Here’s a guy you want to bet on - Li Ka-Shing. Li is reportedly the richest person in Asia with a net worth well in excess of $30 billion, much of which he made being a shrewd property investor. Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.
"We have been cheated by CCB," exclaimed one Chinese investor who invested 1 million yuan ($160k) in China Construction Bank's Songhuajing River No.77 Trust (which offered returns of 9.8 to 12% per annum). It appears that a 12% yielding financial instrument was not hint enough of the risk to the dozens of investors who confronted police in troubled Sanhxi province yesterday demanding their money back from the trust which has missed 6 monthly payments in a row. People wearing white masks with the words "despicable bank" and "pay back our money" were among at least 30 investors facing special-forces officers in dark uniforms and the group dispersed soon after the bank had asked for more time, adding "the bank said they wouldn't risk their reputation."
The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the IMF and the World Bank (which are dominated by the U.S. and the EU), according to RBTH. As WSJ reports, the U.S. would lose its veto power on the International Monetary Fund's executive board under a plan being considered by some emerging economies. The countries are fed up with the United States' failure to ratify a four-year-old deal to restructure the emergency lender. Yet more loss of credibility on the global stage and, as Brazil's FinMin Mantega sums up, "the IMF cannot remain paralyzed and postpone its commitments to reform."
Curious why after nearly touching $200 in early trading IBM is down 4% in after hours trading? Perhaps this has something to do with it: as the chart below shows, in Q1 IBM reported only $22.5 billion in sales, well below the $22.9 billion expected by the street, and down 3.9% from a year ago. In fact, this quarter's revenue was the lowest for IBM since the first quarter of... 2009. Net Income (non-GAAP of course), which was $2.6 billion and which met reduced estimates, was down a whopping 22% from a year ago. But the punchline, one which Cisco is very familiar with, was this:"Revenues in the BRIC countries — Brazil, Russia, India and China — decreased 11 percent."
When it comes to the real world, the difference between fascism, communism and crony-capitalism is semantic.
We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.
Having been stopped out of his "long punt" in copper futures (which are, we remind readers, levered via margin and not a simple cash percentage loss of capital), world-renowned (for something) Dennis Gartman has issued his latest missive - ultimate contrarian call - advice... "we are sellers this morning of copper and buyers of crude oil, one relative to the other, with the problems in China weighing upon the former while crude has held impressively as other commodity prices have fallen." Crude oil longs beware... prepare to be Gartman'd.
Yes, this is not meant to be ironic.
As we noted earlier, yesterday's ramp and the continued push higher in futures overnight has been stoked by first Japan, then China, and then Europe headlines proclaiming the great news that economic data is bad enough for the central banks to come back to refill the punchbowl... The result, as the charts below show, is 'magical' as the S&P pushes back up to the crucial for confidence positive territory for 2014.
- Ukraine Says Russia Exporting ‘Terror’ Amid Eastern Push (BBG)
- Civil War Threat in Ukraine (Reuters)
- China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier (BBG)
- Mt Gox to liquidate (WSJ)
- Ex-Co-Op Bank Chairman Charged With Cocaine Possession (BBG)
- Goldman Sachs plans to jump-start stock-trading business (WSJ)
- Credit Suisse first-quarter profit falls as trading tumbles (Reuters)
- U.K. Unemployment Rate Falls to Five-Year Low (BBG)
- Lawmakers Back High-Frequency Trade Curbs in EU Markets Law (BBG)
- Yahoo's growth anemic as turnaround chugs along (Reuters)
- Spain ETF Grows as Rajoy Attracts Record U.S. Investments (BBG)
We summarized yesterday's both better and worse than expected Chinese GDP data as follows: "a substantial deterioration of the economy, one which was to be expected yet one which can be spun as either bullish thanks to the GDP "beat", and negatively if the purpose is to make a case for more PBOC stimulus." Sure enough here are the headlines that "explain" the latest overnight futures surge which has once again brought the S&P into the green on the year - a 40 point Spoo move in hours since yesterday's bottom when the Nikkei "leaked" Japan's economy is on the ropes :
- Stocks Rise on China Stimulus Speculation
Here one should of course add the comment that launched yesterday's rebound, namely the Japanese warning that its economy is about to contract, adding to calls for more BOJ stimulus, and finally this other Bloomberg headline:
- The Strengthening Case for ECB Easing
And there you have it - goodbye "fundamental" case; welcome back "central banks will once again bail everyone out" case. Hopefully today's news are absolutely abysmal to add "US economic contraction fear renew calls for untapering" to the list of headlines that should send the S&P to all time highs by the end of today.
In keeping with the tradition of Chinese data being fully Schrodingerized, not to mention completely goalseeked and fake, moments ago China reported that its GDP for the quarter which ended 15 days ago has not only been compiled and analyzed, but somehow once again it both beat and missed at the same time. It beat on a Year over Year basis rising 7.4%, just fractionally above the 7.3% expected, while at the same time it missed on a sequential basis with Q1 GDP growing 1.4% Q/Q, just below the 1.5% expected, suggesting the annualized Q/Q has slowed to a meager 5.7% - a number far below China's 7.0% minimum threshold target.
In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host's total to an unprecedented $341 billion!
" The Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions" - US Treasury
Tax time, but not pay-up time.