China Contagion Spills Over To Hong Kong Banks As HIBOR Explodes To Record High, Stocks Tumble
Chinese stocks are trading at the lows of the day after Overnight HIBOR rates (Hong Kong's interbank borrowing rate) exploded a stunning 939bps to a record high 13.4%. It is clear that banks are utterly desperate for liquidity and/or are extremely concerned about one another's counterparty risk. This has dragged HSCEI down 5% (to its lowest since Oct 2011).
Something just snapped...
Evidently the pressure between On- and Off-shore Yuan was too much for banks to bear...
Smashing Hang Seng China Enterprise Index down 5% to its lowest since October 2011
But US equities are being bid by an invisible hand once China closed for lunch...
Chinese Default/Devaluation risk just jumpe dback above 120bps (highest since August collapse)
As we explained earlier, as Asian markets opened (ahead of the Yuan fix), they were in turmoil with FX markets crashing (JPY rallying as carry trades unwound), equity markets tumbling (Dow, Nikkei, and China A50), commodity carnage (crude and copper carnage) as Gold and bonds were bid. With offshore Yuan sliding ahead of the fix (and Onshore Yuan 3 handles cheap to Friday's fix), CFETS RMB Index dropping below 100 for the first time, and following Friday's 'token' stability, The PBOC decided to hold Yuan Fix practically unchanged for the second day. USDJPY and equity markets jumped on the news, then quickly faded.
We have seen this "stability" before...
Asian stocks collapse to lowest since October 2011...
Chinese media is pushing rumors of rate cuts and urging people that they do not need USD (despite the lines we noted earlier) demanding theyhave more patience... (via People's Daily)
More patience is needed for the Chinese economy which is in a transition period, as it transfers from old to new economic growth drivers while also facing a backdrop of a slowing global economy, the People's Daily reports citing academics. It would be too opinionated to judge that the Chinese economy would suffer a hard landing based on short-term fluctuations as many factors have had an impact on the yuan's recent depreciation and the stock market's falls.
"The fundamentals of many economic crises is the psychological panic problem, and we need to take good care of the market and foster new drivers; conclusions on the Chinese economy can't be made in a rush based on the short-term or partial changes," said Zhang Tiegang, professor at the Central University of Finance and Economics.
Yeah - all psychological.
Offshore Yuan was tumbling before the Fix...
As were Chinese stocks:
- *FTSE CHINA A50 JANUARY FUTURES SLIDE 3%
Of course, The Keynesian have a solution for all this...
- *STIGLITZ: RECENT CHINA MARKET VOLATILITY ISN'T CATACLYSMIC
- *STIGLITZ: CHINA NEEDS DEMAND BOOST TO AVOID DEEPER DOWNTURN
It's that simple eh?!
The reaction to PBOC "stability" is not good:
- *MSCI ASIA PACIFIC EX-JAPAN INDEX DROPS 1.7%, EXTENDING LOSS
- *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 1.7% TO 3,131.85
And Dow futures jumped 80 point and then dumped 100...
Chinese stocks are tumbling...
And ChiNext is now down over 21% YTD...
* * *
As we detailed earlier, markets were turmoiling into the China Fix...
China ripples may be turning into tsunamis. As FX markets creep open, something serious must have snapped. The South African Rand just crashed 10% - the biggest single-day drop since Lehman - to new record lows. At the same time, carry trades are being unwound en masse, smashing USDJPY down to 116.75 (strongest Yen in a year). Somebody do something!!!
The South African Rand crashed 10% to a record low against the USD of 17.9169. This 10% collapse is the largest on record outside of the immediate post-Lehman move...
Don't forget - As goes the South African Rand, so goes The World?
Korean Won plunges to its lowest since July 2010...
And Yen is surging...
Smashing Nikkei futures down over 500 points from Japan's close....
As USDJPY tumbles so US Equity markets are slumping...
And crude is carnaging...
Copper flash-crashed at the open and is now retesting...
It appears people were expecting some Chinese intervention over the weekend... and so far have been disappointed.
For now, Gold is bid as a safe haven...
Charts: Bloomberg
(43 votes)
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There are infnite sources of real money. Some types are less vulnerable to shenanigans than others but all are vulnerable, even silver and gold. See FDR and the gold standard.
because money is only the unit measuring what you are bartering with
"There are infnite sources of real money."
really...thats funny and idiotic at the same time???
the reasons why Gold and Silver r the only 2 forms of real money is because 5,000 years of history tells us so...and then theres a little thing known as "scarcity" which ties directy into the reason why they r referred to as "precious metals"....
keep talking....and sayin' nothing....
Aristotle.
Aristotle's philosophy just happens to be FOUNDATIONAL
Western Civiliation would not be here without that foundation.
To destroy that foundation would destroy civilization.
Attributes of Money
Durability
Portability
Divisible
Fungible
Intrinsic Value
Now Gold and Silver satisfy these requirements. There have been many experiments throughout the many centuries, the Millennia, since Aristotle quilled these on vellum.
Every single one of them has failed miserably.
It is just the historical fact.
And when the US Dollar fails, and it will fail, we will return to that which we know has worked for 5000 years, and will work for another 5000 years if we last that long.
