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This Could Be Very Bad News Ahead Of China's Open Tonight
Earlier today we explained why far from supporting the stock market, all the Chinese RRR cut did was offset already used funds to support currency intervention following the August 11 devaluation: the one sentence from SocGen that put it in perspective was tthe following: "In perspective, the PBoC may have sold more official FX reserves than this amount since the currency regime change on 11 August."
Hence, the RRR cut was a retroactive move, not at all proactive as the market's initial euphoria indicated.
Which, ahead of China's close tonight, could be very bad news for those hoping for a rebound in China's Shanghai Composite which as a reminder closed below 3000 for the first time since its bubble runup which started last July.
Here, according to Bloomberg, is the reason why:
China halts intervention in stock market so far this week as policy makers debate merits of an unprecedented government campaign to prop up share prices and what to do next, according to people familiar with situation.
Some leaders support argument that stock market is too small relative to broader economy to cause crisis, says one of the people, who asked not to be identified as deliberations are private.
Leaders also believe intervention is too costly, person says.
Those who back intervention argue that market meltdown could pose danger because banks offer wealth-management products tied to market performance, people say.
Government’s current priority is success of military parade set for Sept. 3 in Beijing commemorating end of World War II, people say.
China Securities Regulatory Commission doesn’t immediately respond to faxed request for comment.
So if the liquidity from the RRR had been already used up, and if China will not step in to prop up stocks, what will?
And why is China doing this? The FT had an interesting theory earlier today:
The China-led turmoil that has rocked global markets in the past two weeks has also shaken the ruling Communist party and left Li Keqiang, the prime minister, fighting for his political future, according to analysts and people familiar with the internal workings of the party.
Among party officials and politically connected people in Beijing, the hottest topic of conversation is whether Mr Li will take the fall for Beijing’s perceived mismanagement of the stock market crash and the country’s broader economic slowdown.
“Premier Li’s position has certainly become more precarious as a result of the current crisis,” said Willy Lam, an expert on Chinese politics at the Chinese University of Hong Kong. “If the situation worsens and if there comes a point where [President Xi Jinping] really needs a scapegoat, then Li fits the bill.”
* * *
Mr Li is already regarded by most analysts and political insiders as the country’s weakest premier in decades, thanks largely to Mr Xi’s aggressive concentration of power in his own hands.
Mr Li was once thought to be the most likely candidate to replace former President Hu Jintao, before he was instead anointed as Mr Xi’s number two in 2012.
The premier is regarded as a leading member of the faction centred on Mr Hu, known as the Communist Youth League group. But Ling Jihua, one of the most prominent members of that faction and Mr Hu’s former personal aide, was arrested earlier this year on Mr Xi’s orders on charges of corruption and abuse of power.
* * *
“In any other country facing such a big crisis you would see senior officials coming out to reassure the public, but since early July no Chinese political heavyweight has come out to say what’s going on or what the government plans to do about it,” said Mr Lam. “This has fuelled speculation that there are real divisions at the apex of the party.”
Maybe Li rubbed Xi the wrong way, maybe Xi just wants to put one of his own people in the premier's shoes, maybe the two just don't see eye to eye, whatever the reason, what matters is that Xi now has an "out" from the whole market mess: his prime minister, whom he can hand over to the furious masses to deal with as they see fit, thus washing his hands of the whole Chinese epic stock market bubble pop and moving to bigger and better bubbles.
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China's next import bubble will be women. Lots and lots of women.
Maybe that's why they've stock-piled all that cash and bling...
"Fuck you USA."
The short version- "We're broke".
Liquidation of all US treasury holdings by China coming up next. Get ready for higher interest rates automatically due to that, while the Federal Reserve will look like the buffoons that they really are. !!!!
Gold into attractive chinese women? Modern alchemy!
Not yet. Fear trade will drive people into UST to mute any short term price impact of current bond holders looking for bag holders for when TSHTF.
and into sudden heavy drinking as the crisis should warrant:
" A woman was stopped at Beijing Capital International Airport for trying to carry a bottle of cognac worth £120 on the plane. Faced with either having to throw the whole bottle away or drinking the contents, she opted for the latter. The woman, surnamed Zhao, downed the entire thing at around noon, because she didn't want to waste the bottle of Rémy Martin XO Excellence that she had purchased at a US airport earlier on her journey."
http://www.telegraph.co.uk/news/worldnews/asia/china/11822355/Woman-drin...
