China

China

Kyle Bass On The Resurgence Of Gold And The Looming "Run On Cash"

"I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you're running academic models, but in reality they make no sense... If they told you and I that they're going to tax your deposits by a hundred basis points, well it's better to put it in a safe or under your mattress. And that's why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there's no carrying cost."

China Embraces Gold In Advance Of Post-Dollar Era

To challenge the US dollar hegemony and increase its power in the global realm of finance, China has a potent gold strategy. Whilst the State Council is preparing itself for the inevitable decay of the current international monetary system, it has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation and increased its official gold reserves in order to ensure financial stability and support the internationalisation of the renminbi.

Pushed Too Far - The Inveitable Costs Of The "Perpetual Money Machine"

It must be tempting for the believers to again revel in the brute power of the “perpetual money machine.” Yet the costs associated with the latest round of monetary inflation are steep. Not many months ago it appeared that China was determined to rein in excess, while the U.S. was ready to lead the world toward policy normalization. Today it’s become rather obvious that China is out of control and global policymakers are trapped at near zero or negative rates and perpetual QE monetary inflation. What was always sold as temporary extraordinary measures is increasingly recognized as desperate “whatever it takes” indefinitely.

What Happens Next (In Europe)?

A year ago today, European equities hit their highest levels ever. But, as Bloomberg reports, the euphoria about Mario Draghi’s stimulus program didn’t last, and trader skepticism is now rampant. The Stoxx Europe 600 Index has lost 17% since its record, and investors who piled in last year are now unwinding bets at the fastest rate since 2013 as analysts predict an earnings contraction. The trading pattern looks familiar: a fast run to just over 400 on the gauge, then disaster...

China - A Reversal Of Urbanization?

Since modern-day “policymakers” are averse to allowing even the slightest bit of economic pain to materialize (except if the countries concerned are small and helpless, such as Greece), they have implemented unprecedented monetary pumping and debt expansion to hold recessions at bay. China’s planners have been especially diligent in this respect, misallocating resources in truly grand style and leaving the country buried in a pile of unsound debt. The combination of demographic and economic challenges the country now faces means that more than just a small hicc-up is probably in store, even though the timing of the denouement remains uncertain.

America's Imperial Overstretch

Since the end of the Cold War in 1991, this country has been steadily bled and slowly bankrupted. We are now as overextended as was the British Empire in the 1940s. Time for a reappraisal of all of the war guarantees this nation has issued since the beginning of the Cold War, to determine which, if any, still serve U.S. national interests in 2016. Alliances, after all, are the transmission belts of war. This is not isolationism. It is putting our country first, and staying out of other people’s wars. It used to be called patriotism.

Exposing The False Promises Of The Socialist "Poison That Bernie Is Peddling"

"It takes someone who has experienced socialism’s failures firsthand to see why Sen. Sanders is succeeding: We elders, immigrants and native-born alike, have failed to teach our children and grandchildren about the economic history and false promises of the myriad forms of socialism that infest our world."

"Last Bubble Standing" Bursts - China Junk Bond Risk Soars

In January we pointed out "the last bubble standing," as China's crashing equity market had spurred massive inflows - directed by a "well-meaning" central-planning committee's propaganda - sparking a massive bubble in Chinese corporate bond markets (in an effort to enable desperately weak balance-sheet firms to roll/refi their debt and keep the zombies alive). That has now ended as China's junk bond risk has soared to 5-month highs with its worst selloff since 2014. As HFT warns, "we should avoid junk bonds."

"If No Agreement, Expect A Sharp Selloff" - All You Need To Know About Doha

Sunday’s producer meeting is all about nothing no matter what agreement might be forged. At best, the agreement will be, as Russia’s energy minister has stated, a gentlemen’s affair, with no binding commitments, no concrete next steps beyond having a review meeting, and no procedure for moving to production cuts.

$1,001,000,000,000: China Just Flooded Its Economy With A Record Amount Of New Debt

If one adds up the Total Social Financing injected in the first quarter, one gets a stunning $1 trillion dollars in new credit, or $1,001,000,000,000 to be precise, shoved down China's economic throat. As shown on the chart below, this was an all time high in dollar terms, and puts to rest any naive suggestion that China may be pursuing "debt reform."

As Empire Fed Prints Highest In Over A Year, Are The Fed's "Global" Concerns Easing?

Janet - you have a problem. Following the all-clear from China, soaring stock prices, and 'stability' in oil, Empire Fed business conditions just hit a 17-month high. In other words, The Fed is gonna need some bigger 'turmoil' excuses or defending "no rate hikes" is going to look a whole lot more political than their independence would suggest.