Posts Tagged ‘US Treasury bond market’

The capital tsunami is a bigger threat than the nuclear option

The capital tsunami is a bigger threat than the nuclear option

Courtesy of Michael Pettis at China Financial Markets

Since this is another long posting, it might make sense to summarize briefly its two parts.  In the first part, expanding on an OpEd piece of mine published by the Wall Street Journal on Monday, I argue that China’s “nuclear option”, which has generated a great deal of nervousness among investors and policy-making circles in the US, is a myth, and what the US should be much more concerned about is its diametric opposite — a tsunami of capital flooding into the country.  I try to discuss the economic implications and perhaps the implications for asset prices.

In the second part of this posting I discuss the slowing of the Chinese economy within the context of what I believe to be its stop-go approach to economic policymaking.  The one-minute take: I think policymakers will soon be stomping again on the accelerator, although there seems to be a real debate going on about whether this would be the proper policy response.

———

An awful lot of investors and policymakers are frightened by the thought of China’s so-called nuclear option.  Beijing, according to this argument, can seriously disrupt the USG bond market by dumping Treasury bonds, and it may even do so, either in retaliation for US protectionist measures or in fear that US fiscal policies will undermine the value of their Treasury bond holdings.  Policymakers and investors, in this view, need to be very prepared for just such an eventuality

So worried have many been that last week SAFE even had to come out and calm people down.  According to an article in the Financial Times:

China has delivered a qualified vote of confidence in the dollar and US financial markets, ruling out the “nuclear option” of dumping its huge holdings of US government debt accumulated over the last decade.

But the State Administration of Foreign Exchange, which administers China’s $2450bn in reserves, the largest in the world, also called on Washington and other governments to pursue “responsible” economic policies. The statement on Wednesday, one of a series that Safe has issued in recent days in an apparent effort to address criticism about its lack of transparency, also played down the chances of China making major further investments in gold.

It’s good that SAFE is trying to soothe worried investors and policymakers, although, as I have pointed…
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Ruth Bader Ginsburg helped shape the modern era of women's rights - even before she went on the Supreme Court

Supreme Court Justice RBG passed away from complications of metastatic pancreatic cancer yesterday. RIP, the Notorious RBG.

Ruth Bader Ginsburg helped shape the modern era of women's rights – even before she went on the Supreme Court

Judge Ruth Bader Ginsburg paying a courtesy call on Sen. Daniel Patrick Moynihan, D-N.Y., left, and Sen. Joseph Biden, D-Del., in June 1993, before her confirmation hearing for the Supreme Court. AP/Marcy Nighswander

Courtesy of Jonathan Entin, Case Western Reserve University

Justice Ruth Bader Ginsburg died on Friday, the Supreme Court announced.

Chief Justice John Roberts ...



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Politics

Ruth Bader Ginsburg helped shape the modern era of women's rights - even before she went on the Supreme Court

Supreme Court Justice RBG passed away from complications of metastatic pancreatic cancer yesterday. RIP, the Notorious RBG.

Ruth Bader Ginsburg helped shape the modern era of women's rights – even before she went on the Supreme Court

Judge Ruth Bader Ginsburg paying a courtesy call on Sen. Daniel Patrick Moynihan, D-N.Y., left, and Sen. Joseph Biden, D-Del., in June 1993, before her confirmation hearing for the Supreme Court. AP/Marcy Nighswander

Courtesy of Jonathan Entin, Case Western Reserve University

Justice Ruth Bader Ginsburg died on Friday, the Supreme Court announced.

Chief Justice John Roberts ...



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Chart School

Stocks are not done yet - Update

Courtesy of Read the Ticker

There are a few times in history when a third party said this US paper (stocks, funds or bonds) is worthless.

Here is two.

1) 1965 Nixon Shock - The French said to US we do not want your paper dollars please pay us in gold. This of course led to the US going off the gold standard.

2) 2007 Bear Stern Fund Collapse - Investors said their funds collateral was worth much less than stated. This of course was the beginning of the great america housing bust of 2008.


In both cases it was stated .."look the Emperor is naked!"... (The Empe...

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Zero Hedge

The Ultra Wealthy Are Selling Billions Of Dollars In Stock

Courtesy of ZeroHedge View original post here.

As the market has "rebounded" off its lows back in March, the world's super wealthy are jumping at the chance to offload billions of dollars in stock while global central banks - and most notably the Federal Reserve - keeps a bid under the market and acts as a Mr. Magoo-like counterparty.

Many investors have been prompted to sell by market volatility over the last two weeks, which appears as though it could be signaling an end to the V-shaped recovery. This has likely helped spook the ultra wealthy into take some cash off the table. 

Seo Sang-young, an analy...



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ValueWalk

Markets Crash Two Days In A Row: The American Dream Is Dead

By Eloise Williams. Originally published at ValueWalk.

The American dream is dead, she thinks to herself. After all her hard work. All the blood, sweat and tears. Long nights in the office away from her family.  Diligently saving up every penny so they could have that white picket fence. A big screen television. And even an iPhone 11 Pro.

Q2 2020 hedge fund letters, conferences and more

The American Dream Is Officially Dead

Emma slowly sips her bourbon while sitting on her porch. Deep wrinkles caused by stress are embedded into her once smooth face. A chunk of her blonde hair falls to the ground.&#x...



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Kimble Charting Solutions

Gold Breakout Triggers Buy Signal, Is $3000 Next Target?

Courtesy of Chris Kimble

90-days ago this cup & handle pattern was discussed on See It Market when Gold was trading at 1717.

Fast-forward to today and Gold is up 15 percent. So it’s time for an update!

As we pointed out 90-days ago, the initial price magnet for the rally was the 261.8 Fibonacci extension that marked the 2011 high at (1).

That high has served as price resistance for nearly 9 years! …But it may be ...



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Biotech/COVID-19

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

 

Smoke from wildfires can worsen COVID-19 risk, putting firefighters in even more danger

Firefighters have battled camp crud before, but COVID-19 brings new risks with the potential for heart and lung damage. Robyn Beck/AFP/Getty Images

By Luke Montrose, Boise State University

Two forces of nature are colliding in the western United States, and wildland firefighters are caught in the middle.

Emerging research suggests that ...



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Digital Currencies

Cryptocurrencies Rarely Used To Launder Money, Fiat Preferred

Courtesy of ZeroHedge View original post here.

Authored by Shaurya Malwa via Decrypt.io,

Traditional channels continue to dominate the estimated $2 trillion global money laundering racket instead of cryptocurrencies, a report says.

In brief
  • Money laundering via cryptocurrencies is not a preferred tool for criminals, a report said...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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