The Federal Reserve wasn’t the only major central bank conducting open market operations (OMO’s) this week. On the other side of the Pacific, the People’s Bank of China (PBOC) had been, too. Big ones. And in both places, nobody really seems to know what to make of them even though they are actually connected to [...]
It seems as if we’ve found one of those interim periods that often accompany times of uncertainty. Markets, stocks as well as bonds, are in a wait-and-see mode. Either the next shoe drops, as is feared, or the grand response works, as is widely hoped. Which way are the risks perhaps rebalancing? The global downturn [...]
Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, [...]
The last time was bad, no getting around it. From the end of 2014 until the first months of 2016, the Chinese economy was in a perilous state. Dramatic weakness had emerged which had seemed impossible to reconcile with conventions about the country. Committed to growth over everything, and I mean everything, China was the [...]
Chinese monetary authorities announced today what will be for some of its banks a seventh round of “stimulus.” For the largest institutions, it will "only" be their sixth and the first one since January 2019. The PBOC has decided it is time for more RRR cuts. Effective September 16, the ratio all banks are required [...]
Earlier this year, Chinese authorities reduced the VAT tax the government charges auto manufacturers. Intended to boost consumption, the levy was reduced from 16% to 13% in the hope automakers would pass along the savings to consumers. Many if not most manufacturers did. The results were immediate, and fleeting. In the month of March 2019, [...]
For a cabal of superpatient supergeniuses, the Chinese tend to play with fire quite often. According to many, the Communists have perfected the art of technocracy and are merely waiting out the impetuously free West. The dollar system will destroy itself (there’s the kernel of truth) allowing a perfectly positioned China to swoop in and [...]
Toward the end of June, Chinese RMB money markets seemed like they had weathered the worst of it. One month earlier, in late May, regulators had seized Baoshang Bank Co. sending waves of uncertainty rippling through markets in China and around the world. Authorities were quick to declare “nothing to see here”, blaming the bank’s [...]
Central bankers are not nimble traders. By their very bureaucratic nature, they leave big muddy footprints all over markets. Sometimes that is by design, a show of force to scare some evil speculators into going straight. Other times, it just can’t be helped. The way it works in China, the autocratic structure doesn’t leave much [...]
One month ago, on May 24, Chinese regulators stunned the world by announcing the first bank restructuring in modern China’s history. Based in Inner Mongolia, Baoshang Bank was seized because of what the PBOC and China Banking and Insurance Regulatory Commission said was “severe credit risk.” Initial reports attempted to link Baoshang’s struggles to financier [...]
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