Just when you thought it was safe to go all-in leveraged long stocks and sell all the volatility you can eat, a spasm of fear cracks through markets this morning... driven by our 'friends' in Beijing.
While many are taking the call "to slow or halt" its Treasury-buying at face-value, former fund manager Richard Breslow believes there was a deeper, darker reason behind this shot across Washington and Wall Street's bow.
Via Bloomberg,
How do you turn a relatively quiet trading day into a riveting one?
Have someone with enormous amounts of actual money at work in the markets remind everyone that not everything is wonderful in paradise.
The news about China at least re-evaluating its attitude toward its U.S. Treasury holdings has stood everything that was happening overnight right on its ear. And you would be hard pressed to argue that the instant reaction across a wide spectrum of global assets wasn’t entirely appropriate nor overdone.
I get a real sense that the Chinese officials making the comments weren’t simply studying their charts of U.S. breakeven rates and concluding that yields may have bottomed. It sounded very much more a statement of, “Who the hell do you think you are?” And probably should be taken in that context.
Actions do have consequences.
You can’t incessantly bash another country, even if you think there are pieces of the criticism that are fair points, and be surprised that eventually you get some blow-back.
The U.S. objects to China’s increasingly strong economic ties to Latin America. Then Congress passes a bill last night to strengthen ties with Taiwan. The U.S. makes no secret of the fact that it will pursue policies that directly support domestically flagged companies. And then this morning in Brussels, Treasury Under Secretary David Malpass said China is creating market distortions by favoring state-owned enterprises.
I’m not even trying to argue who is right or wrong. Just warning that the very understandable inclination of traders to treat this as just another tempest in a teapot may be too cavalier. In truth, the market moves have been muted in the grand scheme of things, but the players, and bilateral relationship and relative strengths of these two countries isn’t what they were during past episodes.
This latest incident may indeed pass quickly from the market’s immediate consciousness. But it shouldn’t be forgotten. Nor the fact that the reaction wasn’t just to sell a few bonds, but to hit everything with a dollar sign in front of it. Did I mention that the Treasury has a lot of bonds to sell this year? This should be seen as an extremely cheap reality check.
Meanwhile, equities are indeed lower but still well up on this new year. Little, if any, technical damage has been done. Although it’s worth noting that the recent move higher has been impulsive enough such that reaching the first important lines of support will feel like a correction. Or at least be portrayed as such.
The dollar fell like a lead balloon but with the exception of yen, hasn’t broken any new ground, by any stretch. If anything we are just confirmed back into the recent lower range. What looked like an attempt to probe higher has been stymied. Or you were just handed a great opportunity.
And bonds? Supply, breakevens, CPI on Friday, questions about Japan’s intentions make this the most important market in major league play. With implications for all assets. The path of least resistance was clearly in evidence with today’s news.
As China prepares to launch its petro-yuan futures contract, and US-North Korea relations suddenly shift to a more positive tone (something that China has pushed for), a crazed digital dickweed could be forgiven for seeing a pattern of hegemonic transfer occurring and today's shot at the financial markets is yet another straw on the unipolar camel's back.
Comments
Who run Bartertown?
Master Blaster
No bid...bitches
In reply to Master Blaster by Cognitive Dissonance
""One Trader Asks "Did China Just Give US Assets A Cheap, Valuable Lesson On Who's In Charge?""
Not Really, NYC Paper GOLDT is Down Again ...
Everything is under Cunttrol ...
In reply to No bid...bitches by Theta_Burn
Still no news from Steve Bannon on ZH? (/sarc)
In reply to One Trader Asks "Did China… by BaBaBouy
Maybe if US renames them US Treasury 'Blockchain' Bills it will renew some interest in the world for countries to buy their bonds again
In reply to Still no news from Steve… by Klassenfeind
YUNO
The "Blockchain" is to cryptocurrency ... AS drones are to the U.S. MIC!...
Hell maybe the U.S. military's predator drones have a "blockchain" within them keeping score of every murder/double tap as an incentive for all the camo-kiddies to stay in longer?...
In reply to Maybe if US renames them US… by YUNOSELL
Fuck China. We'll stop buying their crap products.
