Markets in Asia and Europe down

[snoop1130]

Markets in Asia and Europe down
Euronews

CHINA -- Chinese shares plunged more than 6 percent to 14-month lows on Tuesday (January 26) after oil prices dropped again, reviving concerns about global growth and prompting a sell-off in the world’s equity markets.

After a rebound on Friday and early Monday, crude prices fell back below 30 dollars a barrel, not far from last week’s 12-year lows, ending a couple of days of gains for Wall Street stocks.

China’s fickle stock markets have now slumped about 22 percent so far this year on concerns about the slowing economy and confusion over the central bank’s foreign exchange policy.

Other stock markets in Asia and Europe were also down on Tuesday, with Japan’s Nikkei dropping 2.4 percent and MSCI’s broadest index of Asia-Pacific shares outside Japan down 1.5 percent, extending earlier losses after the late slide in China. In Germany, the DAX was down about 1.8 percent during the first 30 minutes of trading.

Source: http://www.euronews.com/2016/01/26/markets-in-asia-and-europe-down/

-- (c) Copyright Euronews 2016-01-26

[Publicus]

The mention in the OP of CCP's slowing economy is well known and has been for several years. Some parts of it are chugging at different rates of slow while other elements such as the equities markets are clanking loudly while their various parts constantly fall off.

But it is the currency that needs to be watched this year. Last year was the turning point in several ways, but most significantly global markets began to recognise the CCP Boyz were not in charge of the economy, its financial system, the stock markets, the yuan currency etc.

Last year in fact CCP and its personal (central bank) the People's Bank of China had to quit its ten year old policy of a stable yuan currency. From mid last year it's been only fits and stops in a depreciation/devaluation of the yuan. The currency is predictable but not stable.

Yuan is appreciating which CCP can't afford cause it will bust 'em. Hence the depreciation forced march which is now unmistakably trudging towards the 20% downgrading global markets had feared.

In August CCP said the sudden shock depreciation was a one-off. It's not and many of us knew then it was not a one time only bargain deal. It was rather the beginning of the long march through and to a debilitating yuan depreciation.

PBOC just threw $260 billion cash into the economy for the Chinese New Year February 8th. It is the largest holiday cash giveaway on record. This is another symptom as indicated......

While the central bank stated that the liquidity injection is to prepare for possible liquidity shock amid Chinese New Year season, we see that this is primarily to counter the strong capital outflows and the withdrawal of yuan liquidity due to FX market intervention,” Zhou Hao, senior emerging markets economist at Commerzbank in Singapore, wrote in a client note.

To be sure, many investors believe the government is not opposed to a weaker currency despite the rhetoric. Gone are the days when Beijing was under international pressure to let the yuan rise as its economy notched up double-digit expansion.

Growth in 2015 was the lowest in more than two decades and is expected to slide further, while the dollar is likely to rise broadly as the United States raises interest rates.

http://www.dailytimes.com.pk/business/26-Jan-2016/as-china-tries-to-reassure-on-yuan-stability-investors-see-depreciation

Edited January 26, 2016 by Publicus

[tonbridgebrit]

The mention in the OP of CCP's slowing economy is well known and has been for several years. Some parts of it are chugging at different rates of slow while other elements such as the equities markets are clanking loudly while their various parts constantly fall off.

But it is the currency that needs to be watched this year. Last year was the turning point in several ways, but most significantly global markets began to recognise the CCP Boyz were not in charge of the economy, its financial system, the stock markets, the yuan currency etc.

Last year in fact CCP and its personal (central bank) the People's Bank of China had to quit its ten year old policy of a stable yuan currency. From mid last year it's been only fits and stops in a depreciation/devaluation of the yuan. The currency is predictable but not stable.

Yuan is appreciating which CCP can't afford cause it will bust 'em. Hence the depreciation forced march which is now unmistakably trudging towards the 20% downgrading global markets had feared.

In August CCP said the sudden shock depreciation was a one-off. It's not and many of us knew then it was not a one time only bargain deal. It was rather the beginning of the long march through and to a debilitating yuan depreciation.

PBOC just threw $260 billion cash into the economy for the Chinese New Year February 8th. It is the largest holiday cash giveaway on record. This is another symptom as indicated......

While the central bank stated that the liquidity injection is to prepare for possible liquidity shock amid Chinese New Year season, we see that this is primarily to counter the strong capital outflows and the withdrawal of yuan liquidity due to FX market intervention,” Zhou Hao, senior emerging markets economist at Commerzbank in Singapore, wrote in a client note.

To be sure, many investors believe the government is not opposed to a weaker currency despite the rhetoric. Gone are the days when Beijing was under international pressure to let the yuan rise as its economy notched up double-digit expansion.

