Nearly two months ago we explained "How Beijing Is Responding To A Soaring Dollar, And Why QE In China Is Now Inevitable" in which we cited Cornerstone who reminded us "that from 2007 to late 2008, U.S. fed funds dropped 500 bp, and then the Fed still needed to do QE? The backdrop for China looks a bit similar. We had a credit bubble, they have a credit bubble. We had a housing bubble, they have a housing/investment bubble. Will China eventually have to go down the same path as the U.S., and the Eurozone? ... The PBoC will first cut rates to 0%, before contemplating QE."
To this we added that "once China, that final quasi-Western nation, proceeds to engage in outright monetization of its debt, then and only then will the terminal phase of the global currency wars start: a phase which will, because global economic growth and that all important lifeblood of a globalized economy - trade - at that point will be zero if not negatve, will see an unprecedented crescendo of money printing by absolutely everyone, before coordinated devaluations mutate into uncoordinated, and when central bank actions morph from "all for one" to "each man for himself."
We may not have long to wait because just hours ago, MarketNews first among the wire services hinted at what we suggested was the endgame.
- *PBOC DISCUSSING DIRECT PURCHASES OF LOCAL GOVT BONDS: MNI
- *PBOC IS DISCUSSING UNCONVENTIONAL POLICIES: MNI
Bloomberg adds more, citing MNI as saying that the Chinese central bank discussing "adopting unconventional policies to rebuild its balance sheet and reinvigorate economy, including making direct purchases of local government bonds from market."
Of just as we predicted.
MNI continues that "although wide range of possibilities tabled about how PBOC operations could change,common thread of discussion involves need to expand balance sheet to ensure supply of liquidity meets economy’s demands, report says."
In other words, China is about to engage in the biggest QE of them all, and drown the world with exported deflation as the global supply glut which we explained yesterday, hits unprecedented levels and ultimately leads to the biggest inventory dumping phase in global history which central bankers will have no choice but to offset with Friedman's infamous "helicopter drop" of money, finally leading to the terminal phase for fiat currencies.
MNI continues:
PBOC discussed quantitative easing, which would tie in with aim of having local governments sell CNY1t in bonds this year to lower interest costs, mitigating systemic risk and boosting economies at local level.
PBOC could buy assets directly from the banks, freeing them up to purchase local government bonds, or buy local government bonds directly from the market, according to sources who have been briefed on discussions.
Unlike reserve-requirement cuts, which involve funding already in PBOC accounts,these operations would expand bank’s balance sheet, helping it to counter impact of sustained capital outflows.
Because apparently $22 trillion in global central bank assets is not enough to show the world's Keynesians, who are now eager to push the world to war just to avoid being proven wrong, that QE does not work.
To be sure others promptly jumped on the report: according to Shanghai Pudong Development Bank, the "possibility exists for PBOC to adopt unconventional policy such as bond purchases as onshore commercial banks may have limited appetite for such notes."
Move will help fund infrastructure projects more smoothly at a time when growth is slowing, Shanghai-based senior analyst Cao Yang says, adding that the Yuan will continue to be stabilized as authorities keen to promote currency internationalization
And while no decision has been made and China is clearly unsure if this is the correct policy...
- PBOC ECONOMIST SAYS NO NEED FOR STRONG STIMULUS: PEOPLE'S DAILY
... the market has already made up its mind, with the Yuan falling 0.14%, set for biggest drop since March 23, to 6.2036 per dollar, while the Shanghai Composite was up 3% in overnight trading, rising above 4,500 for the first time since the last financial crisis, and up 40% since we first predicted in the beginning of March precisely what the Chinese endgame is.
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UPDATE 2 피치, 일본을 다운 그레이드 재정 정책에 경고에 무디스 합류
