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Japanese Stocks Tumble After Holiday, China Default Risk Hits 2 Year Highs As Yuan Weakens For 4th Day
AsiaPac stocks are broadly lower at the open, folowing US' lead as after being closed for 3 days, Japanese stocks open and catch down to global weakness with Nikkei 225 at 2-week lows. It appears it is time to "get back to work Mr.Kuroda," as stocks are below Black Monday's lows. Following last night's dismal data, China credit risk rose once again to new 2 year highs. Once again, industrial metals are under pressure with iron ore, copper, and aluminum all lower (following "peak steel" comments). After 3 days of weakening (and Xi's comments that China won't weaken), PBOC weakend the Yuan fix again, pushing the offshore-onshore spread to 2-week wides (over 500 pips apart).
After 3 days of holidaying, selling resumes in Japanese stocks... ahead of tonight's Japan PMI.
The good news to start the day in China, delveraging begins again...
- *SHANGHAI MARGIN DEBT BALANCE FALLS FIRST TIME IN THREE DAYS
As it appears the excitement of high beta fraud is back with ChiNext and Shenzhen outperforming this week...
But the path remains similar (albeit a little faster)...
Once again China injects more liquidity...
- *PBOC TO INJECT 80B YUAN WITH 14-DAY REVERSE REPOS: TRADER
And industrial metals are all lower after...
- *CHINA STEEL OUTPUT TO DROP TO 810 MLN TONS IN `15: CUSTEEL
- *CHINA STEEL OUTPUT HAS PEAKED, CUSTEEL'S YANG SAYS IN I'VIEW
But China default risk continues to leak higher...
Following Xi's comments that China will not devalue the Yuan (and 3 days of devaluing the Yuan), PBOC weakened the Yuan fix again tonight...
- *CHINA SETS YUAN REFERENCE RATE AT 6.3791 AGAINST U.S. DOLLAR
Notably the spread between Onshore and Offshore Yuan has pushed to a 2-week high...
Charts: Bloomberg
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Helicopter trading?
Not to worry, the NSA/zionist internet spy stocks (FB, LNKD, GOOG, etc.) will have no difficulty maintaining their price.
They are very valuable to the controllers and so are above monetary valuation.
Should I sell my Enron now?
"Should I sell my Enron now?"
What ? Don't panic, the Fed has everything under control.
It would be useful to see a story detailing the decline in industrial metals and rise or strengthening in Gold. If present it suggests that the shit show previews are starting to play prior the movie.
don't worry about the japanese and chinese maggots. they got plenty too.
Why did I have to be born on this planet.
Why didn't I get a government yob?
Mother, do you think they'll try to break my balls?
OOH ahh Mother should I build a Wall
you are witnessing a species that was able consume as much as it wanted. all vices run rampant. that is great drama. you want to live in a boring Disneyland perfect society. its one thing humans have always been good at. lets have slaves build me a pyramid for three hundred years, cus that will make me eternal. when you think you have it all you want to keep it for eternity. that's some crazy ass drama right there. and yet we think it was great human achievement.
Gold catching a small bid this evening in Asia; maybe they are getting done selling.
Bitcoin $231 steady as she goes.
USA futures will likely bounce back up, 1h RSI Bullish divergence in a downtrend. Retest 1960-1987.
Then Lower Lows.
http://tripstrading.com/2015/09/24/sp500-1h-chart-bullish-divergence/
http://tripstrading.com/2015/09/19/sp500-weekly-chart-2-or-5/
All of the free trade BS has made all economies more vulnerable to real, imagined and manufactured, global economy BS. The more unnecessary off shored business your economy is involved in, the less control you have over your local, real, economy. It is completely logical to only allow the minimum required import and export of resources, goods, labor. More than required exposes you to more of the external, uncontrolled influences. Just common sense. Giving all the manufacturing over to China has made us hostage to China. To it's good or bad intentions. It's mistakes. China has it's best outcome in mind. We are now only a cost benefit analysis. Worst case scenario, that I suspect, is China is so thoroughly corrupt, that we are hostage to that corruption as well as our home grown corruption. We seldom prosecute our on shore corruption. The offshore is even safer and more rampant. Our regulations and inspection is lax. They are almost nonexistent in China. There is no free trade between unequal partners. A very few benefit from that trade. Everyone else loses.
http://www.reuters.com/article/2015/09/24/japan-economy-idINL4N11U074201...
Japan PM to announce 600 trillion yen GDP target - government source
* Abe trying to pivot focus to economic policy
* Investors disappointed with pace of economic reforms
* GDP target seen as unrealistic by economists
By Stanley White and Takashi Umekawa
TOKYO, Sept 24 (Reuters) - Japanese Prime Minister Shinzo Abe will announce a plan on Thursday to raise gross domestic product by around 22 percent to 600 trillion Japanese yen ($5 trillion) as he refocuses on the economy after the passage of controversial security bills that eroded his popularity.
