops, we are talking state of the art, from textile to steel to car plants robotics and robotized factories that are still coming on stream at record rates and no one is going to cancel a 5 year project to build a state of the multi billion factory 3 years in to build.
They gonna keep on a coming, and the production is gonna rise and rise faster and they have to sell that stuff.
And that means flogging to the economies with the highest currencies.
Cos that gets the most RMB.
Guess who that is.
Yep good ole US of A.
With its manipulated currencies stock markets, its fucking GS and JP criminal enterprises running tilt at fraud and the fucking rancid cunts at the FED feeding it all for the neo cons world domination ambitions, they have fucked up.
The world is now gonna get a flood of even cheaper imports especially the USA , MOAR deflation, and at the same time more trillions are going to flood out of EM to buy the USD, To cover their asses on EM debt and so drive the ponzi $ higher.
Which can only mean one thing.
More RMB devaluation soon coming your way.
Stock up on Chinese toys toys boys and gals, the prices are gonna crash.
And any talk of China wanting o stop the flow of capital out of China is bullshit.
How do I know, because I am one of those sending invoiced by the tens of thousands to Chinese companies for immediate payment on goods to delivered in one years time or more with an option to cancel and that cash goes direct to an offshore account for the client.
And no one wants to know a damned thing about what those goods to be delivered are officially.
Did anyone really think China is going to let all those brand new and still being built factory's go to waste for lack or orders and thus jobs because of the dollar rising.
Now the question you need to ask yourself is this.
Now that China is starting to devalue, and I do mean start, then what the fuck are the dumb fucks at the FED going to do to devalue the fucking dollar now.
"Now that China is starting to devalue, and I do mean start, then what the fuck are the dumb fucks at the FED going to do to devalue the fucking dollar now."
With the $ index now riding high, they can jawbone the war by simply saying "rates on hold for now" and BAM!
Nope. Priced in already.
well at least they have a lot of hard assets .... US did QE and got none.
I say we peg the dollar to the Yuan.
Sun Tzu
"The quality of decision is like the well timed swoop of a falcon which enables it to strike and destroy its victim."
it's getting so bad i don't think even they know what they are trying to accomplish. The U.S. economy is recovering... yeah, right
Classic zerohedge. Important event, a good analysis by the Tyler's and great comments.
The USA has one choice. When to devalue the USD. Soon, or later.
If it does it later , like cowdiddly stated, the US will buy foreign goods for cheap. But at what cost and for how long? It will eviscerate whatever is left of our manufacturing and it will create the largest negative trade deficit ever. This will Lead to economic collapse.
If the USA devalues sooner, by pressure from John Deere, CAT, Boeing, etc, it will lead to inflation.
"Mad Max, beyond Dollar Dome"
58% more to go
FIRST and foremost ... it's a problem for Japan and S. Korea. This intensifies the economic war in Asia.
You are right, Japan will be forced to devalue as well. That reminds me of the zerohedge's article on Albert Edwards from October 2014, where he states that if USD:Yen goes above 125 or 126 then we are in big trouble. I can't find that zerohedge article now, but i found this:
http://www.bloomberg.com/news/articles/2014-10-02/albert-edwards-says-wa...
Very interesting...
Found it!
http://www.zerohedge.com/news/2014-09-22/albert-edwards-presents-most-im...
I'd appreciate any comments from currency traders.
The USD:Yen has definitely broken the trendline in the link above.
I'm set for the opposite. Buying JPY against USD.
Let the hoarding begin.
Now we can buy so much more Chinese junk for less. I loved the part where it says "The U.S. economy is recovering"
Was this article at least in part written by a machine?