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Chinese Central Banker Blames Fed For Market Rout

Tyler Durden's picture




 

While the western mainstream media meme is that "this is all China's fault" - despite the fact that the real break happened after the FOMC Minutes last week - Xinhua reports that China central bank blames wide-spread expectations of a Fed rate hike in September for the global market rout... demanding The Fed "remain patient."

 

 

As Xinhua reports,

A researcher with China's central bank on Tuesday blamed wide expectation of a Fed rate rise in September for the global market rout.

 

Yao Yudong, head of the People's Bank of China's Research Institute of Finance, said the expected Fed rate hike next month had been the "trigger" for the wild market swings.

 

Analysts worried that the Fed rate hike could accelerate the plunge of U.S. stocks and trigger a sell-off of assets worldwide and even a new global credit crisis.

 

Yao said the Fed should remain patient before the U.S. inflation reaches 2 percent.

 

Earlier, analysts said the devaluation of Chinese currency the Renminbi triggered the plunge and the weakening of bulk commodities and currencies in other countries.

 

China's benchmark Shanghai Composite Index sank 7.63 percent to close at 2,964.97 points on Tuesday. It has lost 26 percent in the past six trading days.

 

Overnight, the Dow tumbled 588 points, or 3.58 percent, to 15,871, after sliding more than 1,000 points, or 6 percent at the opening.

 

Li Qilin, analyst with Minsheng Securities, said the small devaluation of Renminbi could have slightly weighed on stock markets, but it could not explain the huge sell-off in the United States and other countries.

 

Li said the liquidity crunch is a bigger culprit.

 

The global rout has little to do with economic fundamentals and the Asian financial crisis would not be repeated, Capital Economics said in a research note.

 

But it said if the market plunge continues worldwide, the Fed might postpone its rate hike.

*  *  *

Which of course is supremely ironic since Goldman Sachs explains the biggest reason for the China rate cut overnight is the market rout, implying PBOC only cut because of The Fed's expected hike actions.

 

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Tue, 08/25/2015 - 11:48 | 6468648 XAU XAG
XAU XAG's picture

They do have a point

Tue, 08/25/2015 - 11:49 | 6468653 OldPhart
OldPhart's picture

Careful, Wars are fought over this bullshit.

Tue, 08/25/2015 - 11:54 | 6468679 cherry picker
cherry picker's picture

You're right and after they blow the shit out of each other they sit down and come to a resolution.

What a waste of time and energy, wars I mean.

Tue, 08/25/2015 - 11:58 | 6468689 y3maxx
y3maxx's picture

World wars have begun over $$$ arguments.

Gold will be China and Russia's saving grace.

Tue, 08/25/2015 - 12:18 | 6468724 Ham-bone
Ham-bone's picture

A worldwide Ponzi blows up when the growth of new customers (consumer base multiplied by credit layered on base) starts to go South.  Nation by nation, growth is ending.

New post details how slowing population growth has exposed the Ponzi and no amount of debt can maintain it (not that that will keep CB'ers from tyring).  Engines of population and credit growth are flaming out.

http://econimica.blogspot.com/2015/08/slowing-engines-of-growth-examinedor.html

Tue, 08/25/2015 - 12:24 | 6468803 Divided States ...
Divided States of America's picture

I knew Jim Cramer's rant this morning about the PBOC being a bunch of idiots and fools wouldnt sit well with the Chinese. This guy should shut the fuck up. China has every right to blame the US specifically Goldman and Morgan. Everything was going fine till these crony i-banks decided to push China to allow Short Selling, and this happened right at the peak when the SHCOMP was above 5000. Of course we know what happened after that as those same i-banks are reaping profit at the expense of the Chinese retail sheeps getting roast fried like chop suey. I have heard from some people in the mainland that the PBOC has given up on supporting their stock markets via open market purchases so the support of the stock market will have to come via other methods, maybe more rate cuts to come.

Tue, 08/25/2015 - 13:24 | 6469001 tc06rtw
tc06rtw's picture

 
Actually, the whole thing has been arranged by Hillary’s own PPT to get her out of the news.

Tue, 08/25/2015 - 14:56 | 6469302 JRobby
JRobby's picture

Calls from far and wide for Cramer's euthanization, yet there he is on TV every day.