It makes me wonder whether the Chinese government popped their own stock market bubble so they'd have an excuse to dump Teasuries.
It's just a hypothesis.
it is a very smart hypothesis. Equities risk-off, Treasuries rally
Jesus , if China shits the bed again tonite....
Chinese leadership should have intervened when the Shanghi Market was being overbought
and foreseen the damage that would be done when the market inevitably corrected to a more
realistic level.
I'm long Chinese women (since I married one). Count me in on that bubble......highly recommended.
I'm not touching that one...
I'm in on that one too. Faithful, smart, hard-working, and gorgeous!
Me too. Wonderful lady.
I've heard there are American woman dating ads on all the main Chinese websites...
Men to women ratio in CHINA 70/30.... They will need to import women or follow King Longshanks strategy in Scotland...
You know what they use for rubbers?? A contact lens...and a bandaid.
Somebody needs to translate "Charge of the light brigade" into Chinese......
Qing qibing jinji...
You're on your own for the rest.
https://www.youtube.com/watch?v=VIXOOwthtaE
You don't know who is swimming naked until the tide goes out
rur roh
The smell of doom is in the air.
Ya think?
To expensive? Somebody should have told that to the Fed 20 trillion dollars ago!
Conversation overheard in China today:
Li: Xi?
Xi: Li?
Li: Si!
Si: What?
Hu's on first.
Wi Tu Lo or Ho Lee Fuk?
Dow Hung Lo.
The Party core, the princelings, and the politically connected neo-captialists have been bought out with fresh phony fiat: so intervention is no longer deemed necessary and/or 'too costly'.
The peasants are just prawn to be shelled to the politiburo bosses, and shelled and served like prawn they shall be.
Wi Tu Lo, China's equivalent of Kevin Henry, will be working tomorrow. Markets will be on fire.
At least they have their priorities in order on making sure the military parade is a success
https://www.youtube.com/watch?v=QvMq2YZloZM
and this could be very bad for those hunting "safe yield" in dividend stocks:
Transocean to propose cancellation of third and fourth installments of dividend; Co was previously paying a $0.15/quarter dividend (12.20 -0.06)
Really, I mean seriously, how did they think they could run a stock market with chopsticks?
When the dead cat bounce stops, I want to coin the phrase first for the "new normal" Dead rat splat. ( and then I am headed over to Gartman's house with party favors and a ball gag!
I think DOW 15K gets taken out tomorrow at least intraday......
I think DOW 15K gets taken out tomorrow at least intraday......
How about 14K by Friday's close with the REAL panic starting on Monday the 31st?
That would be awesome in a scary way!
Won't happen, they will shutter the doors and unplug the servers before yielding to reality.
Maybe at that point "they" won't be able to monkey hammer gold down any longer ?
well yes, except that all ccp officials own shares in the SSE or in companies that would like to go public on the SSE. Nonetheless I am encouraged that the ccp didn't insist on holding 3000 last night - which means the new line in the sand is likely 2500 which translates into under $90 for appl and its criminal "tipper" ceo.
I come to Zerohedge to get my daily dose of depression. Blogging one negative article after another.
You guys should replace your tagline to "Get your daily dose of depression" or something like that.
I come to Zerohedge to get my daily dose of depression.
Welcome to a semblance of the real world pal . . . . is it any wonder many times what you get on ZH is never reported on the MSM outlets - particularly the financial ones like CNBS and Bloomturd . . . .
Real world == depressing news over and over again. That's great.
Actually nothign to do with a real world. Just a place for all the market shorters to get together and find as much negative news as possible. Not doctored news but real I agree. But this is like the Facebook for shorts and people looking for their daily dose of depression.
It's exactly the contrary. Daily dose of sanity. But why am I bothering...
He needs a "I contributed trophy"
Exactly Bernoulli.
BTW, your theory is why I'm a pilot...
I mean, WTF we gonna do, listen to/watch CNBC, read Bloomberg or Yahoo Finance or any of the other sell side cheerleaders. I watched Cramer Once - I cannot believe people watch this idiot entertainer cum market analyst, or whatever the hell he purports to be, but apparently a lot of people do watch him, and not for entertainment.
Thank goodness for ZH and Misch and George Washington and the rest for a daily dose of sanity. And you, Saint Bernoulli, and knucks and the rest here for both sanity and entertainment.
So what's the problem?
