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"Now Is Not The Time To Raise Rates" China Demands The Fed Live Up To Its "Global Responsibilities"
With all eyes on China's Trade Data (due out shortly), propagandists aplenty are out en masse to explain a) China's slowing economy is a "healthy rebalancing" (in other words, please do not pull your capital, or this will get very serious), b) The Fed should not raise rates (or we will bury them in Treasury selling and force QE4), and c) Credit demand is extremely weak (in other words, no matter what supply is jammed down the banks' throats, it won't reach the real economy).
The PBOC fixed the Yuan massively stronger (+0.28% - the most since Nov 2014)
- *CHINA SETS YUAN REFERENCE RATE AT 6.3231 AGAINST U.S. DOLLAR
- *CHINA STRENGTHENS YUAN FIXING MOST SINCE NOV. 2014
and injects more liquidty:
- *PBOC TO INJECT 40B YUAN WITH 7-DAY REVERSE REPOS: TRADER
After 8 straight days of stronger fixes, On- and Off-shore Yuan is trading back at 2-month highs (having retraced most of the August devaluation) and notably erased all of the spread between the two rates...
Technicians note that CNY has broken below the 50DMA and retraced 50% of the August rally, targeting 6.30 as the next support....
The USD is notably stronger (against Asian FX) once again as Asia opens
* * *
As Reuters reports, The Fed just got its marching orders from China...
Now is not the right time for the United States to raise interest rates, given the global economic situation, China's Finance Minister Lou Jiwei said in an interview published in the China Business News on Monday.
Speaking on the sidelines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand.
"The United States isn't at the point of raising interest rates yet and under its global responsibilities it can't raise rates," Lou was quoted as saying.
The finance minister said the United States "should assume global responsibilities" because of the dollar's status as a global currency.
But for those hoping (and praying) for moar stimulus from China to save the world, think again. As Bloomberg reports, while the QE-esque CAR program announced overnight may free up some lending "room" - there is no end-demand at anything but off-market rates (as the Chinese reach peak debt saturation like the rest of the developed world.
PBOC Academic Warns of Falling Borrowing Demand in Real Economy
Some manufacturers in China are cutting capacity and reducing borrowing demand amid increasing downward pressure in economy, Wang Yong, a professor at the People’s Bank of China’s Zhengzhou training school, writes in Securities Times.
Weak demand in credit market has “severely” affected lendings and some banks are forced to reduce credit lines
Policies should work on both credit supply and demand
Chinese central bank’s expansion in re-lending program could increase commercial banks’ lending ability
Regulators need to build confidence in cos. to boost investment and borrowing demands
Despite The PBOC demanding yesterday that "China's market correction is nearly over" which was 'confirmed' by panic-manipulation in Chinese stocks yesterday...
But are sliding modestly in the pre-open...
- *FTSE CHINA A50 INDEX FUTURES FALL 0.2% IN SINGAPORE
- *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 0.3% TO 3,420
Earnings expectations continue to collapse...
As SCMP reports, as the authorities on the mainland moved to project confidence in the country's economy and stock markets, investors yesterday picked up on the positive stance and bought shares to move the markets more than 3 per cent higher.
Hopes are high for more official measures to boost the country's economy after the Communist Party said it would be holding a key meeting from October 26 to 29 to map out the 13th five-year plan.
...
A Politburo statement said the plenum would develop a strategy for building a well-off society and set the direction for the nation's socioeconomic development.
...
But analysts said the mini rally would not be sustained without significant policy support in the new five-year plan.
"Personally, I do not see much room for further growth in the share market," said Eric Wu, an analyst in Shanghai. "It is crucial to see if this meeting will break through the reform strategies laid out since the plenum in 2012."
...
"We need to see a more detailed ownership reform plan for the state-owned enterprises, or a tax-reduction plan for emerging industries. If neither of the two catalysts comes into being after the party plenum, the current rebound will be small in size and unsustainable," the note said.
ut all the excitement and re-promises from the leadership has done nothing but drive the bloody chinese to relever!!