Growth in 2015 was the lowest in more than two decades and is expected to slide further, while the dollar is likely to rise broadly as the United States raises interest rates.

http://www.dailytimes.com.pk/business/26-Jan-2016/as-china-tries-to-reassure-on-yuan-stability-investors-see-depreciation

Publicus, you really do love to exaggerate don't you ?

You love to be a cheerleader for the supposed future collapse of the Chinese economy. Okay, let's put this all into perspective, and look at the long-term track record.

Okay, the report says that Chinese shares have dropped to 14-month lows, fair enough. Now, what about London's FTSE 100 ? The FTSE 100 dropped to about 5650 on last Wednesday, do bear in mind that the last time it was as low as 5650 was during April/May 2012 !!

Almost three years ago !!

Okay, you love to go on about the exchange rate. Okay, dollar against the Chinese yuan renmenbi.

One US dollar was EIGHT RMB back in 2006. The dollar weakened to 6.8 RMB by early 2008, and it stayed there until early 2010. The dollar then slowly weakened to 6.05 RMB by early 2014. The dollar has strengthened to 6.60 at the latest prices.

So yes, Beijing has been carrying out a peg for years.

They allowed the RMB to strengthen from 8.0 to 6.05 over nearly a decade. They've now allowed it to weaken by about 10% since it's peak in early 2014.

Now, let's look at the British pound for comparison. The pound was worth a staggering over TWO dollars before the world wide crash of 2008. It was worth 1.70 USD during mid 2014. It crashed to 1.47 USD March/April 2015. So the pound's crash during a shorter period of time was much greater.

By the way, the pound was worth over 65 baht before the 2008 crash. It quickly fell to 50 baht in less than one year, it might have been just six months.

I'm only trying to put things into perspective. Currencies, (whether it's the pound, dollar, RMB) change in value.

Also, that RMB, whether a US dollar is 5.0 RMB or 8.0 RMB, it still means that Walmart's quarterly import bill from China will still run into billions of US dollars.

Yes, Walmart, that's why Cina's economy won't crash.

http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y

[Publicus]

CCP stock markets are only the tip of the proverbial iceberg. And this iceberg is heading straight south. In one direction only and getting smaller and lower in the water. It is going to be a long time before anyone has any control over the command economy that is so big and so corrupt it can only fail, just as it continues to do.

Not even the darkest minds imagined it would be this bad for China

One trillion dollars in capital left China in 2015.

That’s worse than even the most bearish China analysts could have even imagined.

In October, the US Treasury estimated that capital outflows from China hit $500 billion in the first eight months of 2015.

In other words, the situation has deteriorated very rapidly, and everyone got it very wrong. Last year, China’s foreign-exchange reserves dwindled for the first time since 1992. They fell by $513 billion to $3.3 trillion.

A Bloomberg News survey found that investors think that, this year, reserves will fall another $300 billion. Of course, that was taken before everyone knew how bad the 2015 outflow situation was.

http://finance.yahoo.com/news/not-even-darkest-minds-imagined-192833192.html

Reserve reversal will continue this year at three times the stated rate.

The only alternative is strict capital controls well beyond the already broad and deep capital controls the CCP Boyz in Beijing have always had. CCP capital market has always been largely closed. Controlling it completely will delay and make worse the eventual "sharp adjustment" the economy is moving inexorably to.

It is a combination of crashing and collapsing. Stock markets for instance have crashed. The property and housing bubble is bursting. Banks are bone dry of liquidity as npl's pile up like dust. Capital is fleeing over the past 18 months, mostly by shadow banking transactions.

Daiwa Securities late last year projected based on capital flows a loss of 20% off GDP by 2020. There's no growth in that.

CCP, meet the IMF et al who will be your new bankers. Indefinitely.

Edited January 27, 2016 by Publicus

[William C F Pierce]

The Koendatrieff cycle has proven to be correct over a 200+ year period. After a long Bull run, a sudden collapse (Bear run), then a short Bull run before going sideways slightly downwards. (This is where we have been recently). Next is a short Bear run, shorter than the 2008 collapse. Then the market will enter a Bull run bigger and larger than it has ever known. This happens each successive cycle. Why worry, what happens, happens when history repeats. Oil or currencies are not the total parts of the cycle. It is the sum total of the world's productive efficiency that will drive the next Great Bull run.

[Srikcir]

The mention in the OP of CCP's slowing economy is well known and has been for several years. Some parts of it are chugging at different rates of slow while other elements such as the equities markets are clanking loudly while their various parts constantly fall off.

But it is the currency that needs to be watched this year. Last year was the turning point in several ways, but most significantly global markets began to recognise the CCP Boyz were not in charge of the economy, its financial system, the stock markets, the yuan currency etc.

