China Begins Monetary Easing, Lowers Reserve Ratio By 50 bps: Gold, Crude, Futures Spike

Tyler Durden's picture

It appears that China has already forgotten its close encounter with inflation as recent as a few months ago leading to assorted riots, and is instead far more concerned with the collapsing housing market. As a result it just announced a 50 bps reserve ratio cut, well in advance of when most commentators thought it would happen, on what is now the start of a monetary policy loosening cycle. The kneejerk reaction is for futures to surge and gold to spike, and crude to pass $100, even as the EURUSD was once again drifting lower overnight. And while this is beyond bullish for commodities, we doubt equities will remain bid unless Europe mysteriously fixes itself overnight too. Which won't happen. More from Reuters: "China's central bank cut the reserve requirement ratio for its banks on Wednesday for the first time in nearly three years to ease credit strains and shore up activity in the world's second-largest economy." Naturally, this ties Bernanke's hand even more as Chinese inflation will now be stoked internally in addition to importing any excess inflation to be generated by the Chairman, likely leading to an even faster spike in global inflation the next time we get US-based quantiative easing. Look for Chinese-based purchases of gold to surge.

and as shown by Bloomberg:

More from Reuters:

The 50-basis-point cut in the reserve ratio showed China's monetary policy has swung into easing mode as economic growth slows while inflation eases.


The cut lowers the reserve ratio for China's biggest banks to 20 percent from record highs, and frees up funds that could lubricate lending to cash-deprived small firms.


The new ratio is effective December 5, the central bank said in a short statement on its website.


The central bank last cut the reserve ratio in December 2008, when China's economic growth floundered on the global financial crisis.

We expect many more analyses to come on the matter shortly.

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Oh regional Indian's picture

Hah! A clear sign that in this new reality, you don't control debt, debt controls you. Yes, even China is in deep debt shit. I mean, look at the US, a covert Planned economy, total mess.

Now imagine an openly planned economy! India is a bad mix of both. Yik....



bigun's picture

chanos just wet his pants


Oh regional Indian's picture

More like de/bi/in/stag-flation


Minoan's picture

One solution.The Austrian school of ...whatever.

KlausK's picture

What did you expect? They *invented* paper.

HD's picture

...and fireworks. BOOM!

wandstrasse's picture

Marc'o'Polo was deeply impressed and shocked as he saw Chinese money printing...

jcaz's picture

LOL-  gee, think China is in panic mode for some reason? 

Oh no- they're just trying to "help out" the world with this move.......


Matt1973's picture

I'm not standing in the way of central bank juice

Aductor's picture

This has of course nothing to do with China PMI being released within 24 hours.

slaughterer's picture

The question of the day: Now that the PBOC unexpectedly started it, how long will this monetary loosening party continue?    There are clearly dates within the next two weeks, where this party can continue, and continue.  

rguptatx's picture

From Seeking Alpha: Given the horrid investment performance of the BRICs, SocGen's professional bear Albert Edwards suggests the acronym ought to stand for Bloody Ridiculous Investment Concept. YTD: Brazil EWZ -28%, Russia -23%, India INDY -32%, China FXI -20%. Could China's move to easing turn things around?

pmcgoohan's picture

The Chinese economic data tomorrow is clearly dire.

But ES cant get enough of that moral hazard.

PaperBear's picture

I now understand why gold/silver was being whacked hard the hours before this announcement.

ZippyBananaPants's picture

Really? From 20.5% to 20.0%.

They really don't bother putting that in a headline. Since it was under 18% less than 18 months ago.

westboundnup's picture

Amazing how the policies of a authoritarian state-controlled country and CB mirror those of the US and the Fed.

No Mas's picture

China has forgeotten?  ZH has forgotten its endless calls for the end of time.  You guys are becoming good for nothing but a laugh.

Listen, China will do what it needs to do to maintain growth and as bad a taste as it is for the ZH Sheeple, it will succeed.  And Europe is no different.  You guys are perpetual shorts and gold bugs of the highest order and as such you're just sheep on the railroad tracks of life.  Standing between the rails, nibbling on the short stuff and unaware of whats headed your way. 

And sheeps and trains don't mix.  So, please, for those who are casual readers here, do not let the bleating of the ZH Sheeple lure you onto the rail of collapse.  That light ahead that is coming your way?  It is the locomotive of economic and equity growth.  Don't let the fools around here get you run over!

Yet another great day for economic news around the world!  Things are looking better so come on ZH Sheeple; get out, get a woman/woman (whichever you prefer) and get a life :)

Aductor's picture

Is that you Altucher?

Irish66's picture

That was some hopium interview dow 20,000

Savyindallas's picture

It may be Altucher;s evil twin-or gay lover. He sure does sound klike Altucher.

Belarusian Bull's picture

MillionDollarBonus! We missed you so much! Welcome back.

jcaz's picture

Magnificent post, No Mas-  as ES booms up to all of 1205, you're surely a hero on Wall Street today......

"great news around the world"-  oh yes, when FBOC has to cut rates, it's certainly good news.....


EscapeKey's picture

If there's one thing we need, it's more leverage in the banking system situated in the world economy with the biggest housing bubble ever recorded.

