China

China

The Real Reasons Why The Fed Will Hike Interest Rates

With a complex and disaster-prone system of interdependence causing social strife and chaos, why not just simplify everything with a global currency and perhaps even global governance? The elites will squeeze the collapse for all it’s worth if they can, and a Fed rate hike may be exactly what they need to begin the final descent.

China Injects More Liquidity, Strengthens Yuan As Foreigners Dump Record Amount Of Japanese Stocks

The evening started with disappointing Japanese trade data cross the board - weakest imports, exports, and trade balance in 6 months - which follows the largest selling of Japanese stocks by foreigners ever. China opened with the first rise in margin debt in 6 days, stocks were lower  in the pre-open after last night's epic farce ramp. PBOC strengthened the Yuan fix modestly and also injected another CNY 40 billion.

In China 1300 Hedge Funds "Did Not Fight The Central Bank" And Are Now Liquidating

Just like 13F clones end up getting burned more often than not, so too unfortunately for the Chinese copycats, an endorsement from the equity market’s savior has done nothing to ensure outsized returns. In fact, as Bloomberg adds, it was just the opposite - the stock picks have trailed the broader market. The 46 companies that reported the agency as a top 10 shareholder in the past two months lost an average 29 percent since the announcement, versus a 21 percent drop for the Shanghai Composite Index.

China Liquidated A Record $83 Billion In Treasurys In July

According to TIC, China, between its mainland and Euroclear holdings, sold a record $83 billion in Treasurys in the month of July. It also means that China has liquidated a whopping $184 billion notional in US Treasurys in 2015. Finally, and here it the punchline: the sale of ~$83 billion took place in July. This is before China announced its devaluation on August 11 and before, as we also first reported, it sold another $100 billion in Treasurys in August.

The Truly Stupid Case For More ZIRP

"Every day brings another reason why the Federal Reserve should hold off before raising interest rates... First and foremost there was the recent plunge in stock prices."

Global Trade Bellwether FedEx Misses, Cuts Outlook, Blames Weak Industry Demand, Higher Wages

Every quarter we pay particular interest to the results reported by Fedex not only due to its position as the leading company in worldwide logistics but due to its status as a bellwether in global trade. And not surprisingly, following a bevy of reports here and elsewhere confirming the plunge in global trade, Fedex did not disappoint, or rather it did when it reported non-GAAP EPS of $2.42 missing already reduced consensus expectations of $2.45, but it also cut its full year 2016 EPS guidance from $10.60-$11.10 to $10.40-$10.90 (below the consensus $10.83) proving yet again that hopes for EPS growth are just as misplaced as those for multiple expansion at a time when the Fed is preparing to hike rates and as China unleashes Quantitative Tightening.

Frontrunning: September 16

  • Contrarian CEOs tell the Fed: Go ahead, raise my rates (Reuters)
  • Goldman Warns Markets Unprepared for Fed as Treasuries Seesaw (BBG)
  • Investors Look Beyond Fed Meeting, See Low Rates (WSJ)
  • Volatility seen lingering no matter what the Fed does (Reuters)
  • What Rising Interest Rates Would Mean for You (BBG)
  • China Stocks Jump in Last Hour of Trading on State Support Signs (BBG)
  • No Escape for China Hedge Funds Overwhelmed by Stocks Crash (BBG)
  • Hedge Fund Bridgewater Defends Its ‘Risk-Parity’ Strategy (WSJ)

China Plunge Protectors Unleash Berserk Buying Spree In Last Hour Of Trading As Fed Meeting Begins

Ffor whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite - after trading largely unchanged - went from red on the day to up 4.9% after hitting 5.9% minutes before the close - the biggest one day surge since March 2009 - and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.

Head Of China's 'Goldman Sachs' Probed For Insider Trading As "Market Purification" Continues

Imagine for a moment the sentiment shock for mainstream Americans if Goldman Sachs' Lloyd Blankfein was probed for insider-trading and publicly scapegoated for causing a nation's equity market (and economy) to collapse. While it may be true, it would never happen in America... But in China, as part of what authorities call "purifying the markets," the president of China’s biggest brokerage has been swept up in a widening campaign to root out financial wrongdoing and assign blame for the nation’s $5 trillion stock rout. As Bloomberg notes, shares are falling further in today's markets as the probe of Citic Securities President Cheng Boming comes after the state-run Xinhua News Agency reported last month that four executives at Citic had admitted to so-called insider trading.

Traders Fear Second China State Entity Default As Aussie Leading Index Plunges, PBOC Devalues Yuan

Chinese equity markets are holding modest 'bounce' gains after two days of carnage. After 3 days of stronger fixes PBOC devalued the Yuan but the Ministry of Finance made it clear that "devaluation is not aimed at boosting exports," which makes us wonder, is it aimed at selling Treasuries? No additional direct liquidity injections but anxiety grows as China National Erzhong Group Co. may miss an interest payment later this month after one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market.

Aussie Property Market Collapse Looms As Chinese Flee Amid Capital Controls

Given the recent admission by the Australian Central Bank that property prices "have gone crazy," it appears new Chinese 'regulations' may just kill Australia's golden goose of 'weath creation' as Aussie's largest trade partner sees its economy collapse. While the Aussies themselves proclaimed a "war on cash," it appears, as AFR reports, that Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing's move to tighten capital controls. With Chinese banks now limiting any overseas transfer to USD50,000 - in an effort to control capital outflows - and with China dominating the Aussie housing market, one agent exclaimed, "it has affected 70 to 80 per cent of current transactions and some have already been suspended."