Last year in fact CCP and its personal (central bank) the People's Bank of China had to quit its ten year old policy of a stable yuan currency. From mid last year it's been only fits and stops in a depreciation/devaluation of the yuan. The currency is predictable but not stable.

Yuan is appreciating which CCP can't afford cause it will bust 'em. Hence the depreciation forced march which is now unmistakably trudging towards the 20% downgrading global markets had feared.

In August CCP said the sudden shock depreciation was a one-off. It's not and many of us knew then it was not a one time only bargain deal. It was rather the beginning of the long march through and to a debilitating yuan depreciation.

PBOC just threw $260 billion cash into the economy for the Chinese New Year February 8th. It is the largest holiday cash giveaway on record. This is another symptom as indicated......

While the central bank stated that the liquidity injection is to prepare for possible liquidity shock amid Chinese New Year season, we see that this is primarily to counter the strong capital outflows and the withdrawal of yuan liquidity due to FX market intervention,” Zhou Hao, senior emerging markets economist at Commerzbank in Singapore, wrote in a client note.

To be sure, many investors believe the government is not opposed to a weaker currency despite the rhetoric. Gone are the days when Beijing was under international pressure to let the yuan rise as its economy notched up double-digit expansion.

Growth in 2015 was the lowest in more than two decades and is expected to slide further, while the dollar is likely to rise broadly as the United States raises interest rates.

http://www.dailytimes.com.pk/business/26-Jan-2016/as-china-tries-to-reassure-on-yuan-stability-investors-see-depreciation

Publicus, you really do love to exaggerate don't you ?

You love to be a cheerleader for the supposed future collapse of the Chinese economy. Okay, let's put this all into perspective, and look at the long-term track record.

Okay, the report says that Chinese shares have dropped to 14-month lows, fair enough. Now, what about London's FTSE 100 ? The FTSE 100 dropped to about 5650 on last Wednesday, do bear in mind that the last time it was as low as 5650 was during April/May 2012 !!

Almost three years ago !!

Okay, you love to go on about the exchange rate. Okay, dollar against the Chinese yuan renmenbi.

One US dollar was EIGHT RMB back in 2006. The dollar weakened to 6.8 RMB by early 2008, and it stayed there until early 2010. The dollar then slowly weakened to 6.05 RMB by early 2014. The dollar has strengthened to 6.60 at the latest prices.

So yes, Beijing has been carrying out a peg for years.

They allowed the RMB to strengthen from 8.0 to 6.05 over nearly a decade. They've now allowed it to weaken by about 10% since it's peak in early 2014.

Now, let's look at the British pound for comparison. The pound was worth a staggering over TWO dollars before the world wide crash of 2008. It was worth 1.70 USD during mid 2014. It crashed to 1.47 USD March/April 2015. So the pound's crash during a shorter period of time was much greater.

By the way, the pound was worth over 65 baht before the 2008 crash. It quickly fell to 50 baht in less than one year, it might have been just six months.

I'm only trying to put things into perspective. Currencies, (whether it's the pound, dollar, RMB) change in value.

Also, that RMB, whether a US dollar is 5.0 RMB or 8.0 RMB, it still means that Walmart's quarterly import bill from China will still run into billions of US dollars.

Yes, Walmart, that's why Cina's economy won't crash.

http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y

"Walmart announced last week that it plans to close 269 stores this year, including 154 stores in the U.S."

Oops.

[MaeJoMTB]

Now, let's look at the British pound for comparison. The pound was worth a staggering over TWO dollars before the world wide crash of 2008. It was worth 1.70 USD during mid 2014. It crashed to 1.47 USD March/April 2015. So the pound's crash during a shorter period of time was much greater.

By the way, the pound was worth over 65 baht before the 2008 crash. It quickly fell to 50 baht in less than one year, it might have been just six months.

Pound was at $2 for about a month,

For the past 20 years it's bounced from 1.4-1.8, picking the high then claiming it's fallen wildly is a bit of an exaggeration.

[tonbridgebrit]

Now, let's look at the British pound for comparison. The pound was worth a staggering over TWO dollars before the world wide crash of 2008. It was worth 1.70 USD during mid 2014. It crashed to 1.47 USD March/April 2015. So the pound's crash during a shorter period of time was much greater.

By the way, the pound was worth over 65 baht before the 2008 crash. It quickly fell to 50 baht in less than one year, it might have been just six months.

Pound was at $2 for about a month,

For the past 20 years it's bounced from 1.4-1.8, picking the high then claiming it's fallen wildly is a bit of an exaggeration.

Yes, I have picked out the high point and low point. I'm only trying to say that the fall in the pound has been sharper than the fall in the Chinese RMB.

Right now, the pound is 1.42 US dollars. I'm actually getting a bit concerned because there is talk about the pound falling to 1.30 US dollars because Britain might leave the European Union. Do you reckon that the pound will fall that low if Britain does leave the European Union ??