In reply to YUNO… by Son of Captain Nemo
I'm making over $14k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://disq.us/url?url=http%3A%2F%2Fwww.Jobzon3.com%3Ab8eR_DQLwGRPVGtFv…
In reply to Fuck China. We'll stop buy… by IH8OBAMA
Why is it assholes like you continue to reappear?
Please find a nice quite corner and eat your keyboard for lunch.
In reply to Been a while since we heard… by Currency Pinto
i'm sure you're right...
We'll stop buying their crap products using this (https://www.rt.com/usa/415449-new-us-nuclear-doctrine/)!
When you're deranged and financially beyond bankrupt with everything looking like a "nail" to your "hammer"!
In reply to Fuck China. We'll stop buy… by IH8OBAMA
I recently bought a package of binder clips at Walmart to take to work. Made in China, of course. I think it was around two bucks for 36 clips. Even with our dumbed down and doped up labor force, I have blind faith that we could still manufacturer binder clips in the US. But I wonder what the price of a package of domestically produced binder clips would be?
In reply to Fuck China. We'll stop buy… by IH8OBAMA
Can it be mostly done by robot? If so, more but not a ton more. Less shipping, but higher electricity, etc. in the US. So I am not sure if that would be a wash.
In reply to I recently bought a package… by Snout the First
Can it be mostly done by robot? If so, more but not a ton more. Less shipping, but higher electricity, etc. in the US. So I am not sure if that would be a wash.
In reply to I recently bought a package… by Snout the First
You people realize that China literally can’t stop buying UST unless they unpeg the Yuan, right? The “basket of currencies” is literally created by holding foreign reserves in the form of treasury notes from whatever country they peg against.
Stop buying UST, Yuan skyrockets vs USD and all of a sudden China has declared currency war on itself.
In reply to Maybe if US renames them US… by YUNOSELL
"You people realize that China literally can’t stop buying UST unless they unpeg the Yuan, right? The “basket of currencies” is literally created by holding foreign reserves in the form of treasury notes from whatever country they peg against. "
We also realize how mentally challenged you are!
In reply to You people realize that… by Ramesees
"Hey why don't the US ever buy our Chinese government bonds? It's always us buying their stupid US treasuries! Something's not right here -- they get all this manufactured material goods and all we get is a lot of this worthless green paper."
In reply to "You people realize that… by Son of Captain Nemo
Cause "Yankee Jewdle" couldn't afford it even if he wanted it!... And more importantly it defeats the purpose of his agenda as he doesn't want ANY currency that is "worth something" he only wants what he feels he needs at 'gun point" which IS THE $USD!!!
Case in point... Just look at what the U.S. put into the "collection plate" (https://www.rt.com/news/415491-us-iraq-reconstruction-aid/) to help the Iraqi government rebuild from it's 3 million dead and 15 million displaced going on 17 years with our bloody fingerprints all over it (http://www.ae911truth.org/)?...
In reply to "Hey why don't the US ever… by YUNOSELL
When are you changing your avatar to Gay Muhammed?
Or Son of Cokehead Hitler? You sure as fuck no relative of Nemo.
In reply to Cause "Yankee Jewdle" can't… by Son of Captain Nemo
it is not even paper
In reply to "Hey why don't the US ever… by YUNOSELL
correct...it's cotton picked by global slaves.
In reply to it is not even paper by rygar
Damage done to our economy by buying those Chinese "manufactured material goods" is greater than the damage eventually done to China by holding dollars.
In reply to "Hey why don't the US ever… by YUNOSELL
Let's go the other way....The China.gov should do a backroom deal with Trump to buy ALL US Treasuries. ALL of them, at 5%. Expiration dates all have to be within the Trump Presidential Term.
Which brings up another point, no one, not even an American should buy anything long term and bet on what will happen 4 or 5 Presidents from now.
In reply to "Hey why don't the US ever… by YUNOSELL
I bet most on here do not understand that concept.
In reply to You people realize that… by Ramesees
What happened with tariffs against currency manipulator Chicom?
In reply to You people realize that… by Ramesees
^^^THIS!!!
Remember folks, China is still a centrally planned COMMUNIST state!!!
There is no way that they want the transparency required of a true reserve currency. Of course, It really looks like the Federal Reserve or their puppets in D.C. do not want it either. Interesting times.
Regardless, place your bets...
but do NOT call it "investing" because it is not.
In reply to You people realize that… by Ramesees
China has not been a communist state for many decades. US is not a democracy either.
