China CDS Soars On Continued Hard Landing Concerns

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Fri, 09/30/2011 - 05:10 | 1725027 GeneMarchbanks
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I thought they were bailing out Europe? Too confusing this is the most disordered circle-jerk ever...

Fri, 09/30/2011 - 05:26 | 1725043 Haywood Jablowme
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Faber did state that he expected China to implode but would also be the first to recover.  Looks like he maybe correct on that call...


Fri, 09/30/2011 - 05:59 | 1725061 oogs66
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europe is bailing itself out withe levered efsf so no longer need china for stocks to go up...and yeah the western world is decoupling so all good without china....

what a mess

Fri, 09/30/2011 - 08:32 | 1725329 Smiddywesson
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LOL, the Chinese trolls are out this morning junking anyone who says anything remotely negative about China.

Fri, 09/30/2011 - 09:27 | 1725509 Cynical Sidney
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7.7% is way high, china's gdp growth cannot be sustainable under the current market environment. here's why:

1. 25-30% of chinese economy is made up of black and gray market

2. chinese outclasses enron when it comes to 'creative' accounting and cooking the books, US DoJ is launching investigations as we speak

3. chinese real estate bubble, the fav tool of financial criminals, is close to bursting which will bring down housing price by at least 1/3; land is not privately owned, but 'leased' to individuals for 200 years

4. china has the least self-reliant economy in the market, should globalization decrease china economy will crash harder compared to the US or eurozone

5. their govt has little tools to fight inflationary pressure


there are huge social and political risks surfacing unless the renmingbi replaces the greenback as the global reserve currency in the near future

Fri, 09/30/2011 - 09:31 | 1725527 Smiddywesson
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There's also the withdrawal symptoms of being accustomed to 10%+ growth every year and suddenly having your GDP plummet as opposed to a country with mediocre growth seeing a further drop in GDP.  The pain is felt more accutely in the country that is accustomed to the crack pipe.

Fri, 09/30/2011 - 05:11 | 1725030 Shirley Wilfahrt
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Everything has its beauty but not everyone sees it.


Fri, 09/30/2011 - 05:24 | 1725039 reader2010
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Regime change follows?

Fri, 09/30/2011 - 08:35 | 1725338 Smiddywesson
Smiddywesson's picture


Freedom for the 292 separate people with their own languages that are held together in China at the point of a bayonette.

Junk this Chinese trolls.  FREEDOM!!!!

Fri, 09/30/2011 - 05:44 | 1725048 HD
HD's picture

Slow motion train wreak...

Fri, 09/30/2011 - 05:46 | 1725050 buzzsaw99
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With as many yearly double digit economic growth rates as they've had they must be 10, 11, 12 feet tall by now. lulz

Fri, 09/30/2011 - 05:47 | 1725051 Sequitur
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The news is ugly all over. China, Europe inflation, German sales, U.S. banks leaving TARP early to avoid executive compensation restrictions. I am as certain as I've ever been that in the days and weeks ahead, these markets are going lower. Much lower.

Fri, 09/30/2011 - 05:50 | 1725053 Dick Darlington
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By Bloomberg News
     Sept. 30 (Bloomberg) -- Beijing home sales in the first
nine months of the year fell 19 percent and average prices
dropped 10 percent from a year earlier, according to Soufun
Holdings Ltd., the country’s biggest real estate website owner.
     Shanghai home sales was down 5 percent while prices rose 14
percent during the same time period, Soufun said in an e-mailed

Fri, 09/30/2011 - 08:37 | 1725342 Smiddywesson
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No problem, it's not like these houses were extremely leveraged and are all underwater now.

Fri, 09/30/2011 - 06:02 | 1725065 ivars
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Here is comparison chart between my feb 6th chart of DJIA and actual prices. After 8 months with mistakes in the middle, its for last 2 months within 0-5% of actual DJIA:


In original chart, the trend continues to go down with increasing speed.

