There has been an economic coup d’état in America and most of the world. We are now ruled by about 200 unelected central bankers, monetary apparatchiks and their minions and megaphones on Wall Street and other financial centers. Unlike Senator Joseph McCarthy, we actually do have a list of their names. They need to be exposed, denounced, ridiculed, rebuked and removed.
With China now closed for all intent and purpose for a week as Golden Week arrives, it appears The PBOC wanted to leave the market a message. Clear and direct intervention in offshore Yuan has ripped it 800 pips higher in the last 2 days to its highest since mid-December and stronger than onshore Yuan. However, while PBOC may have won this battle, surging CDS suggest the currency war is far from over.
"Having been manifestly bearish of crude oil over the course of the past many, many months we are moving to the sidelines in light of the “reversal” to the upside staged by WTI and Brent crude yesterday and in light of the sharp move lower on the part of the contangos in both crude types."
- Dennis Gartman
Overnight, one of the two rating agencies, Standard and Poors, came one step closer to that fateful moment of junking Glencore when it downgraded Glencore, however it decided to throw the company one last lifeline by keeping it at the very lowest investment grade rating, and instead of cutting it from BBB to single B or CCC where its CDS and bond yield implies the company should be trading, it kept it a BBB-.
The collapse of Deutsche Bank continues to not just accelerate but to contagiously spread...
We are going to need more "whatever it takes." And with Draghi's efforts to shove sovereign bonds down the throat of Europe's banks, the sovereign-to-financial linkage is now systemically as worrisome as it has ever been...
With an ever-increasing horde of hedge fund "speculators" daring to confront The PBOC, here is how they are placing theirs bets on Yuan devaluation...
Great timing for a short-squeeze rumor? With Chipotle due to report what is likely to be ugly earnings after the bell today, CNBC reports (citing Dow Jones) that the CDS may declare an end to the E.Coli outbreak today. This, as we suggested last night, has ripped stocks 4-5% higher (to one-week highs) squeezing shorts.
After an almost unprecedented surge in credit (total social financing) and over-invoicing enabled a bounce in China's PMI data in December, both Manufacturing and Services data tumbled in January, confirming South Korean trade data. While manufacturing continues its contraction (dropping to 49.4, the weakest since Aug 2012), it is non-manufacturing's plunge from a one-year high "transition is happening, see" narrative to practically the weakest print since 2008. But apart from that all that, China is "stabilizing" according to officials.
Having urged "don't panic" just 4 short months ago, it appears Nigeria just did just that as the global dollar short squeeze forces the eight-month-old government of President Muhammadu Buhari to beg The World Bank and African Development Bank for $3.5bn in emergency loans to help fund a $15bn deficit in a budget heavy on public spending amid collapsing oil revenues. Just as we warned in December, the dollar shortage has arrived, perhaps now is time to panic after all.
"We believe that the current environment is not a normal cyclical downturn but a fundamental shift in the operating environment for these commodities. As a consequence, a wholesale recalibration of ratings in the mining industry is deemed necessary. " - Moody's
The PBOC FX intervention team continue to be busy in offshore Yuan this week as for the 4th time in 3 days, a mysterious panic-buyer lifted CNH between 5 and 10 handles higher for no good reason other than to show George Soros (and Bill Ackman) who is boss (i.e. drive away the shorts). In keeping with the recent "stability" the Yuan fix was flat but another 340bn Yuan was injected - except China CDS pushes to Aug 2015 wides indicating severe stress and suggesting devaluation looms.
Following the afternoon weakness in US equities, Offshore Yuan has been limping lower into the fix, not helped by comments from a MOFCOM researcher that "China is able to withstand currency fluctuations" implicitly warning carry traders to stay away and suggesting the dollar's dominance would not last long. CNH is now at 3-week lows against CNY, over 300pips cheap - which prompted the major short squeeze last time. Chinese stocks are modestly lower but more worrying is the 7-day slide in Chinese corporate bond yields - the most in 2 months - hinting perhaps that the last bubble standing is bursting.
Moody's took the global energy sector to the woodshed, placing 175 global oil, gas and mining companies and groups on review for a downgrade due to a prolonged rout in global commodities prices that it says could remain depressed indefinitely. Here are the 69 US, 19 Canadian and 13 European companies (the full list of all global companies can be found here) that just Moody's black list, a grand total of 101 companies which now face a downgrade threat on just about $540 billion in total debt.
Venezuela's crude oil basket price collapsed to as low as $20.20 yesterday, according to the socialist utopia's President Maduro. Having already "passed the point of no return," Maduro rages that OPEC producers appear to be "finally waking up" to what they have unleashed noting that, according to him, Russia's Putin has agreed to "work on oil price issues."