- *SHANGHAI MARGIN DEBT BALANCE RISES TO ONE-MONTH HIGH
- Balance rose 3%, biggest gain since Dec. 8
And finally, just in case you were still believing the mainstream media mantra that "China doesn't matter" - it does!!
On a side note, Aussie miners are taking it on the chin again (just a shame their rugby team didn't last weekend)
Charts: JPMorgan and Bloomberg
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I can't take much more of this.
It makes it easier if you just breathe out.
We still have 9 1/2 more inches of Yellin' to go.
I hear ya. Too bad I quit using drugs along time ago.
Looks like I picked the wrong week to quit sniffing glue...
Nearly evey person I know who claims to no longer use, is currently taking an opiate or a stimulant which they now get from the dealers who work in offices with a bunch of waiting rooms.
Chemicals have always been a part of the human condition. It is all about moderation.
I am a stone cold, drink til am I drunk, and will not stop drinking for months, alcoholic, idiot. I can not drink alcohol and do not.
Other things are available and am able to to moderate and function without causing damage. It has always been this way.
We like the romatic view of history when talking about drugs, but you had to be high to work a field like a dog and not get to keep your production.
Instead you were forced to hand it over to some motherfucker who periodically made you got to war and kill shit loads of people so he could acquire more tenant farmers like yourself. YOU HAD TO BE HIGH TO DO THAT SHIT.
I think the we should listen to the chinese. Most ZH readers seem to have aopted their favor of shiney metal objects.
Interesting.
October 13th will Mark the Real 2,570 Day Shemitah Cyclehttps://www.youtube.com/watch?v=CAgcwOcmcU4
About time.
Well the Fed thinks it is god. They'll have none of that Shemitah business.
Damn, I was born one day too early.
"October 13th will Mark the Real 2,570 Day Shemitah Cycle" -Hitlery_4_Dictator
The one that was a real rip-roaring blast, was the 2469 cycle (two for 69), 101 years ago (1914).
Get ready for your daily bowl of rice - and spreading your human waste on your kitchen garden. Watch your pigs in the back yard. They look as attractive as your dog to some people.
I think you meant to say they are as smart as a dog, not as sexy as a dog, but maybe your the core demographic here of bible thumping gun toting tricorn hat wearing royal libertard.
PS a simple composting toilet renders human waste suitable for the garden and can be used in a small home scale methane plant to produce energy. This would supplement your chinese made solar panels on a cloudy day of course.
NO - as tasty to some as your dog!
Sure, in China they all have composting toilets - not.
You lost him homebody, just go back to your bible thumping and tricorn hat wearin'. /sarc
Mention of pigs and a lot of mud-slinging- great mixing of metaphors, folks!
Regarding composting, a composting toilet is basically a variation of China's old (probably still in practice in lots of places?) "Night Soils." You can spread raw waste on fields and achieve sterilization via solar radiation. Because it's not perfect, and people get impatient to plant and harvest (because you gotta eat), Stir-Frying (high heat) is the means of killing off any remaining pathogens.
It's all about the eventual return to recognize TRUE efficiency in the utilization of energy. Those that can achieve with the least will, as nature prescribes, tend to be the better survivors.
Raise the fucking rates damn it!!
So the Fed's forward guidance comes from China huh? Hilarious.
And if China decides to really dump USTs? It might happen not as some politically motivated move to one-up the US, but out of sheer need (to support shaky books); no matter, it seems almost a sure bet that eventually China (as will everyone else) liquidates. I don't think that the Fed would want to see this any time soon; if they see it as something brewing I'm pretty sure that they'd consider bargaining with China, which, I suppose, one could say that that could be seen as "forward guidance," no?
http://amphora-alpha.com/wp-content/files_mf/1444340215AR_1015.pdf
Now is definitely time to raise rates. There will be some domestic pain, but as it is right now, China is far more leveraged and in a situation where we can basically ruin their agendas.
