Dow Dumps 250Pts, Nikkei Plunges 500Pts After China Credit Concerns, Kuroda Comment

Submitted by Tyler Durden on 01/15/2016 01:07 -0500

It appears the world is ganging up on The Fed as following China's recent clear and present threat should the USD strengthen, BoJ's Kuroda warned that further QQE might threaten the bank's finances - implicitly demanding moar from Yellen because he knows he's out of bullets. Add to that the surge in China credit which merely extends the life of already zombified firms, thus spreading more deflationary stress to the world and stocks from China (SHCOMP -3%) to US (Dow -280 points from Bullard Bounce highs) are tumbling.

China’s broadest measure of new credit surged the most since June as companies increase borrowing on the corporate bond market, underscoring a shift away from reliance on state-backed banks for funding.

Aggregate financing rose to 1.82 trillion yuan ($276 billion) in December, according to a report from the People’s Bank of China on Friday, compared with the median forecast of 1.15 trillion yuan in a Bloomberg survey.

The data shows companies are turning to alternative sources for credit given banks’ reluctance to lend. It also adds to signs the economy is stabilizing, not slumping as its falling currency and plunging stock market seem to suggest.

"For the whole year of 2015, the biggest increment in aggregate financing came from the corporate financing via bond and stock markets," said Zhou Hao, an economist at Commerzbank AG in Singapore.

"It appears to us commercial banks have few incentives to provide loans directly to corporates, especially due to credit concerns over SMEs, but turn to capital markets to finance the corporate indirectly. This hints an ongoing structural change in China’s financing system."

In fact, as we noted previously, the bigger than expected increase in aggregate financing shows Chinese companies taking advantage of lower (bubble) bond yields to raise funds as commercial banks have refrained from providing loans to domestic companies because of the slow economic growth outlook.

Despite the massive supply, yields have collapsed...

As both "strong"

And "weak" balance sheet firms...

...take advantage of the credit bubble. However, there is one less than silver-lining:

Going by the official numbers, which are widely regarded as understated, bad loans rose to a seven-year high of 1.2 trillion yuan as of the end of September. In a sign of write-offs to come, policy makers are aiming for a clean-up of “zombie companies” that rely on government subsidies and bank loans to keep operating.

While that credit impulse would normally be seen as a positive in the new normal, it appears there has been a clear shift in recognition that enabling already-zombified companies to live longer merely exacerbates the over-invested, over-produced, mal-invested deflationary spiral that is rapidly spreading across the world.

Then Kuroda piled on, noting:

*KURODA: NO PLANS AT THE MOMENT TO ADD TO MONETARY EASING
*KURODA: JAPAN'S POTENTIAL GROWTH RATE IS AT OR BELOW 0.5%
*KURODA: QQE POLICY HAS A RISK FOR BOJ'S FINANCES

Which sounds an aweful lot like a demand that The Fed step back up to the plate and "ease" the world's pain (or at least "un-tighten.")

And crushed Japanese Stocks... (Nikkei down over 500 points from the US session close)

And the result of that is an almost total reversal of all Fed's Bullard's good work during the US session. (Dow down over 250 points from Bullard's Bounce peaks)

So for now, Bullard appears to be firing blanks and "good" news is bad news once again.

Chinese stocks head for their longest weekly losing streak since October...

...and still the worst start to a year ever...

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Fri, 01/15/2016 - 01:13 | 7049347 StackShinyStuff

DOWn. That's funny.

Fri, 01/15/2016 - 01:16 | 7049350 Boris Alatovkrap

DOW Syndrome.

Fri, 01/15/2016 - 01:25 | 7049365 rccalhoun

down jones industrial average

Fri, 01/15/2016 - 02:35 | 7049453 Squid-puppets a...

meltDOW

Fri, 01/15/2016 - 05:13 | 7049552 Tarzan

all is well

Fri, 01/15/2016 - 06:37 | 7049659 nmewn

Now everyone don't forget at 9:35 this morning "The economy is strong!"...lol.