Tue, 08/25/2015 - 15:52 | 6469563 RaceToTheBottom
RaceToTheBottom's picture

If Cramer is the official spokesman for Wall Street, then we should string up each and every worker on Wall Street, from the mailroom up.  There cannot be any value there....

 

Tue, 08/25/2015 - 13:26 | 6469008 KnuckleDragger-X
KnuckleDragger-X's picture

It's everyones fault, so everybody should be taken outside and shot.......

Tue, 08/25/2015 - 11:57 | 6468690 LibertyBear
LibertyBear's picture

It's all theatre. The Central Banks talk to each every day. No Fed President came out and made comments to stop or hinder the plunge. They wanted the plunge. Who knows why. Maybe to test the Stock Market breakers or to see how they will handle a real crisis in the future when/if it occurs.

Tue, 08/25/2015 - 12:06 | 6468728 post turtle saver
post turtle saver's picture

agree, this is red meat for the locals...

Tue, 08/25/2015 - 12:07 | 6468735 clade7
clade7's picture

In the wild melee yesterday, ...some new ZH poster warned Gold will be 1135..he typed with such conviction, I remembered it...and by god it is! 

Then, this am the very same fellow said everythings taking a major shit at 2pm on Sept 17 and to prepare accordingly!  I wish I could remember who it was!  I'd buy thier newsletter if they have one!

Tue, 08/25/2015 - 13:53 | 6469111 daveO
daveO's picture

No need to buy a newslette, just learn chart reading. Gold will probably go to $1000/oz. by the end of Sept. Possibly $850/oz. by year's end, depending on the FED. I'm long term bullish on metal, but the charts always come first.

Checkout Rambus' usd/gold chart about 3/4th's down this page;

http://www.marketoracle.co.uk/Article51962.html

Tue, 08/25/2015 - 13:56 | 6469129 clade7
clade7's picture

Thanks Dave!

Tue, 08/25/2015 - 12:09 | 6468745 JRobby
JRobby's picture

Correct Sirs!! (Chinese CB'er and Old P)

You have won the grand prize!!!!! : unrelenting currency wars and unprecedented market volitility until total chaos and mass destruction ensues.

Tue, 08/25/2015 - 11:51 | 6468662 XAU XAG
XAU XAG's picture

Truth always hurts

 

Li said the liquidity crunch is a bigger culprit

Tue, 08/25/2015 - 12:07 | 6468700 F0ster
F0ster's picture

I'm inclined to blame Yellen for jawboning the rate rise and strengthening the Dollar, thusly crushing EMs. However if Bernanke had done his job for the economy and not just his banker scum friends back in 2010 and tightened (raised rates) when he should have, we would have a smaller stock marklet bubble today and the Fed would have more effectvie policy tools. So in short, Bernanke yeilded to the bank cartel demands for short term profit (theft) which has now effectively created the collapse of the global economic system. And don't let bounces like today fool you, there's a lot more insanity coming soon...

Tue, 08/25/2015 - 12:42 | 6468874 NihilistZero
NihilistZero's picture

First by inflation, then by deflation...

The coming crash was always in the cards.  They've basically admitted that our economy will be a serial bubble machine until at some point it collapses.  Who knows how many more cycles they can squeeze out.

The Chinese banker is laughable though.  Reminds me of when David Lereah basically begged the FED to stop the tightening cycle in 2007.  These guys don't get that when the Money Masters decide it's time to raise, to pop a bubble, front run bonds or whatever, they could give a shit how it affects YOUR particular market.  Even if said market is the second biggest economy in the world.  China is looking more like Japan coming out of the 80's every day.


Tue, 08/25/2015 - 13:05 | 6468932 Bay of Pigs
Bay of Pigs's picture

The Wall Street Banksters are the biggest crooks to ever walk the planet.

They are ten times worse than any Chinese banker.

 

Tue, 08/25/2015 - 12:24 | 6468801 thunderchief
thunderchief's picture

Trade Wars, currency wars and next  comes Hot Wars.

China has a year plus to get into the IMF SDR Basket.

I say they end up in a war before then..

Tue, 08/25/2015 - 11:49 | 6468650 TeamDepends
TeamDepends's picture

And the central banks start eating each other....