Pop, light up, or pour something!
Tomorrow is another day!
Until it's not.
foad
Hahaha you must get depressed often. Too bad you can't distinguish between humor and reality. Eat a bag of dicks and come back often!
Byeeeeeeee!
I can relate Stan.
Depression is like the blues.
Sometimes, when you hear about somebody elses problems, it makes your own seem less painful.
riddle me this: is there a plan in the works to retire the current market operating system?
else, try to get the balance right.
When you reach the top
Get ready to drop
Prepare yourself for the fall
You're gonna fall
It's almost predictable
Sum Ting Wong.
Ho Li Fuk.
Dow Tu Lo.
"Sum ting wong" should just automatically appear as the first comment on every story posted.
Careful, with a little Ghost.py scripting your wish could become reality!
That, and you'd get your account banned.
You no raise rates round eye
Just don't open the markets in China tonight. Can;t sell what won't trade!
Should the headline read, "Breaking News: China allows markets to function, seeks investors interested in price discovery"
Leaders also believe intervention is too costly, person says.
Haha. Did I mistakenly click on the onion or this a new low in anonymous sources. :)
This can't be good either:
Chinese Govt Agencies Expect USDCNY to Fall to 7 in 2015; 8 in 2015This could be a real problem, no? Very AIG-ish.
August 18, 2015
China shadow banks appeal for government bailout
http://www.ft.com/cms/s/0/06cc9b9c-44c4-11e5-b3b2-1672f710807b.html#ixzz...
The collapse of a state-owned credit guarantee company in China’s rust belt has shone a new spotlight on risk from bad debt and moral hazard in the country’s shadow banking system.
As China’s economy slows, concerns are mounting over rising defaults, especially on loans from non-bank lenders, which provide credit to risky borrowers at high interest rates.
These guys have to be shitting in their pants.
Me ruv you rong time.
Now, risten here lound eye!
Phocky Socky 500 dollah. you like my sistel? She chelly 300 times.
Hillary's mouth - 1/2 a million Dollah
ClintonsCock - worth 2 nubile virgins
Obama's A$$ ? - well thats a secret (known to NSA & cabals only)
"Ahead Of China's Open Tonight"
IF it opens.
It's all part of the plan.
http://www.denk-bubbles.com/what-if
AEP, quoting SocGen, states that at it's current FX intervention reserves burn rate, China will be out of ammo in 9 weeks' time, 27th October,
which is one day before the October FOMC meeting:
http://www.telegraph.co.uk/finance/economics/11823176/China-cuts-rates-t...
Nice timing Chinese folks.
They need Mao back so desperately as we speak.
That way instead of bubble bursts we get famines and a 10% population discount!
OK, let's just shut all the markets down for a week and have a big party a real hootenanny!
I havent heard anyone say hootenanny in years.
Thanks for the reminder.
China hates the NWO and Lloyd Blankfein.
Why? The Chinese are the Jews of Asia.
I don't know about that, but take a look at their checkerboards.
http://www.shutterstock.com/s/chinese+checkers/search.html
Weird thought just popped into my so called mind, maybe OT, but not much: Bernake, dear old Uncle Ben, must be one happy motherfucker that he got out in time...
And notice how these supposedly progressive technocrats only handed the ship's wheel to the (barely) black president and the female Fed chief in both cases only AFTER the ship had hit the iceberg as a tactic to stymie critics of the system and dodge their grievances by calling them racist and sexist. They KNEW extraordinary and hugely unpopular measures were coming, and said, "hey, let's put a black guy and a woman out front for that." Real progressive. Sociopaths.
"as a tactic to stymie critics of the system"
Hah! I see what you did there! How clever to talk about our half negroid POTUS and slip that reference to Stymie in there! I was a Little Rascals fan myself!
The same principle applied to IMF appointee.
From the main article:
"the hottest topic of conversation is whether Mr Li will take the fall for Beijing’s perceived mismanagement of the stock market crash and the country’s broader economic slowdown."
So, if they allow a "free(ish) market, someone has to take the fall? What has this world become? On these pages folks clamor for no management of the markets - whether they are in freefall or on an irrational exuberance tear.
I will take the flip side and argue that the Chinese gov interventions have caused the market crash. I would not be surprised to see a massive rip your face off rally for weeks if they decide to stop intervening in markets...
To the Chinese economist looking at intervention in markets: Of course; Don't do it.