In reply to ^^^THIS!!!… by LawsofPhysics
You realize that people are not rationale, right?
China will do what it wants to do. And I would applaud the idea that China quit helping the US government run up record debt by cutting their purchase of the paper.
In reply to You people realize that… by Ramesees
They need to buy something. There is a reason Mario holds a bunch in EUland. Do they want those? (Laugh Track Deafening !!!!)
In reply to You people realize that… by Ramesees
No biggie, just throw a 100% tariff on cheap ass Chinese junk until they unpeg the yuan.
In reply to Maybe if US renames them US… by YUNOSELL
That'll kill the FANG stocks real kwik. 1000's of merican corporations be butt hurtin real bad.
In reply to No biggie, just throw a 100%… by Ghost of PartysOver
Maybe, if the US cow tows even more to China, putting 7 million jobs there instead of over 2 million, we won’t have a massive trade deficit with them, proving that it is a very one-sided arrangement.
In reply to Maybe if US renames them US… by YUNOSELL
Corporate merica likes it that way. Ask any of the FANG stock corporations operating out of China to sell you poor people cheap shit. You do anything nasty to trade, those merican corporations will be butt hurt.
In reply to Maybe, if the US cow tows… by Endgame Napoleon
Re... "Maybe if US renames them US Treasury 'Blockchain' Bills it will renew some interest in the world for countries to buy their bonds again"
Or they can be honest, and call it DebtChain or ZioCoin, Plantation dweller.
In reply to Maybe if US renames them US… by YUNOSELL
lol....excellent. The US could just issue blockchain notes...bypass the FED altogether. And to make everyone feel good, we could limit the maximum number of blockchain treasurycoins to 21,000,000,000,000.
In reply to Maybe if US renames them US… by YUNOSELL
Limits are a bullshit pipedream... same as fiat, just slower to print.
In reply to lol....excellent. The US… by Antifaschistische
Blockchain Bills - and they should be advertised as the USD Frok for all those hodlers.
In reply to Maybe if US renames them US… by YUNOSELL
China limiting/not buying T's has got the Hedgerow front office scrambling, a really big deal.
Bannon will feature around 8 tonight.
In reply to Still no news from Steve… by Klassenfeind
Interesting to see how US will respond to this -- hopefully not with their go-to move of starting a war
In reply to One Trader Asks "Did China… by BaBaBouy
China is doing business with all those Latin Americans who are employed by US companies that nearshored production across the southern border. It is one of the many ways the Washington, D.C. Swamp and our US-in-name-only companies have sold out the American people.
In reply to Maybe if US renames them US… by YUNOSELL
I think we will find out today with our 10 year auction.....if it pops..they quit buying
In reply to Maybe if US renames them US… by YUNOSELL
Brussels has the money, just like last time. Stuff the vaults in Brussels and monetize. Maybe it'll a a purchase as large as Belgium's GDP this time?
Meet The Brand New, And Shocking, Third Largest Foreign Holder Of US Treasurys
https://www.zerohedge.com/news/2014-03-18/meet-brand-new-and-shocking-third-largest-holder-us-treasurys
In reply to I think we will find out… by youngman
Federal Reserve banksters are in doing their naked shorts on the PMs trying to keep their fantasy economics going.
In reply to One Trader Asks "Did China… by BaBaBouy
Exactly, and get ready for the US to be relegated to a third world nation.
In reply to Master Blaster by Cognitive Dissonance
You replace the majority white population with a majority third world population. Is it any great surprise that you turn into a third world country as a result?
In reply to Exactly, and get ready for… by Buck Johnson
I think people are going to miss America if/when China takes over.. DERP
In reply to Master Blaster by Cognitive Dissonance
Who's your daddy??
In reply to Master Blaster by Cognitive Dissonance
He who has the gold rules
In reply to Master Blaster by Cognitive Dissonance
The White Round-eye is in charge and those slanty-eyed yellow devils know it.
In reply to Master Blaster by Cognitive Dissonance
TYLER: Please change the comments sort order.
Yes, give us back the sort options if you can Tyler(s).
Live hard. I, For One, Would Be Great Fill If Yous Could Do That Little System Tweak Fer Usasses, Die Free
~ DC v8.4
In reply to TYLER: Please change the… by Baron von Bud
Pagination