Tue, 08/25/2015 - 11:57 | 6468684 Spitzer
Spitzer's picture

just goes to show how anti capitalist and keynesian these losers in Bejing are.

 

You would think one day, somebody in China would discover Misus or Hyak.

Tue, 08/25/2015 - 11:56 | 6468685 Son of Loki
Son of Loki's picture

Central bankers? Who could have guessed?

Tue, 08/25/2015 - 12:08 | 6468740 all-priced-in
all-priced-in's picture

I think it is more licking and sucking than actual eating.

 

 

Tue, 08/25/2015 - 11:49 | 6468651 KCMLO
KCMLO's picture

Time to start pointing the finger for blame, because overvalued stocks can't possibly be the cause.

Tue, 08/25/2015 - 12:06 | 6468726 Viffer
Viffer's picture

What is funny about this is if Trump was president right now you could almost guarantee that he would be coming out today in full support of raising the rates.

"When somebody challenges you, fight back. Be brutal, be tough." - Trump

Tue, 08/25/2015 - 12:55 | 6468910 Grimaldus
Grimaldus's picture

Well I don't know about rates but I see when President Trump lifts a leg and farts in the direction of China, another Chinese port city gets blown off the map.

Don't fuck with Trump.

 

 

 

 

 

Grimaldus

 

Tue, 08/25/2015 - 11:49 | 6468655 Newsboy
Newsboy's picture

Trust in Yuan/Renmenbi is a goner. China holds gold in reserve. China needs to destroy trust in all other fiat currency, then move to gold-backed Renmenbi.

Tue, 08/25/2015 - 11:52 | 6468657 Jason T
Jason T's picture

you built f'ing cities that no one lives in..

 

Tue, 08/25/2015 - 11:52 | 6468663 Osmium
Osmium's picture

"you built f'ing cities that no one lives in.."

LOL, Good one.

Tue, 08/25/2015 - 11:51 | 6468660 El Oregonian
El Oregonian's picture

"Yao said the Fed should remain patient"

What???

"Yao said the Fed should remain imprisoned"

 

Fixed.

Tue, 08/25/2015 - 11:59 | 6468680 XAU XAG
XAU XAG's picture

Patients Grass Hopper (fed) you are young................you will learn!

Tue, 08/25/2015 - 11:52 | 6468664 Dr. Engali
Dr. Engali's picture

Finally somebody has it right, but you won't hear this in the MSM. I'll go a step further and blame all central banks for this mess thanks to their medddling, but the creature created in 1913 deserves the bulk of the blame. The sooner it's gone the better off we will be.  

Tue, 08/25/2015 - 11:52 | 6468665 Raoul_Luke
Raoul_Luke's picture

The global rout has EVERYTHING to do with fundamentals - the fact that they suck everywhere and only serial CB interventions are keeping equity prices from falling.

Tue, 08/25/2015 - 11:52 | 6468669 BandGap
BandGap's picture

Chicken or egg discussion. Who blinks first.

Does this mean China will retaliate in some fashion? Also, what do these bank moves mean for Chinese investors? If I had my ass hairs scorched as much as they have in the past few months I wouldn't be heading back to the beach blanket blowout.

Tue, 08/25/2015 - 11:52 | 6468670 Bay of Pigs
Bay of Pigs's picture

Blame the Chinks!!!

Tue, 08/25/2015 - 12:01 | 6468710 Son of Loki
Son of Loki's picture

Bush was bashing the Chinese yesterday for 'anchor babies' while not mentioning the 45 million mesicans or central americans once. Odd.

Tue, 08/25/2015 - 12:08 | 6468742 post turtle saver
post turtle saver's picture

Jeb is a slope headed, mouth breathing, knuckle dragging idiot... but, at least he knows there's WAY more Hispanic voters than Asian voters...

Tue, 08/25/2015 - 13:35 | 6469041 WillyGroper
WillyGroper's picture

SOB also knew how to funnel FL pension $$$ to Lehman & get a high paid position to boot.

The power of the press. Correction, lack of it.

Like none other.

Tue, 08/25/2015 - 11:53 | 6468671 homebody
homebody's picture

Yes a quarter point increase in rates will be the end of the world - what BS

Tue, 08/25/2015 - 11:53 | 6468674 Seasmoke
Seasmoke's picture

Somehow I bet on Gold and wound up with the horse bred in China.