Or Western Civilization fails. And still we will revert to what has worked in the past in order to rebuild a foundation upon which to fabricate another social structure and order.
Now you know this.
Yes I know this.
And there is not one damned thing that you can do to change their mind.
Many will have to suffer as a consequence of the lack of understanding of fundamental truth.
Se la vie.
For further reading to the dear reader...
http://www.marketoracle.co.uk/Article10370.html
http://www.quebecoislibre.org/05/050915-11.htm
Jeez, for a guy that doesn't even know he's a fuckwit, you sure give yourself credit for knowing a lot.
You're a great example of someone suffering from lack of understanding of fundamental truth, and not the kind we're programmed with.
It's c'est la vie...
Buh bye.
I did not study French.
Thanks for the correction.
I didn't either.
Guess maybe one doesn't have to study something, even apply a "scientific method", to know it.
Imagine that...
714
That definition needs to be refined by adding:
"Has no counter-party risk."
If something like gold or silver is real money then why is it measured against fiat currencies like USD? If someone is spending this real money then maybe they are buying energy or food. Real money would be denominated in things we need like barrels of oil or bushels of wheat. If gold and silver are truly real money than whoever let them be measured against debt money needs to be held accountable.
Futes open in 13 minutes. A Black Monday on the table....
If the bulls can break out from ES 1920.25, they will have some hope today. But they really need to break above 1944 from an open of 1913.25.
its happening!
i think the PPT is just trying to see how bad things will get without their intervention
we will see some HFT 330 PM ramps in a week or two just like last year
The House is SHORT.
WHAT do you think is gonna happen?
Same thing that happens when jamming ten pounds of shit in a five pound bag. It's going to be a shitty mess.
Or jamming the elephant in the room through the keyhole called volume
Everything has been tied to the Yen for 3 years now. The Yen is strengthening, probably a result of covered carry trades, and buying by the Chinese. Unless they can overcome China's desire to devalue the markets will continue to head south. There is going to have to be a lot of voodoo to undo the Chinese devaluation.
Green by Morning
Black monday
Cast your ballots folks, and we will let Diebold count em up....
CNBC: Shit their pants
CNBC: Pound the table to buy moar
(can't find the "both" button...)
I've already pulled my money out of the bank last week. I think we are close.
No intervention means one or a couple of the following:
1) big wood is finally short and wants to clean out the 401ks and pension funds
2) China is out of ammo, and the US is actively trying stick it to China
4) The Globalists are making their play.
4) The Globalists are making their play.
In Dec 2014 the banking mafia slipped the 'taxpayer backing of derivative losses' into the spending bill, passed on DEC 16 when no one was paying attention. Now, it's time to cash that chip in. Taxpayers are about to get shafted again...hard! They'll do it during superbowl weekend, no one will care.
3) Something
Damn, dumb fucks didn't link SouthPark to the missing third step.
Well, this is the money making time we've all been dreaming about since 2008 :)
Mind your stops, and good luck. ;D
IF Wave Theory still has validity this leg down is not the last leg down in this wave.
There should be one more reach for the top after this big winter/spring dump/slump before the last dive into the abyss.
But what about the Vietnamese Dong?
Drooping.
go long the dong
<-----Long BONGS
Not to fond of the Dong
I think "since Lehman" was fun for 2015, but it has SO been done.
My vote for 2016's go-to ZH phrase is "Moments ago", which seems to be the timespan between events happening and ZH posting about them.
time passages ---- seems as if Lehman occurred only moments ago
https://www.youtube.com/watch?v=pm6TsYypBpY
If you take into consideration the age of our galaxy, you're right!
It did only happen a moment ago. :)
"moments ago"....
....best ZH phrase since Lehman.
I rather like "WSL" - not Worst Since Lehman, but
"What Sucks Lately"
Equities are a gnat on the butt of the currency elephant. The unwind of the Yen carry trade will CRUSH this fucker.
If the Yen is heading to 100 then stocks are in trouble. Don't forget the Chinese are not just devaluing against the dollar. They will also be devaluing against the Yen. Massive Yen purchases are going to cause complete panic in the Yen carry trade that Abenomics has made so popular since Santa Claus was sliding down the chimney in 2012.
The Chinese arent devaluing against anything. Yen has dropped 50 percent in a couple years, the euro 30 percent. China moving 5-10 so far is a drop in the bucket. When they get to 8 to 1, then it might start getting interesting.
The Chinese aren't devaluing? Hmmmm, you lost me.
What I am saying is ex usd, they are way behind in the devaluation war.
buddy can you spare a qe?
Good one Buzzsaw ! Still giggling.
I have a metaphor for the currency markets. Imagine 200 parachutors jumping out of a plane from 3,000 feet. Because of wind currents, they are all falling at different rates towards earth below. it's almost meaningless to say one is rising faster or slower than another because eventually they are all going to hit the ground.
In these markets, you can't predict which way to go. This is a losers game.
Care to wager a trillion Zimbabwean dollars on that?
I'll see ur trill and raise you a quad.
I'll up the ante, and offer an egg with some bottle caps for your trillion dollar zimbuck.
Sold Scooby - I needs to eat and the bottle caps be worthy of a ZAR
Ahem -- you rang, need a loan?
Are you sure they have parachutes?