Does China hold US debt? Sure, about $1.1Tt of it. But there is a massive carry trade of ~$3t (denominated in USD) and many companies in China have taken out USD loans (~$2t). Any CNY weakening will be met by an even larger scale capital flight. That 1.1t is nothing, the carry trade alone will kill it, which leaves China in a position where they must print a LOT of RMB to buy up USD that it can send out. This shows some serious weakness and will crash the CNY. That crash creates a feedback loop and a few decades of wealth vanish in very short order.
So, US, please, raise rates already. A deep recession is a small price to pay for a dead china.
US Deep State: 1
ChiComs: 0
Yes, but China has supplied nearly half of our manufactured goods for more than a decade. China has accepted faith-based (or trust-based) USD in exchange for these goods and won't be likely to accept them again if they are the instrument of their financial demise. China is the largest trading block in the world. A dead China doesn't go without taking the world - and the USD-based financial system - with it.
I can't speak for everyone, but China surely does not supply half of the manufactured goods that I personally buy.
Chinese gold and silver?
Chinese guns and ammunition?
Chinese parts for my fleet of EMP-resistant old GMCs?
Chinese batteries for my burgeoning solar plant?
Chinese food supplies?
Chinese tools to last a lifetime?
Chinese mil-spec clothing and equipment?
Chinese seeds and garden implements?
Not at this address, no sirree, Bob.
I did buy a cheap pair of shoes to wear while mopping tar on a flat roof, so I guess I have contributed 5 bucks to China this year.
And my bro left me an old iPhone 5 that he wants me to use for target practice.
What I find interesting is the idea that more of the central FX pile is in some other currency. What could it be? And how fast is it sinking relative to the UST assets they hold?
China: got 20% deval yet?
Markets are waiting.
Else, keep draining the 3.5T in reserves.
GEOPOLITICAL ALERT
The ChiComs are upset at rising i-rates?.....SHIT, It's a done deal. (anybody here know how fucking paranoid the US Deep State is about China?)
The Fed will just keep rates at 0% indefinately, and have their PPT keep buying stocks to prop up the stock market and everything will be awesome. Watch.
Lester -> +1....they can't raise rates....
Govt debt becomes bigger problem
You are coming into an election yr
It blows up a bank or two and make EM debt blow up as well
Sorry China do not hold your breath.
PRINT MOAR MONIES FED!!!!!!!!!!!!!!
- China
Governments around the world agree. Fed raising rates will spell doom period.
... They'd rather flirt with WW3 in the MiddleEast than admit we're bankrupt.
wow things must be really bad in china
That is the obvious call. Confucius wonders if maybe China isn't doing a little rope-a-dope here. At the same time they are seeming to beg the Fed to stay ZIRP they are signalling to the rest of the world that the Fed's credibility, and thus the dollar's, is at stake. If China fails because of higher rates then they will in turn blame the Fed and diminish the dollar.
"Werr screw you round eye. We have a gord."
"You have a gord?"
"Gorrrd. Sirver. Metar. Dumbass."
"So the guy has a gord..."
All we need is for someone to switch sides. Why are the Saudis loyal to the dollar again? Oh yeah, mil.gov.us. That arrangement is looking more feeble by the day.
We all know the plan is to kill the dollar (inside job). We know doing something like that takes "flexibility". We just don't know HOW or WHEN it is going to happen.
So the guy has a gord..."
+1
Although, I respectfully disagree with your analysis.
The BRICS are not patricidal. China is nothing without external inputs...and...customers (west).
Russia does have oil, gas, and now, unexpected military capability...but it is NOT even a feeble Japan economically.
What China, AND the rest of the BRICS want...is for us to get serious about fixing the mess it sees we created...and NOW.
Despite a lot of views to the contrary, Russia and China are NOT ready to run the world just yet...and I'm not sure they even want to. They want to make money, not war.