Tue, 08/25/2015 - 11:56 | 6468688 XAU XAG
XAU XAG's picture

Hay Seasmoke

 

Is it a small horse?

Tue, 08/25/2015 - 11:58 | 6468698 homebody
homebody's picture

Maybe just a goat

Tue, 08/25/2015 - 11:54 | 6468681 Reaper
Reaper's picture

Either market is a theater, wherein the marks are hustled into making bets in a rigged game. There is no free lunch. There is no always rising market. There always are fools.

Tue, 08/25/2015 - 11:56 | 6468682 Jason T
Jason T's picture

china went on the biggest binge of malinvestment the world has ever known  .. well, the student loan bubble is a mess too ..but them empty cities are a complete and utter disaster.

talking about patience?  how about waiting for people to at least move to the city before building the thing .. now no one is moving there after you buit it.. like morons.

Tue, 08/25/2015 - 11:58 | 6468694 CHC
CHC's picture

Fuk U Mista Chinaman!

Tue, 08/25/2015 - 11:58 | 6468695 Name Already Taken
Name Already Taken's picture

"Economic fundamentals? WTH is that? I can't hear you from up here in the clouds!" -Crony banking

Tue, 08/25/2015 - 11:59 | 6468699 Callz d Ballz
Callz d Ballz's picture

"Analysts worried that the Fed rate hike could accelerate the plunge of U.S. stocks and trigger a sell-off of assets worldwide and even a new global credit crisis"

Indisputable evidence of how screwed up things have become.  2x4 across face right there.

Tue, 08/25/2015 - 12:00 | 6468707 roadhazard
roadhazard's picture

Everything is wound up tighter than Dicks hat band.

Tue, 08/25/2015 - 12:04 | 6468721 Mike Honcho
Mike Honcho's picture

Invent firecrackers and they think they are know it alls.

Tue, 08/25/2015 - 12:08 | 6468739 Consuelo
Consuelo's picture

 

 

Long gold & aircraft carrier battle groups.

 

Tue, 08/25/2015 - 12:25 | 6468809 Colonel Klink
Colonel Klink's picture

Long gold and super sonic anti-ship missiles.

Tue, 08/25/2015 - 12:46 | 6468878 Son of Captain Nemo
Son of Captain Nemo's picture

CK

Your "wish"is China's command!

Nohing holding them back either after the unusal events of the past month that started with foreign investors short seling the shit out of their markets which brought retaliation by the PBOC to depeg from Uncle Sam's "paper printer", which resulted in some post Chinese New Year spectacular "fireworks" in two of it's industrial ports that house the components for steel and gold making... followed by the announcement that the IMF would be witholding the "carrot" and rewarding them with another stick from that most "coveted" soon-to-be toilet seat known as the Anglo-American banks SDR...

 

Tue, 08/25/2015 - 12:14 | 6468762 Consuelo
Consuelo's picture

Observe the choice of words:

 

"The Fed should remain patient".   What does that sort of phrasing suggest?

 

- 'May you live in interesting times'...?

- 'Please, please I beg - don't kick us in the teeth when we're down'...?

- 'We're tied to you, and you're tied to us, so do the reasonable thing'...?

- 'You escalate, we'll find a way to escalate'...?

 


Tue, 08/25/2015 - 12:24 | 6468804 robertocarlos
robertocarlos's picture

I helped a Chinese couple with their daughter yesterday to take the bus to the University. She spoke very good English. Anyways I took them to the bus stop and pointed out the correct bus to take and they asked if they have enough change for the fare. I count it out and they are short so the father pulls out a crisp tenner only the bus doesn't take paper money. So I have two 2 dollar coins and the mother pulls out a crisp fiver and gives it to me. I count the change out so they pay the right fare and they have a little left over. I smiled because I made a dollar profit. Can you believe it? I made money off the Chinese! I actually felt bad afterwards thinking I should have just given them the 4 bucks.  Then I thought one day in the future they'll be my landlord and they'll get their dollar back.

Tue, 08/25/2015 - 12:39 | 6468862 clade7
clade7's picture

You are a good guy! 

