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Global Stocks Dive On Fears Of “Irreversible” Trade War; Italian Bonds, Turkish Lira Tumble

June 25, 2018

Global Stocks Dive On Fears Of “Irreversible” Trade War; Italian Bonds, Turkish Lira Tumble

Bulletin Headline Summary from RanSquawk:

  • Trump is said to be planning new restrictions on tech exports to China
  • PBoC says they are to cut the re-lending rate for SME loans by 50bps, following the RRR cut over the weekend
  • Looking ahead, highlights include, US New Home Sales and BoJ’s Sakurai speaking

Global stocks are diving in what has been a generally quiet session, amid renewed trade war fears following reports that the Treasury Department is planning to heighten scrutiny of Chinese investments in sensitive U.S. industries under an emergency law, putting Washington’s trade war with Beijing on what Bloomberg dubbed a “potentially irreversible course”, while at the same time Trump threatened “more than reciprocity” to trade barriers.

According to overnight news reports, the US Treasury is devising rules to block firms with 25% Chinese ownership from acquiring companies involved in industrially significant technologies and that it plans using International Emergency Economic Powers Act 1977 to impose investment restrictions. “This one could well result in an escalating trade war,” Lee Ferridge, a macro strategist at State Street Corp., told Bloomberg TV in Hong Kong. “Volatility is going to continue to rise from here.”

Adding to the trade war jitters, an EU internal memo says trade crisis “set to deepen in coming months” and warns of the breakdown of rules-based trading. The EU Commission has also warned of a direct response to any new taxes on EU cars imported into the US.

The result has been a sea of red with European equities following Asia lower from the open, with the mining and auto sectors underperforming, resulting in a sea of red across global stock markets.

…click on the above link to read the rest of the article…

The Canadian Cointoss: Bank Of Canada Monetary Policy Decision Preview

September 6, 2017

The Canadian Cointoss: Bank Of Canada Monetary Policy Decision Preview

From RanSquawk

  • The majority expects the BoC to leave its overnight rate unchanged at 0.75%. Only 6 of 33 surveyed expect the BoC to hike this time out, while the OIS curve prices in a 45% chance of a hike.
  • A strong Q2 GDP release and the ensuing solid handover to Q3 has put a hike on the table at the upcoming decision.
  • Many are still cautious regarding further hikes owing to a lack of inflationary pressure.

The majority expect the Bank of Canada (BoC) to leave its overnight rate unchanged at 0.75%. Only 6 of the 33 surveyed in the latest Reuters poll are looking for a hike at the upcoming meeting, while 24 expect the BoC to hike at its October meeting. The remainder expect the next hike to come in January. Markets are more aggressive following a strong June retail sales release and impressive Q2 GDP release (4.5% on a QQ annualised basis, which was above the top end of expectations). Swaps are currently pricing in a circa 45% chance of a hike this week (odds stood at circa 20% pre-GDP), with an October hike baked into the curve.

July’s decision saw the BoC raise rates for the first time in 7 years after a slew of central bank rhetoric paved the way for the hike in the weeks running in to the decision, although the initial change of tone caught both markets and economists off guard. The hike still caught some unaware, as many still believed that the central bank lacked evidence of notable inflationary pressure, with the BoC’s 3 core measures all tracking below 2%.

July’s decision was accompanied by the quarterly Monetary Policy Report (MPR) with the latest batch of projections available below.

…click on the above link to read the rest of the article…

Global Markets Turmoil After China Extends Currency War To 2nd Day – Devalues Yuan To 4 Year Lows

August 12, 2015

Global Markets Turmoil After China Extends Currency War To 2nd Day – Devalues Yuan To 4 Year Lows

Chinese stocks opened lower, extending yesterday’s losses, after The PBOC weakened its Yuan FIX dramatically for the 2nd consecutive day(from 6.1162 Monday to 6.2298 last night to 6.3306). Offshore Yuan fell another 9 handles against the USD after China closed but was hovering at 6.40 as the market opens (now at 11 hnadles weaker at 6.51). Bear in mind the utter devastation in Chinese credit markets that data showed occurred in July, it remains ironic that for the 3rd days in a row, Chinese margin debt balances grew. Before the real fun and games started, Chinese officials once again exclaimed that their data is real (denying any mismatches between GDP Deflator and CPI) as China CDS spiked to 2 year highs. US equity futures are tumbling, bonds bid, and gold bouncing off the initial jerk lower.

PBOC makes some comments (like last night’s)…

  • *PBOC SAYS NO ECONOMIC BASIS FOR YUAN’S CONSTANT DEVALUATION
  • *PBOC SAYS YUAN WON’T CONTINUOUSLY DEVALUE
  • *PBOC SAYS MOVE OF YUAN REFERENCE PRICE IS NORMAL
  • *CHINA YUAN MECHANISM CHANGE MAKES FIXING RATES MORE REASONABLE

And then there is this (from Xinhua):

China’s state-owned news 4-year lowsagency Xinhua said: “China is not waging a currency war; merely fixing a discrepancy.”

“The central parity rate revision was designed to make the yuan more market-driven and in line with market expectations,” it said in a comment piece published on its web site.

“The lower exchange rate was just a byproduct, not the goal.”

The “one-off” adjustment has now become two… some context for the size of this move…

  • *MNI: CHINA PBOC WED YUAN FIXING LOWEST SINCE OCT 11, 2012

Onshore Yuan breaks above 6.41 – trades to 4 years lows against the USD…

…click on the above link to read the rest of the article…

 

China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge

July 9, 2015

China Soars Most Since 2009 After Government Threatens Short Sellers With Arrest, Global Stocks Surge

Here is a brief sample of some of the measures the Chinese government and the PBOC have unleashed in just the past ten days to prop up the crashing market include:

  • a ban on major shareholders, corporate executives, directors from selling stock for 6 months
  • freezing more than half (1400 at last count per Bloomberg) of the listed companies from trading,
  • blocking fund redemptions, forcing companies to invest in the market,
  • halting IPOs,
  • reducing equity transaction fees,
  • providing daily bailouts to the margin lending authority,
  • reducing margin requirements,
  • boosting buybacks
  • endless propaganda by Beijing Bob.

The measures are summarized below.

But it wasn’t until last night’s first official threat to “malicious” (short) sellers that they face charges (i.e., arrest), as Xinhua reported yesterday:

[Ministry of Public Security in conjunction with the recent Commission investigation of malicious short stock and stock index clues ] correspondent was informed on the 9th morning , Vice Minister of Public Security Meng Qingfeng led to the Commission , in conjunction with the recent Commission investigation of malicious short stock and stock index clues show regulatory authorities to the operation of heavy combat illegal activities.

 

… that the wall of Chinese intervention finally worked. For now.

And since this is all about one thing, the stock, market, it is worth noting that the Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who used a wrong discount rate in their DCF, when everything suddenly took off, and the SHCOMP closed  a “Dramamine required” 5.8% higher, the biggest daily increase since March 2009!

“As China beefs up its efforts to rescue the market, with even the public security ministry involved, market sentiment is recovering slightly from a panicky stage earlier,” Shenyin Wanguo analyst Qian Qimin says by phone

…click on the above link to read the rest of the article…

 

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