Fri, 09/30/2011 - 06:05 | 1725069 Dick Darlington
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Fear not, Birinyi is baaaaaack!

S&P’s 12% 3Q Loss May Signal 5.5% 4Q Rally: Birinyi

Fri, 09/30/2011 - 06:14 | 1725080 o2sd
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CDS on what underlying? PBC bonds? Regional bank bills?

Is this the 5Y like the previous article, or has the time horizon contracted?

I thought the PBC was a nett lender, not borrower? No? Couldn't they unwind their UST positions to avoid any kind of credit event on local issue?



Fri, 09/30/2011 - 06:31 | 1725101 myne
myne's picture

Pfft, if China starts copping some problems they'll eventually just dump treasuries.

Fri, 09/30/2011 - 08:04 | 1725261 spiral_eyes
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Hard landing for China but on what?

America dependent on Chinese output and treasury pruchases.

Hard landing for China on America's head. 

Fri, 09/30/2011 - 08:40 | 1725349 Smiddywesson
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Hard landing for China on America's head.

Everything is tied together.  Hard landing for America on China's head too.

Fri, 09/30/2011 - 08:23 | 1725302 junkyardjack
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World War 3 in 3....2....1....

Fri, 09/30/2011 - 08:40 | 1725336 Zeilschip
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Do China CDS trade on a bonds & loans basis? It has virtually no hard-currency bond debt but I would guess billions of hard-currency loans issued by government-guaranteed entities that rank pari passu with senior bond debt. Still, I would rather buy CDS on Chinese property companies. The sovereign is sitting on trillions of dollars, default is not going to happen. If anything, I'd sell China CDS if they reach 350-400.

Mon, 10/03/2011 - 02:58 | 1732385 o2sd
o2sd's picture

Good question. I found this:

Which is quite old, but indicates that China CDS underlying are NOT pari passu, but issued on a single asset class. Which would mean that the credit stress in 'China CDS' is for a particular issue of some debt instrument.

If Chinese CDS is not traded pari passu, then the above chart is not particularly informative, as the spreads may be widening on provincial bank bills, but not on PBC bonds (which, as you say, are almost non-existent).

Occaisionally, ZH has very detailed articles, but this is kinda fluffy.

One more thing: Keep posting Zeilschip, ZH needs a lot more people with a clue as the comments tend to get flooded with 'Silver bitchez!'

Fri, 09/30/2011 - 08:41 | 1725353 Smiddywesson
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Ho, hard landing coming, we build more ghost cities.

Fri, 09/30/2011 - 08:44 | 1725361 Smiddywesson
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Is all barbarian lies.  Student squashing tank production is up 100%.

This is domestic issue, stay in own back yard Yankee dog.

You appologize now.

Fri, 09/30/2011 - 09:10 | 1725448 Ben Bermonkey
Ben Bermonkey's picture

How to enter charts here in?

I have my little .china basket consiting of the five big names (btw look at the market cap of these bank fishs versus european ones, the chinese market cap is by far bigger...)

but I am not interested in fundamentals, since I do not understand a lot when bank analysts speak.

I simply check the chart, and this just took a new low...

short chinese banks and fasten your setbelt for a hard landing


Fri, 09/30/2011 - 11:26 | 1725922 chinaboy
chinaboy's picture

What does "hard landing" mean?

We in China are deeply concerned by things like high urban housing price. But it is hard define risk approprietely. GDP number that brainless global wall street types worry about is least of our concern here in China.


For regular readers of ZH, you already know not to place trade for/against US GDP. For the same reason, we don't trade on China GDP. However, this is exactly what the China CDS trade all about. For those who think they will money by trading this trade, I refer them to JC Flowers.


There are problems in China. And Chinese stocks are falling. This is a good time to buy. You should not buy if real economy is suffering but stocks keep rally.



Fri, 09/30/2011 - 20:12 | 1727894 RyanW525
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The lack of cheap energy is coming home to roost....collapse is nearing.

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