Ashamed to say I'da taken the tenner and given them 2 chucky cheese tokens telling them they were the new Hillary Clinton 5 dollar coin!  The resemblance is remarkable!

Tue, 08/25/2015 - 12:31 | 6468832 Bill of Rights
Bill of Rights's picture

Thems fighting words...

Tue, 08/25/2015 - 13:15 | 6468836 gcjohns1971
gcjohns1971's picture

Fed inflation is primarily exported through CBs.

F÷d deflation is primarily exported through foreign CBs.

Banker wealth depends on inflation.

When non-interest bearing currency creation is based on interest-bearing assets at face value, monetary stasis is impossible.

Hence, at present even given ZIRP you can conclude that principle capital growth from credit is insufficient to achieve inflation.  Meaning there can no longer be growth in the real economy because that wealth is going to interest payments on past debts...and ZIRP can't make more credit, because no more credit can be serviced.

From today til collapse only QE can produce nominal inflation.

And real private innovation in this currency and Govt environment is actively suppressed.   

So the CB choice today truly is:

Collapse by deflation 

OR

Collapse by inflation.

China is expressing their CBs preference.

 

Tue, 08/25/2015 - 12:53 | 6468901 Joebloinvestor
Joebloinvestor's picture

QE + Shadow banking + Every fucking bankster LIES LIKE Hillary= What you have today

Tue, 08/25/2015 - 13:16 | 6468921 Chuck Knoblauch
Chuck Knoblauch's picture

War for the Petrodollar in the Middle East.

War for global currency reserve status.

China dominates trade in Iran, by default.

If the US has any current interests in Iran, they are violating their own sanctions.

All for Israel?

Plenty of blame to go around.

Tue, 08/25/2015 - 13:15 | 6468979 erk
erk's picture

The dramas of a society addicted to fiat. Numbers on a bit of paper can ruin lives.

 

Tue, 08/25/2015 - 13:27 | 6469013 Dawgeatdog
Dawgeatdog's picture

Kind of stupid blame passing.  I mean, I'm hardly a supporter of the Fed, but China is blaming the Fed because the dollar has been strong, and China has keep their currency pegged to that strength. How is that the fault of the Fed?  China should have let their currency free float years ago. 

Tue, 08/25/2015 - 15:54 | 6469568 monad
monad's picture

Rule #4: Always blame somebody else. The farther away, the better.

Tue, 08/25/2015 - 13:55 | 6469121 earleflorida
earleflorida's picture

...the fed should remain patient until inflation hits 2%[?] WTF!

excluding food and energy, inflation is at a negative 8%... again, WTF!

China hasn't a problem? No, indeed... it's is the 'america's' that have this problem...

Sure, China's shadow banking hijacked a portion of the market and the bottom hasn't been flushed out from the nefarious 'Chiang Kai-shek- Nationalist Capitalist'?, whom happen to believe Chinese capitalism can mimic the current USSA capitalist system owned and bought outright by the private entity FRBsystem.

China has state owned enterprises that happen to be integrated into their nascent capitalist system that has yet to find its footing. Butt, never fear they will choose which capitalist system or ? to travel down on their own seeing with their very eyes the pathetic 'Free-Mraket-Capitalist System' the USSA has borne upon itself....[!]  

Show patience my grasshopper.

Tue, 08/25/2015 - 15:35 | 6469473 monad
monad's picture

Long Frying Banksters

Tue, 08/25/2015 - 15:40 | 6469501 fed_depression
fed_depression's picture

Meanwhile the market except for the Nasdaq is giving back all the gains. A CB cut in rates and it doesn't hold. Something is truly up then.

Wed, 08/26/2015 - 00:01 | 6471549 JOHNLGALT
JOHNLGALT's picture

The rates will go up in Sept, Dec, March 2016, June, Sept, Dec, NO WAIT REALLY AND TRULY, cross my heart and hope to die, It will be 2017 March, June.

 

 Looks like the markets are pricing in the Fed’s rate hike. Tell them again Janet how you are getting near to lift-off.  You have enough DATA from around the world. The rate rise will strengthen the dollar and we can get this thing finished with.  HA, HA,HA _JOHNLGALT.  p.s.  There seem to be a lot of John Galt’s out there working toward the same end.

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