If we actually had a real recovery here...you'd never have heard about a new reserve currency replacement for the dollar. Everyone would think that is as crazy as it is unnecessary.
m
"We all know the plan is to kill the dollar (inside job)."
It's more likely that there's a plan on what to do when the dollar kills itself. Fiat has a built-in projection of eventual death.
Everyone is playing the Ponzi Game of Growth. It's not a conspiracy (not unless you figure that every single person who believes in growth is essentially supporting this "plan").
When viewing this as picking winners and losers, just consider, did the US really "win" the Cold War? Strong argument could be made that the Russians won: look at them now. No matter, all fiat monsters will eventually run out of fodder to sustain themselves.
Fortune Cookie say: Commodities are cheaper if the dollar is weaker. Lucky Numbers: 10 31 15 18 13 33
Ouch! China's imports -17.7%
It's every man(country) for himself now.
We raised rates and wrecked Japan decades ago and now China is in the kill box. What are we waiting for?
Oh...I don't think we want to do that.
We're already in trouble with the EM's for the western outsourcing that gave them hope in a more prosperous future selling to us, while at the same time, leaving us broke and unable to.
It's important, that when it goes, we're only the source of the cause, and not the pin on the global economic disaster grenade (hell...hydrogen bomb) about to strike the immediate cause.
If you think we're not liked now...
We'd be hated for at least a thousand years hence.
m
This is a VERY significant blurb (if accurate).
This locks the door on any rate raise here...indefinitely. No wonder Yellen had podium difficulties the other day. Her "international developments" rationale may well be the result of back channel pleas from the Chinese.
We all knew China was in bad shape, but when they publicly advise the manager of the WRC NOT to raise rates, it's clearly a strong signal they're in danger of collapse. Perhaps it's also the primary reason for Xi's visit (and I suggested he may have come to ask for help and guidance with their massive mess) last month.
Today's Chinese trade numbers merely underscore the point. They have no mature middle class capable of picking up a bigger share of their GDP, and exports aren't selling much to the west (weak exports). Therefore, commodity inputs aren't needed (bigger part of weak imports).
We're almost there folks.
Personally, I doubt we get into next year without it finally all going to hell.
m
Ok, now ZH's true colors are showing. Tyler's upset about Australia powering through the Rugby World Cup, kicking England out of the competition and running over Wales. So is this page's Tyler a Pom or a Kiwi?
Yes be a good girl Janet and keep the malinvestment ponzi scheme going would ya! I've got houses to flip here!
There’s a lot of silly talk about how and when to rase rates while the simple truth is that they can’t and they won’t. So stop that!
By that logic, when the Chinese were over heating their economy, the Fed should have raised rates...right?
So it is about the US economy sometimes...about the Chinese economy sometimes....about unemployment sometimes but then it is about promoting inflation other times....
There is always a reason not to raise interest rates.... .25!
The Fed cant get out .... that is the only conclusion....they cannot EXIT...only generate excuses.
Just annouced Lou Jiwei will be named Goldman Sachs Chinese director at a salary of $1 Million for saying the correct thing
China is selling treasuries now because they need the cash to restimulate their own economy. But the Chinese threat of selling all their Treasuries is an empty threat. China would do more harm to their own economy because as they sell Treasuries, they put downside pressure on the dollar which makes Chinese exports more expensive. Besides, if the Fed is ready to spend $4T on keeping interest rates low, they probably wouldn't have much problem spending another trilllion to buy back what China is selling. The real loser will be China with their expensive exports.
You have it backwards; if they dump the treasuries that would put the demand for dollars higher; thus increasing the dollar strength relative to almost all currencies making the US exports higher and Chinese exports cheaper or imports to US cheaper. The dollar would be in high demand while supply is tight. Now if China took those dollars and bought Yuan, then that would prop up the strength of the Yuan relative to the USD and that would increase the cost of their exports. That would be unlikely.
The largest buyer of US Treasuries is the US Treasury and it has been that way for a while to give the illusion that the bond market is liquid. Guess who gets to pay the interest?