China’s hardly in need of more territorial disputes with neighbors. Yet, it has started a new one with Indonesia.
Well over a week after the disappearance of flight MH370 - which now is the longest official disappearance of a modern jet in aviation history - with no official trace of the missing plane yet revealed, the investigation, which as we reported over the weekend has focused on the pilots and specifically on Captain Zaharie Ahmad Shah, earlier today revealed that on his home-made flight simulator had been loaded five Indian Ocean practice runways, among which those of Male in the Maldives, that of the US owned base at Sergio Garcia, as well as other runways in India and Sri Lanka - all notable runways as all are possible landing spots based on the flight's potential trajectories. The Malay Mail Online reported, "The simulation programmes are based on runways at the Male International Airport in Maldives, an airport owned by the United States (Diego Garcia), and three other runways in India and Sri Lanka, all have runway lengths of 1,000 metres."
PBOC Denies It Will Bail Out Collapsed Real Estate Developer While Chinese Property Developer Market CrashesSubmitted by Tyler Durden on 03/18/2014 10:15 -0400
The PBOC is reported to be scrambling to bail out China's second corporate default in one month, real estate company Zhejiang Xingrun, even as the Chinese property developer market is crashing and rapidly shutting down. So why did the PBOC personally just go to Weibo to deny such speculation. And what happens next?
An overview of the technical condition of the major currencies.
"I don’t think they’ve solved anything. I think they’ve compounded the underlying problems that caused the last crisis, and so now the next crisis will be that much worse because of what the central banks did, in particular the Federal Reserve...The Fed is building an economy that is completely dependent on that cheap money. And so if you take it away, the economy implodes, but if you don’t take it away, then it’s worse." The idea is to preempt capital controls - "get out the window before it slams shut!"
Yes, rates can be raised too. Just out from the Reserve Bank of New Zealand which just hiked rates by 25bps to 2.75%, as was largely expected.
3,000 Americans around the world renounced their citizenship last year. CNN Money introduces us to five U.S. citizens who have given up their passports -- or are thinking about it...
"There is a big flight to quality," warns one trader as the spread between interest rate swaps (implicitly bank risk) and government bonds soared to a record high. This "crisis gauge" flashing red is also followed by 3 month SHIBOR (short-dated interbank lending rates) surging to an 8-month high. China's CDS have jumped 30bps since the Fed taper and as Bloomberg reports that billionaire investors like George Soros and Bill Gross have drawn uncomfortable parallels between the situation in China now and the US before 2008 (when this crisis gauge was key in spotting the carnage to come). Simply put, the banks don't trust each other...
All eyes were on China overnight, where first the PBOC drained a quite substantial CNY 100 billion in liquidity via 14 day repos in the month following the biggest credit injection on record, pushing those worried about China's credit schizophrenia to the edge, and then things got even more bizarre when in an act of clear PBOC intervention, the CNY dropped to the lowest since August 2013 as concerns about the global carry trade's impact on China (as noted here previously) start to reverberate. We will have more to say about China's Yuan intervention, but what should be noted is that the Shanghai Composite has tumbled nearly 10% in the past week, and was down another 2% overnight and is once again just barely above 2000, a level it can't seem to get away from for years (which is fine: recall that the real bubble in China is not the stock but the housing market). Chinese property stocks dropped to 8-month lows as concern continues about bank's withdrawing some liquidity for the asset class.The USDJPY drifted along and after rising to a resistance level of about 102.600 has since slide just shy of its 102.20 support area which means US equity futures are now in the red, and concerns that the S&P 500 may not close at a new record high are start to worry the technicians.
Gloomy commentary on the world's ageing population appears overdone. We look at key silver linings and the significant investment opportunities ahead.
A technical look at the currencies. The phase that has characterized the first few weeks of the year has ended and a new one has begun.
Asia outperformed emerging market peers in Europe and Latin America during the recent selloff, which coincided with a drop in China’s PMI below 50. As Bloomberg's Tamara Hendereson notes, that was partly due to 'smoothing' by Asian central banks to temper volatility and partly because of the region’s reputation for strong growth and ample current-account cushions. Still, she warns, emerging market investors may in time focus more on Asia’s vulnerabilities, including higher valuations, lower real yields and greater sensitivity to Fed tapering and China’s rebalancing.
The Fed tightens by a little (sorry, tapering - flow - is and always will be tightening): markets soar; Turkey tightens by a lot: markets soar. If only it was that easy everyone would tighten. Only it never is. Which is why as we just reported, the initial euphoria in Turkey is long gone and the Turkish Lira is basically at pre-announcement levels, only now the government has a furious, and loan-challenged population to deal with, not to mention an economy which has just ground to a halt. Anyway, good luck - other EMs already faded, including the ZAR which many are speculating could be the next Turkey, and certainly the USDJPY which sent futures soaring last night, only to fade all gains as well and bring equities down with it.
This week, much of the market focus will remain on the policymakers' responses to the challenges emerging out of the, well, emerging markets. In particular, the response of the Turkish Central bank will be key. This week we also have eight MPC meetings, with the US FOMC on Wednesday standing out. Consensus expects the continuation of the tapering of asset purchases – by another USD10bn, split equally between Treasuries and MBS. Other than that, the announcement should be fairly uneventful. In India GS forecasts an out-of-consensus hike of the repo rate to 8.00% after the central bank published a report on suggested changes to the monetary policy framework. In New Zealand, South Africa, Israel, Mexico, Malaysia and Colombia, consensus expects no change in the monetary policy stance. Among economic data releases, the focus will be on consumer surveys, as well as business surveys (US, Germany and Italy). There are also inflation numbers from the US, Euro Area, Japan and Brazil. Advanced Q4 GDP data prints will come out for the US and the UK. US consumption and production numbers are due at the end of the week.