Fri, 01/15/2016 - 06:42 | 7049665 VinceFostersGhost

Mind the gaps......that stuff is killer.

Wear your neckbrace.....cuts down on the whiplash.

Fri, 01/15/2016 - 06:48 | 7049674 new game

defending 1867 at all costs, or lose of control????

the question, ha...

Fri, 01/15/2016 - 07:30 | 7049736 Eyeroller

Fuck you, Bullard! Mwahaha!

Fri, 01/15/2016 - 01:25 | 7049366 Soul Glow

China going full retard.

Fri, 01/15/2016 - 01:15 | 7049348 Boris Alatovkrap

Too many graph and complex article, so Boris is make summary of article. Kuroda is say something in Japanese. "nantoka nantoka" and China finance ministry is respond "nei ga nei ga", and value of Asia currency is collapse, create problem for USSA currency.

Fri, 01/15/2016 - 01:42 | 7049391 The Merovingian

Dude, I don't know where you've been, but DAMN we missed you!

Fri, 01/15/2016 - 02:07 | 7049422 Boris Alatovkrap

Boris is miss you too! But in manly way (there is no gay in Russia).

Fri, 01/15/2016 - 02:20 | 7049438 Baron Munchausen

There is no gay in Iran. In Russia they just can't "promote" it, whatever that means.

I suspect you are not a Russian, but rather a tempestuous Latvian, Sir!

Fri, 01/15/2016 - 02:21 | 7049442 Boris Alatovkrap

Boris is offense! Latvian is foul stench and bad manner!

Fri, 01/15/2016 - 05:33 | 7049597 Going Loco

No, Boris is offensive!

(Latvians clean my car at the local hand car wash)

Fri, 01/15/2016 - 06:44 | 7049667 VinceFostersGhost

There is no gay in Iran.

There's no fun of anykind actually.

Fri, 01/15/2016 - 07:53 | 7049781 walküre

Iran's economy is allot more interesting than many of the other muslim states. If the sanctions are lifted, Iran will come back to the global trade and Dubai is taking it up the arse.

Fri, 01/15/2016 - 02:37 | 7049454 Squid-puppets a...

there is no gay in Russia - but there is many Sergei

Fri, 01/15/2016 - 04:00 | 7049518 Mentaliusanything

I have a man love for Boris. But his breath is so much Vodka that I think's he is untouchable. Shame really.

So much balls and so little arm pit killer.

Fri, 01/15/2016 - 04:09 | 7049525 Mentaliusanything

And by the way, there ws a time when Zhedge was ahead of all this and played friday night music with that Bitch Marla (when it was owned by no one but a small group of people who thought things through)

i miss her. I hope she still exists because she broke my heart.

Fri, 01/15/2016 - 04:19 | 7049531 Mentaliusanything

AND ... expect the lower lows and the lower highs to fuck some ones party.(hint- a lot of parties because its one World sweetie)

It reminds me of a side show - it spins a bit and it was fun but eventually you have to get off unless you pay's again

Its the debt stupid

So be it

Fri, 01/15/2016 - 05:28 | 7049594 Latitude25

That was before when bitches like Hitlery didn't grab ZH headlines.

Fri, 01/15/2016 - 05:35 | 7049605 Going Loco

I rememeber when Marla vanished and people asked where she was and we never got an answer.

Never mind, it's 2008 all over again so perhaps she'll revert.

Fri, 01/15/2016 - 02:08 | 7049424 NoPension

Making a YouTube video;

How to cook egg in potato.

I'd link it, but I'm too technically challenged. No kids in the house to show me.

Fri, 01/15/2016 - 02:25 | 7049446 Boris Alatovkrap

Potatoe is very popular in region. You can boil with egg or with turnip, but is alway be boil. Serve with salt or maybe in fancy restaraunt is serve with butter and pepper. Oh, and sometimes is ketsup on side of dish. Now Boris is make hungry!

Fri, 01/15/2016 - 05:51 | 7049618 janus