China

China

RANsquawk Week Ahead - 29th Feb 2016

 

* US nonfarm payrolls report is the notable highlight out of the US this week, with Chicago PMI, ISM Manufacturing and non-Manufacturing data also scheduled for release.

* Focus may fall on China once again, with the Manufacturing PMI data coming in tandem with the latest NPC meeting.

"We Are In A Recession": Dallas Fed Respondents Admit The U.S. Economy Is In Freefall

For those interested in hearing some horror stories from ground zero of America's recession, look no further than Texas, where the best recap of sentiment on the ground comes straight from the Dallas Fed respondents, who have not been this depressed since the Global Financial Crisis. "We are in a recession. Oil prices are a symptom, not the cause."

Key Events In The Coming "Payrolls" Week

The week was supposed to start off quiet on the macro news front, but the PBOC spoiled that with an unprecedented Monday, Feb 29 RRR cut, its fifth since the start of 2015. In any case, it slowly builds up to the week's biggest event on Friday, when the BLS reports February payrolls and will be hard pressed to find all the seasonal adjustments it needs to cover for not only the lost jobs in the devastated energy sector but, as we reported over the weekend, the sudden dramatic air pocket in Silicon Valley jobs.

Frontrunning: February 29

  • Shares fall on G20 disappointment, Fed hike worries (Reuters)
  • China cuts reserve requirement ratio for fifth time since Feb. 2015 (Reuters)
  • China Stocks Tumble Toward 15-Month Low as Stimulus Bets Unwind (BBG)
  • S&P 500 Futures Signal 2nd Day of Stock Losses; Valeant Slides (BBG)
  • Valeant fundamental risks are too severe to suggest the stock is poised for a lasting rebound (WSJ)

China's Panicked RRR Cut Leads To Feeble Stock Rebound; Gold Resumes Climb

After the G-20 ended in a wave of global disappointment, leading to the biggest Yuan devaluation in 8 weeks, and sending Chinese stocks into a tailspin on concerns the PBOC has forsaken its stock market as well as speculation the housing bubble is now sucking up excess liquidity which in turn pushed global market deep in the red to start the week, it was the PBOC's turn to scramble in a panicked reaction to sliding risk exactly one month after Japan unveiled its own desperation NIRP, and as reported before unexpectedly cut its Reserve Requirement Ratio by 0.5% to 17.0%, the first such cut in 2016 and the 5th since the start of 2015.

China Cuts Reserve Ratio One Day After G20

In the “uninspiring” communique delivered following the G20 in Shanghai, officials pledged to “consult closely” on FX markets. We’re not sure whether there was any “close consulting” between the PBoC and its counterparts around the world on Monday, but China just announced another RRR cut (50 bps), the fifth such move since early last year.

A Coherent Explanation of Obama's Foreign Policy

Obama has been carrying out a bipartisan Republican-and-Democratic foreign policy; it’s the policy of America’s aristocracy. Its results have been horrible for the world, but they’ll be even worse if it succeeds.

China Devalues Most In 8 Weeks, Offshore Yuan Slides To 3-Week Lows

Following USD strength last week, China has come back to work after the disappointment of the Shanghai non-accord and weakened the Yuan fix by 0.2% - the most since January 7th. This move follows pressure from offshore Yuan weakness since traders returned from Golden Week - driving the onshore-offshore spread out to its widest since The PBOC stepped in and stomped the shorts.

The G-20 Meeting Was A Big Disappointment: What Happens Next

It is now all up to the ECB: "If they lowball or grudgingly meet expectations, we could face another December 4 move because market participants will see it as the equivalent of a ‘last ease in the cycle announcement’, basically ECB throwing in the towel. If they move aggressively they will catch market off guard and unwind the view that policymakers see themselves as powerless."

China's Housing Bubble Is Back: Locals Wait In Line For Days To Flip Houses

Nowhere is the return of the Chinese housing bubble more ovious than in Beijing where scalpers are charging up to ?3000 for service numbers at the government office where property transfers are recorded, due to long wait times in the wake of the recent transaction tax cuts launched by the government to spur the housing market. The result is peole paying thousands of Yuan to get a better place in line as they scramble to "flip that house."

Saxobank CIO Is "Shorting Everything" Into "Nasty March"

Fearful of a renewed rise in the US dollar, Saxo's chief economist Steen Jakobsen expects a "nasty March" as this will kill commodity stabilization as well as the ability of emerging markets to live up to their expectations to revitalize the global economy. Despite The Bank of Japan's clear "example of how not to do things," Jakobsen warns other central banks will follow Kuroda's cue and, as he explains below, is "shorting everything" as he sees two major canaries in the coalmine.

Bull Rallies In Bear Markets - The Perfect Storm

"Investor hopes of coordinated G20 policy actions proved to be pure fantasy... It’s every country for themselves." Use any rally this week to move to the lowest level of equity exposure for this part of the cycle.

"Another Crisis Is Certain", Warns Former BOE Chief

"Whatever can be said about the world recovery since the crisis, it has been neither strong, nor sustainable, nor balanced. There seems little political willingness to be bold, and so perhaps we should fear that the size of the ultimate adjustment will just go on getting bigger."