China

China

China PMIs Plunge, Economists Demand Stimulus To "Prevent Economy Falling Off A Cliff"

"The index readings for all key categories including output, new orders and employment signalled that conditions worsened, in line with signs that the economy’s road to stability remains bumpy...The government needs to press ahead with reforms, while adopting moderate stimulus policies and strengthening support of the economy in other ways to prevent it from falling off a cliff.

Systemic "Fragility" Surges

With "significant" financial stress pervading the markets, it is hardly surprising that systemic risk concerns are rising rapidly. What we have been experiencing in markets this year, as BofA's FX team notes, is the impact of multiple shocks, at a time when central banks cannot come to the rescue, in a market that has been addicted to the central bank policy put. This leave cross-asset correlation soaring as shocks become larger leaving market fragility increasing.

 

Electric Car War Sends Lithium Prices Sky High

With lithium prices skyrocketing beyond wildest expectations, talk heating up about acquisitions and mergers in this space and a fast-brewing war among electric car rivals, it’s no wonder everyone’s bullish on this golden commodity that promises to become the ‘’new gasoline”.

"Has Everyone Lost Their Freaking Minds?"

It’s getting weird and the market is having a tough time figuring out what to take seriously, what to ignore, what to laugh nervously about and what to just laugh at. Are serious economists actually have a debate about whether it is a good idea to just print up cash and pass it out? Is that really monetary policy? Are governments really talking about banning actual currency, the very money created by that government? Money that depends, oh by the way, solely on people’s trust that the government will stand behind the money they are about to outlaw? Has everyone lost their freaking minds?

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.