The fundamentals for crude oil continue to be atrocious. Production remains relatively stable if slightly reduced, which is about the only factor in favor of oil prices since the February 11 low. On the other side of the ledger, you don’t hear as much about how it’s all oil supply anymore other than the occasional reference to a “glut” that [...]
By April last year, it had become clear that conditions in China were heading into dangerous territory. Even though most mainstream attention was fixed on the then-still growing stock bubble, there was so much that was wrong almost everywhere else. The economy would not stop slowing, and indeed still has not. The financial system was worse, so much so that [...]
China’s Total Social Financing hugely disappointed in February, as January’s surge was not followed as if renewed economic enthusiasm. The net flow was RMB 780 billion compared to the record RMB 3.42 trillion the month before. This latest update was instead among the lowest monthly totals since 2010. New loans added up to just RMB 727 billion after increasing RMB [...]
The PBOC surprised some by lowering the reserve requirement for the Chinese banking system this morning. That marks the sixth reduction since February 4 last year, totaling 350 bps (the reduction on April 19 was 100 bps). By orthodox calculations, that should have added about RMB 2.45 trillion in new “liquidity” as banks freed from holding reserves would have forwarded [...]
All the warning signs were there, especially the backup in the CNY exchange rate. Chinese stocks had stood for a good run while the PBOC had flooded internal channels, but how much of that was real liquidity versus the appearance of stuffing funding into the narrow coffers of the largest state run banks? Increasingly it seemed far more the latter [...]
Total Social Financing (TSF) in China jumped in January which really wasn’t surprising given that the figure captures much of the central bank and whatever it does – which was a lot in January. Loan growth, too, surged giving the mainstream a desperate boost even if these estimates don’t mean what everyone seems to think. This is the typical response [...]
You can’t blame the PBOC for trying, as if they were even going to do it, Monday was the day. With the US closed and after the turmoil all over the “dollar” up to last Thursday, the Chinese central bank was left with practically no choice. With Hong Kong shaping up to the mess in the eurodollar, there wasn’t any [...]
Last month when China’s exports “only” declined by 1.7% (revised) the entire orthodox world took it as a definitive signal for the long-awaited monetary stimulus effects. Whether it was the yuan’s “devaluation” or the six rate cuts and the often double shots of reserve requirement reductions that accompanied them, December trade figures were so very encouraging. Economists, in particular, were [...]
For everything that has gone wrong over the past year or so, there was and is a benign interpretation to accompany each negative factor. Oil prices were “transitory”, longer run inflation expectations didn’t matter because “professional forecasters” remained steadfastly devoted, and no matter which market has gone highly askew it’s just “normal” worry. All of these nonthreatening rationalizations trace back [...]
The Chinese central bank has managed to instill some order in both onshore and offshore RMB markets, but at what cost? The amount of intervention that was induced severely strains only the future at those maturities. Central banks are nothing if not short-termists in the purest sense, so repeating what doesn’t work never factors; all that matters is right now. [...]
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