[tonbridgebrit]

Publicus, you really do love to exaggerate don't you ?

You love to be a cheerleader for the supposed future collapse of the Chinese economy. Okay, let's put this all into perspective, and look at the long-term track record.

Okay, the report says that Chinese shares have dropped to 14-month lows, fair enough. Now, what about London's FTSE 100 ? The FTSE 100 dropped to about 5650 on last Wednesday, do bear in mind that the last time it was as low as 5650 was during April/May 2012 !!

Almost three years ago !!

Okay, you love to go on about the exchange rate. Okay, dollar against the Chinese yuan renmenbi.

One US dollar was EIGHT RMB back in 2006. The dollar weakened to 6.8 RMB by early 2008, and it stayed there until early 2010. The dollar then slowly weakened to 6.05 RMB by early 2014. The dollar has strengthened to 6.60 at the latest prices.

So yes, Beijing has been carrying out a peg for years.

They allowed the RMB to strengthen from 8.0 to 6.05 over nearly a decade. They've now allowed it to weaken by about 10% since it's peak in early 2014.

Now, let's look at the British pound for comparison. The pound was worth a staggering over TWO dollars before the world wide crash of 2008. It was worth 1.70 USD during mid 2014. It crashed to 1.47 USD March/April 2015. So the pound's crash during a shorter period of time was much greater.

By the way, the pound was worth over 65 baht before the 2008 crash. It quickly fell to 50 baht in less than one year, it might have been just six months.

I'm only trying to put things into perspective. Currencies, (whether it's the pound, dollar, RMB) change in value.

Also, that RMB, whether a US dollar is 5.0 RMB or 8.0 RMB, it still means that Walmart's quarterly import bill from China will still run into billions of US dollars.

Yes, Walmart, that's why Cina's economy won't crash.

http://www.xe.com/currencycharts/?from=USD&to=CNY&view=10Y

"Walmart announced last week that it plans to close 269 stores this year, including 154 stores in the U.S."

Oops.

Well, Walmart might be closing some branches, but Walmart is still the biggest dominant player in American retailing. And everybody in America does actually know that a lot of the stuff in Walmart is actually made in China.

Actually, in England, a lot of the stuff you see in Argos, PC World and Currys is also from China.

( To anybody in America who is readng this, Argos, PC World and Currys are the retailers that sell most of the electronic goods in England. Stuff like flat screen televisions, laptop computers, mobile phones, etc.)

[Publicus]

CCP needs $3 Trillion in forex reserves to cover its dollar denominated debts, its shrinking capital account, obligations to countries such as Venezuela, Zimbabwe and Russia among others, to execute its new and grandiose Silk Road project, and to continue to depreciate the yuan to cover for capital escaping the country.

Some respected economists say it's more like $2 Trillion however....

...the falling reserves remains an issue to watch, said Richard Jerram, the chief economist at the Bank of Singapore, who says any fall towards $2 trillion could set alarm bells ringing. "The burn rate has been worrying," he said. "It’s not about how long it gets to zero, its about how long it gets to about 2, which is what they need."

http://usa.chinadaily.com.cn/epaper/2015-12/15/content_22716809.htm

"China has a large reserve but at this rate or higher, the liquid portion of the reserve may run low in months -- not years," said Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance.

Yu Yongding, a former adviser to the PBOC, says policy makers should stop intervening in the currency market and preserve foreign reserves.

If just 5 percent of its 1.3 billion population sent the maximum $50,000 allowed out of the country, it would deplete the entire $3.3 trillion in reserves. Citizens frequently skirt the rules -- from pooling quotas to using so-called underground banks.

http://www.bloomberg.com/news/articles/2016-01-27/china-s-1-trillion-money-exodus-isn-t-about-capital-controls

The currency contradictions affecting forex reserves are extensive and deep.

CCP needs to strengthen the yuan to counter the mass rush of capital outflows but it needs to depreciate the yuan to support falling exports. As the usd appreciates the yuan must depreciate to keep their head above water.

CCP needs to market float the yuan if it wants to be taken seriously as a global reserve currency but it is instead moving to control depreciate it by 5% to 7% this year alone.

The more CCP props up its stock markets the more the currency speculators whet their appetite against the yuan that is traded offshore in Hong Kong and which is responsive to market forces. CCP's central bank has to buy up yuan against the speculators leaving the economy and financial system hard pressed for liquidity.

Indeed, the currency machinations of late are a mask to try to conceal that the needed restructuring of the economy Xi Jinping and his PM Li Kejiang set out in 2013 to accomplish has faltered too much, too often for too long. Entrenched vested interests in the state owned corporations that dominate the economy cannot be overcome. CCP's peristroika is the same as the Russian Soviet peristroika of Gorbechev, which is to say bust.