To start this week, Ma Jun, chief economist for the PBOC, gave an email interview where he expressed his belief that the yuan will be more volatile but in either direction. Many still took those comments as if it were a veiled prescription toward devaluation. In the near term, it is more likely there will be "two way volatility," or [...]
The S&P/LSTA Leveraged Loan 100 was updated this weekend through August 13, confirming that market values in those “liquid” names fell below the December 16 levels for the worst prices since before QE3. There isn’t any further information on the reasons for the delay, though revisions to the BofAML High Yield indices suggest an answer. On Friday, the CCC and [...]
It’s amazing what will be ignored or forgotten in order to try to explain the state of the world when it strays so far beyond bounded conception. Commentary views the state of economic world as wholly separate dots, disparate systems only tangentially connected through nebulous trade terms and hard currencies. The world was once that way, though perhaps even then [...]
While everyone remains sure that the PBOC is actively trying to “allow” the yuan to depreciate as some kind of export catalyst, the “dollar” continues to show (not suggest) otherwise. Liquidity and “dollar” markets are still roiled rather than soothed, especially the US treasury market where the bid right at the open (what look very much like continued collateral calls) [...]
Everything in dollar-denomination yesterday was lifted by the usual M&A debasement and quite sour data from China. The latter was taken as if there would be renewed “stimulus” in the near term. The “dollar” took a break from its recent destructive nature, as commodities rebounded as did currency proxies and even gold. Stocks in the US and elsewhere jumped and [...]
Going back well more than a year now, every time the PBOC takes some kind of action it is classified immediately as “stimulus.” Last July, the Chinese central bank opened its PLF to China Development Bank and it was heralded as a renewed age of traditional monetarism if in unfamiliar formatting. In November, the first rate cuts since 2012 were [...]
In another of the innumerable cosmic coincidences that so abound these days, producer prices in China have been in “deflation” since March 2012. Not only is that 41 consecutive months of falling prices (insofar as this index captures that effect), that month is ubiquitous as a trend demarcation in so many other places. It’s as if the Chinese economy and [...]
Headlines a few years back were about China's need to re-balance their economy away from a heavy reliance on exports and toward domestic demand. The thesis says that self-reliance will lead to a less volatile economy and lower cost of capital. China is succeeding with this goal, but the path is initially a very bumpy road. The MSCI China index [...]
There was a point last week - probably about midday Wednesday - when it seemed that the financial world was spinning out of control. China's Shanghai exchange was continuing its slow motion crash, down almost 6% overnight, Europe was getting hammered as Greece teetered, the NYSE suddenly stopped working, United/Continental Airlines was grounded due to computer glitches, the Wall Street [...]
There is a lot about the crash in Chinese stocks that remains out of view. Of course, margin debt persists at the forefront of the reversal but I don’t think that begins to explain the depth and speed of the downturn. The timing seems to line up with very well with official policy measures intended to slow down the stock [...]
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