피치가 일본을 다운 그레이드, 다섯 노치 아래 최고 등급 * 다운 그레이드 무디스 12월에 의해 유사한 조치를 다음과 * 의심은 일본이 부채 부담을 줄일 수있는 방법을 통해 유지 (추가합니다은 피치 분석에서 인용, 시장 반응) 스탠리 흰색으로 도쿄 4 월 27 일 (로이터) - 정부가 판매 세 인상의 지연을 상쇄하기 위해 회계 연도의 예산 조치를 취할 실패 후 피치 등급이 한 단계로 일본의 신용 등급을 하향 조정, 기관은 밝혔다. 피치는 다섯 노치 상단 AAA 등급 아래로 한 단계에 의해 일본에의 평가를 잘라. 전망은 안정적이다. "일본은 낮은 등급입니다 단일,에있는 이유 중 하나는 공공 부채에 대한 기준의 경우 주변의 취약성이다"앤드류 코훈, 피치의 아시아 - 태평양 군주의 머리는 말했다. "성장과 금리 변동에 대한 내성이 낮습니다." 엔은 짧게 발표 전 119.17에서 달러당 119.42로 하락하지만 달러화 대비 약 119.30 거래를 위해 손실을 깎았 다. 법인 세율 인하 계획은 또한 정부의 부채 부담을 해결하기에 충분한 수익을 창출 여부에 대한 불확실성을 증가, 피치는 성명에서 말했다. 피치의 움직임은 무디스에 의해 유사한 다운 그레이드 지난해 말을 다음 언젠가 6월 주위에 기인하는 재정 규율 계획에 힘든 조치를 취하도록 정부에 압력을 수 있습니다. 기업의 이익 성장이 지속되지 않습니다 자극 지출, 실망 경제 성장과 걱정의 정부의 사용은 또한 일본의 신용 등급에 대한 부정적, 피치는 말했다. 12 월, 무디스 인해 판매 세 증가 지연, 한 단계 피치의 신용 등급을 초과 A1, 일본을 다운 그레이드. 스탠더드 앤드 푸어스 (S & P)는 AAA의 최고 등급에서 세 노치 일본에 AA- 등급을 가지고있다. 일본에 S & P의 신용 등급은 강등이 가능 의미하는 부정적인 전망을 가지고있다. 올해 예정했던 8 %에서 10 %에 판매 세 인상을 지연 아베의 결정 지난해 어려운 회계 연도 2020 년 주 예산 적자, 중요한 재정 건전화 목표를 제거했다. 주 예산 적자는 채무 상환 비용과 채권 판매에서 소득을 제외한다. 일부 정부 고문은 6 월에 업데이트 된 재정 규율 계획은 국내 총생산 (GDP)에 부채 비율을 낮추는 데 더 중점을 두어야 말했다. 부채 GDP 비율에 더 초점을 맞추기 큰 문제가되지 않지만 정부가 반드시 경제 전망이 현실 만들 필요가 코훈 말했다. 일본의 공공 부채는 경제의 두 배 크기로, 어떤 산업화 된 국가의 최악의 GDP 대비 부채 비율을 가지고있다. 전문가들은 고령화가 향후 몇 년 동안 그 저축을 침식 것이라는 사실을 경고한다하더라도 국가의 충분한 국내 저축은, 지금까지 부채의 대부분을 조달했다. 일부 경제학자들은 금리가 매우 낮게 유지되기 때문에 양적 완화 정책을 통해 정부 부채의 일본 은행의 구매가 재정 정책에 정부가 만족 만들 수 있다는 걱정, 또는 어떤 경우에는 심지어 마이너스로 이동합니다. (클라렌스 페르난데스 시몬 카메론 무어에 의해 편집) UPDATE 2-Fitch downgrades Japan, joins Moody's in warning on fiscal policy * Fitch downgrades Japan to A, five notches below best rating * Downgrade follows similar action by Moody's in Dec * Doubts remain over how Japan can reduce debt burden (Adds quotes from Fitch analyst, market reaction) By Stanley White TOKYO, April 27 (Reuters) - Fitch Ratings downgraded Japan's credit rating by one notch after the government failed to take steps in this fiscal year's budget to offset a delay in a sales tax increase, the agency said on Monday. Fitch cut its rating on Japan by one notch to A, which is five notches below the top AAA rating. The outlook is stable. "One reason why Japan is at single A, which is a low rating, is the fragility around the baseline case for the public debt," said Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch. "The tolerance to fluctuations in growth and interest rates is low." The yen briefly fell to 119.42 per dollar from 119.17 before the announcement but then pared its losses to trade around 119.30 versus the greenback. A plan to lower the corporate tax rate also increases uncertainty about whether the government will generate enough revenue to address its debt burden, Fitch said in a statement. Fitch's move follows a similar downgrade by Moody's Investors Service late last year and could pressure the government to take tough measures in a fiscal discipline plan that is due sometime around June. The government's use of stimulus spending, disappointing economic growth and worries that corporate profit growth is not sustainable are also negative for Japan's rating, Fitch said. In December, Moody's downgraded Japan to A1, which is one level above Fitch's rating, due to a delay in the sales tax increase. Standard & Poor's has an AA- rating on Japan, which is three notches from the top rating of AAA. S&P's rating on Japan has a negative outlook, meaning a downgrade is possible. Abe's decision late last year to delay a sales tax hike to 10 percent from 8 percent that had been scheduled for this year has made it difficult to eliminate the primary budget deficit in fiscal 2020, an important fiscal consolidation target. The primary budget deficit excludes debt servicing costs and income from bond sales. Some government advisers has said the updated fiscal discipline plan in June should focus more on lowering the ratio of debt to gross domestic product. Focusing more on the debt-GDP ratio is not a major problem, but the government needs to make sure its economic forecasts are realistic, Colquhoun said. Japan's public debt, at twice the size of its economy, has the worst debt-to-GDP ratio of any industrialised country. The country's ample domestic savings have financed most of the debt so far, although analysts warn that a rapidly ageing population will erode those savings in coming years. Some economists worry that the Bank of Japan's purchases of government debt via its quantitative easing could make the government complacent on fiscal policy because yields are kept very low, or in some cases even go into negative territory. (Editing by Clarence Fernandez and Simon Cameron-Moore) @@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ 15 년 1 ~ 3 분기에 중국은 드디어 마이너스 성장에 빠진 것이 아닌가 추정하고있다
@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@@ 미국도 금융 완화 경쟁에 다시 참전했다는 의도에서 미국 시장의 반공 (미국 주가 상승, 달러 약세)가 시작 될지도 모른다.
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