Abe will reveal the plan at a news conference marking his election to a second three-year term as ruling Liberal Democratic Party leader and hence, premier, a government source said.
But the new GDP target will not have a timeframe, the source added, which could raise doubts about the goal.
Abe wants to turn attention back to the faltering economy after last week's enactment of unpopular bills that could let troops fight overseas for the first time since 1945, a milestone in his push to loosen the limits of the pacifist constitution.
The legislation triggered large public protests and has eroded Abe's voter ratings, which fell six points to 40 percent in a poll published on Monday by the Nikkei business daily. His disapproval rating rose seven points to 47 percent.
"It is obvious that the one thing they want to do is demonstrate that it's the economy first, that the economy is back on the front burner," said Jesper Koll, CEO at WisdomTree Japan KK.
The government's efforts to boost GDP will focus on steps to expand incomes, support childcare and nursing for the elderly, public broadcaster NHK said earlier on Thursday.
The GDP target could draw criticism for being unrealistic because it implies levels of growth not seen in the last two decades, while economists doubt the government will enact policies bold enough to even come close to the target.
"We can expect some measures to stimulate consumer spending because capital expenditure has not been strong enough," said Daiju Aoki, economist at UBS Securities.
"With out more radical reforms, this GDP target is unrealistic. Even at 3 percent annual growth, this would take seven years."
In fiscal 2014, nominal GDP was 491 trillion yen. Since fiscal 1994, the earliest date that data is available, Japan's nominal GDP has actually contracted by 1 percent.
Since Abe took office in late 2012, nominal GDP has expanded 5.8 percent as the central bank pursued quantitative easing, and a stock market rally encouraged some individual investors to increase consumer spending.
After an initial wave of success, investors have grown disappointed with the scale of Abe's structural economic reforms.
Cabinet ministers have recently said that Abe will also target increases in capital expenditure as he tries to breathe new life into his economic agenda.
I read a quote today;
"What the Chinese have done for their people by encouraging them to buy gold, and then devaluing their currency is fantastic."
I'm no english grammar dude but I thought the comma was wrong.
It's just missing a comma. Should be:
"What the Chinese have done for their people by encouraging them to buy gold, and then devaluing their currency, is fantastic."
But there are no super hard and fast rules for commas tbvh.
"What the Chinese have done .... for their people .... by encouraging them to buy gold .... and then .... devaluing their currency .... is fantastic !"
A bush I was sitting near burst into flames the other day and told me that the yuan was falling to put pressure on the American brokerages (GS) whose billions are locked into suspended stocks on the Shanghai Exchange.
Stocks which are profitable for them, but were bought when the exchange rate was 6.03 to the dollar. Now the yuan is weakening and even if they could sell their suspended stock, they'd lose some of their profit by having to repatriate their dollars at 6.379 to a dollar.
Blankfein could end this is a second if he would agree to the three way deal with Xi and Larry Fink. You know what they say about 'pride going before the fall of the yuan'.
Michael Pettis (http://blog.mpettis.com/) on debt and balance sheets. It seems (surprise!) that excess debt is destabilizing. Somebody needs to send some 4th grade schoolkids to the Fed to try to explain this to them. His remarks are directed at China but clearly apply to Japan, the USA, all of the BRICs, and of course the PIIGS (who aren't floating belly-up YET).
"The second way liability structures can constrain growth, while often poorly understood by economists, is actually well understood in finance theory. An economic entity will suffer from “financial distress” if debt has risen so much faster than expected, or growth is so much lower than expected, that economic agents become uncertain about how higher debt-servicing costs will be assigned to different sectors of the economy. This uncertainty forces these agents to react in ways that unintentionally but automatically intensify balance sheet fragility and reduce growth. This uncertainty is intensified if the debt burden rises and falls inversely with debt-servicing capacity, which almost always happens when economic growth is highly credit-intensive, and which seems to be happening in China.
Because this seems so counter-intuitive for many people, it bears repeating. The problem with too much debt is not just that it might cause a crisis. The problem is, first, that debt may be “inverted”, i.e. structured in a way that systematically enhances volatility, which means good times become better and bad times worse. This automatic leveraging-up of volatility has
seriously adverse impacts on long-term growth. Second, when debt levels are higher than expected and growth lower (one of the nearly inevitable consequences of highly inverted balance sheets), if this divergence causes uncertainty about how the debt servicing will be resolved, the uncertainty itself forces agents to behave in ways that automatically reduce growth and increase balance sheet fragility further."
Does the USA have a razor blade to Japan's economic throat in order to threaten China, or is China holding the razor blade in order to threaten the USA? My suspicion is that they're both using Japan against the other, and when Japan passes out from sheer exhaustion, they'll both be left holding the bag. And who will be called in to re-animate Japan? Will it be the IMF or the AIIB?
"Will it be the IMF or the AIIB?"
No, it will be the new bank, WAR ! Nothing like a hot one to distract the peasants.