Yeah, as No Mas points out; "it's nothing". Nothing to morons, who failed school, that is, and are now sitting ducks in the global ponzi economics scheme will currently live in.

LongSoupLine's picture

wow, I've seen  some troll diarrhea-like rambling in my time, but this one's a keeper.

No Mas needs the mental equiv of!

Global Hunter's picture

I have a woman and I know for a fact I couldn't handle a woman/woman.

Sandy15's picture

Troll alert!!!  I don't believe we are sheeple when ZH points out the 1.7 Trillion dollars in the last 6 months the Fed put into the banks.  88 billion in just the last week.  7.7 Trillion in the last 2 1/2 years.  (NOTE for the troll:  That is half of our total 15 Trillion national debt we can't pay off.  Where did the FED get this money?)  Maybe you should quit living in the rainbow and clouds lala land the progressives have you in......  You will crash hard if you are not prepared.

quacker's picture

Things are looking better for who? Where do you Joseph Goebbels types come from?

It's really quite stunning. We don't have a single net job in over a decade. Never happened before. Even the 1930's and 1970's saw millions of new jobs. And you seem to think printing paper is the answer. The answer for who? 



Implicit simplicit's picture

Just as Duran was not really prepared for the famous "No Mas" fight against Leonard, delussionist who propagate a hopium scenario against all evidence will be nailed hard when your stops are hit after this pseudo rally expires and conttinues on its trend downward. This rally will create a great shorting opportunity.

usikpa's picture

Common. This is JUST the RRR! A year ago when it was being raised in steps, the market would just shrug it off.

If anything, this indicates how severe the state of affairs is with the mandarins

slaughterer's picture

He called us "ZH Sheeple" again, and advises we "get out, get a woman/woman"  You are assuming that a.) we do not play this game both long/short, b) we do not have a sexual partner, c.) we do not have a life, ie. are dead.   These assumptions are incorrect, my friend.  

EscapeKey's picture

Well, it's my take that when you don't really have an argument, you have to point out irrelevant issues, and make derogative statements. No Mas fits the bill on both counts.

Tic tock's picture

This is relatively unimportant, except to Chinese investment at the margin. If anything, it signals a a more appropriate yuan in the medium term

RobotTrader's picture

You could see this coming a mile away


TPTB waited until CDS spreads went parabolic before pulling the rug out.

Just like they did to the silver bulls as the price was approaching $50

Looks like the bears are about to get hammered

Now watch the bear trades on credit unwind with lightening speed

Could be a real shocker, with so many guys pre-positioned on the wrong side, expecting Europe and/or China to fold.

jcaz's picture

..... Or, could be a real laugher for guys like you sitting in their mom's basement, paper-trading the long side.......

EscapeKey's picture

Yep, it's outright fraud and manipulation, alright. But somehow it seems as if you're ok with that?

You think this will carry on forever?

LongSoupLine's picture

lol...yet another robo "rear-view mirror" moment.

"...could see this coming a mile away"  ...oh brother...

Please go back to troll school...'cause you've got to be an embarrassment to even the bad trolls in your clan.

sbenard's picture

Since when is cutting reserve requirements a good thing? It's a sign of despeeration! This is only going to amplify the bad loans and imbalances on China's state-run economic books. This is going to guarantee a worse hard landing once even more bad loans begin to show up. This is a short-term heroin fix that is going to lead to a massive withdrawal down the road. This is akin to China building even MORE ghost cities! It is a clear sign of desperation!

PaperBear's picture

Is this good for $1,800/oz gold and $35/oz silver by the end the week ?

lemosbrasil's picture

Where is Wally ?

Wally is at 9.650-9.850 to Dow Jones and 1.010-1.040 to SP500 !

See here where is Wally !! :

Monedas's picture

1913 to 2013 ! We have Ponzied a clueless world for 100 years ! We´ve had a nice ride ! We´ve lived well and orchestrated Pax Americana with funny money ! Alas,The collapse is at hand ! Could it be Uncle Sam has some tricks to come through the collapse of the Socialist filth world.......on top and ready to lead the return to hard money ? We are in pretty bad shape due to our own Socialist crap experimentation........but; don't underestimate the utter ruinous condition of most of the world ! We have a robust Hoarding Industry ? We still have food ! We have enough oil and gas and coal to grow our own food ! Egypt and Zimbabwe and many, many others aren't so fortunate ! Bush's War on Terror is starting to produce satisfying results even with the inept Barack and Hillary at the helm ! We can exit Iraq now that the Arab Spring dominoes are starting to fall.....Syria, Iran even Pakistan are next ! Teflon America ! The shit don't stick ! Wonderchild China is our invention....and they have serious problems ! Hoard and hang tough ! WE are too big to fail ! Monedas 2011 Comedy Jihad We're Fucked But The World Is Super Fucked ! Hey Drifter....not to late to enlist in the Israeli Defense Forces and atone your soul !

TradingJoe's picture

Stop yelling at each other and start making money! You will need every fxxxing penny of it, soon!

Squishi's picture


Euro Crisis

Japan Ponzi


Syria mayhem - Iran War

Inflation Vs. Deflation

Ben Bernanke