Data has been poor in both China and at home today but it doesn’t matter much as the AUD has held the mid-0.70s as markets are now (rightly) banking on MOAR credit from China:
Bonds caught a little bid:
XJO is down moderately, not helped by Google’s after hours miss:
Dalian is up going into Labor Day holidays. May/June is the risk:
Big Big Iron is copping it again on the China PMIs:
Good to see Big Gas copping it too:
Big Gold isn’t happy:
Big Banks have paused:
Big Realty is in the dog house as the preposterous DHG rally gets slaughtered:
Overvalued, profit growthless, warnings spreading, a real dog of a bourse.
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Westpac: 3 rate cuts to push Australian dollar to 0.66 cents
Via Bill Evans at Westpac: Earlier this week
Australia dollar lifts as trade war contagion sweeps markets
DXY was soft last night as EUR
Australian dollar to the lows as bank short squeeze flames out
The Australian dollar is sitting right at three
Australian dollar hangs by thread amid rising global recession
DXY looks very bullish as EUR and CNY
The markets and MB as well appear to think China can just simulate full stop. I am surprised MB has not mentioned once the Kyle Bass notion that China is able to stimulate only when it has a surplus of USD. If it runs out of USD surpluses (as he asserts they are judging by their current account and foreign reserves) they can no longer stimulate without a huge fall in their currency. I am not going to link to the numerous sources for this thesis as I can only assume most here have seen it already. But it is annoying to say the least how the markets in general think dear leader Xi can just wave a magic wand and everything is better without thinking for one iota about the consequences.
Mr Bass is wrong except, perhaps if rate cuts are required. Otherwise capital flows into China when it stimulates. It flows out when it slows.
Yes but where does this capital flow from? My understanding is that they can get USD from the trade surplus with the US (which is pretty much out of their control) and from issuing securities in the US, which is only feasible as long as there are investors willing to invest. There is only so much that the trade surplus can expand, particularly with the Trump administration trade war. So their ability to get dollars is limited to dumb investment from US pension funds basically. You state capital flows into China and out almost as though it is based on a law of physics with president Xi as the God.
xpjsx, if you follow kyle bass, you will go broke.
LOL I agree, he looks cool and talks well, but he’s been wrong more times than most investors can afford!
the Eurodollar system is resulting in a shortage of USD …. there should be a +ive move in USD soon …