Category: Markets
Markets
Ukraine and China ink $2.4 bn currency swap
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Continue ReadingThe New Order Emerges
De-Dollarization Accelerates As More Of Washington’s “Allies” Defect To China-Led Bank
Ignoring direct pleas from the Obama administration, Europe’s biggest economies have declared their desire to become founding members of a new Chinese-led Asian investment bank that the United States views as a rival to the World Bank and other institutions set up at the height of American power after World War II.The announcement on Tuesday by Germany, France and Italy that they would follow Britain and join the Chinese-led venture delivered a stinging rebuke to Washington from some of its closest allies. It also called into question whether the World Bank and the International Monetary Fund, which grew out of a multination conference in Bretton Woods, N.H., in 1944 and established an economic pecking order that lasted 70 years, will find their influence diminished.The announcement by Germany, Europe’s largest economy, came only six days after Secretary of State John Kerry asked his German counterpart, Frank Walter-Steinmeier, to resist the Chinese overtures until the Chinese agreed to a number of conditions about transparency and governing of the new entity. But Germany came to the same conclusion that Britain did: China is such a large export and investment market for it that it cannot afford to stay on the sidelines.
The foreign ministers of China, Japan and South Korea will meet in Seoul this weekend for the first time in three years, in an effort to calm tensions in the region.The trio have strong economic ties but frosty relations. International angst about this state of affairs among the regional superpowers has been further piqued by the Asian Infrastructure Investment Bank, a Chinese-led initiative sparking alarm in Washington and proving divisive elsewhere.
China welcomes Luxembourg’s application to be a founding member of the Asian Infrastructure Investment Bank, China’s finance ministry says in a statement on website.
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Rate Hikes Already Priced into the US Dollar Index
Buy the Rumor, Sell the NewsAll those bemoaning what rate hikes could potentially portend for the US Dollar need to get a grip, the rate hikes are already priced in. That`s how markets work, buy the rumor and sell the news or …
Continue ReadingPlunge Protection Exposed: Bank Of Japan Stepped In A Stunning 143 Times To Buy Stocks, Prevent Drop
The Bank of Japan’s aggressive purchasing of stock funds has helped Japanese shares climb to multiyear highs in recent months. But some within the central bank are growing uncomfortable about the fast-paced rally and the bank’s own role in fueling it.Since Gov. Haruhiko Kuroda took office in March 2013 and introduced monetary easing of what he called a “different dimension,” the central bank has sharply increased its buying of baskets of stocks known as exchange-traded funds. By directly underpinning the market, officials have tried to encourage private investors to follow suit and put more money in stocks in the hope of stimulating the economy and increasing inflation.During the past two years, the central bank entered the stock market roughly once every three days, picking up a total of ¥2.8 trillion ($23 billion) of ETFs that track Japan’s major stock indexes, according to Bank of Japan records. That distinguishes it from the U.S. Federal Reserve and European Central Bank, both of which have bought bonds to pump up the economy but haven’t directly bought stocks.Analysts say the bank’s action has been a significant driver of Japan’s stock-market rally in recent months, combined with hefty purchases by the $1.1 trillion Government Pension Investment Fund. Their buying has often countered selling pressure from individuals in the market and made up for a weaker appetite among foreign investors.
BOJ officials used to be cautious about purchasing ETFs, worried that it could distort market activities and put the central bank’s own financial health at risk. But under pressure from politicians following the global financial crisis, the bank changed its stance in late 2010.“We led the cows to water, but they didn’t drink it, even though we told them it tasted good,” Miyako Suda, who was a board member then, wrote in a 2014 book discussing monetary easing at that time. “So we thought we should drink it ourselves, showing them it was tasty.”
http://www.zerohedge.com/news/2015-03-11/how-boj-stepped-143-times-send-japanese-stocks-soaring
Continue ReadingDavid Stockman Warns “It’s One Of The Scariest Moments In History”
David Stockman: Yeah, a famous American economist once said anything that’s unsustainable tends to stop. My argument is that we’re at the stop point. The fed has been printing money like there’s no tomorrow really for 25 years since Greenspan took over in 1987. They are now at the point where their balance sheet has become so bloated, so enormous that even the people running the fed are confused about what to do. They’ve painted themselves into a corner, and they’re playing it by the day, and they’re going to make a huge mistake. So the money printing thing is near an end.
So it seems like this bubble bursting is inevitable. How much time do we have? Is it years, months? How will we know? Are there some clues we can look into to make sure that we’re prepared?
Is there anything that can save us?
David Stockman: Well, the crisis is unfolding by the day. It is not too late to start preparing right noW. Now is the time to begin to save if you can and minimize your outlays for unnecessary luxuries. This is going to be a devastating crisis, and people will be happy down the road if they take the steps to prepare today.
Ex-Plunge Protection Team Whistleblower: “Governments Control Markets; There Is No Price Discovery Anymore”
- Malmgren’s recent book “Signals: the breakdown of the social contract and the rise of geopolitics”; [5]
- the “inflation vs deflation” debate
- the closer ties between Russia and China
- the future of the Euro
- Germany’s gold reserves
- and the phenomenon of “financial repression”
- Moreover, Dr Malmgren explains what she foresees as the endgame of the financial crisis.
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Still don’t believe?
Here is Scott Nations in 2008 getting “Schiff’d” by the CNBC anchors (Liesman) and some other guest muppet when he dares to suggest the Fed is intervening and that the President’s Working Group (i.e. Plunge Protection Team) is hard at work…
“look at the market action on the 10th and 28th and tell me what else might have generated a 100 point rally in the S&P under that situation?” Liesman fobs him off as some conspiracy wonk…
Yep looks normal to us… 10/10/2008 [6]
Those are 100 point moves on a 700/800 S&P!! Nothing to see here eh Liesman, Kiernan, Quick?
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And of course there’s last October’s Bullared bounce… the longest most consistent trend higher in stocks ever. [8]
Central Banks Have Lost Control Of The World
Looser monetary policy is not the order of the day everywhere in the world (see map above), and herein lies potential danger for the world economy.The expectation of a normalisation of monetary policy by the Federal Reserve has resulted a sustained rally in the US dollar. Such strength in the world’s reserve currency has simultaneously applied pressure on economies pegged to the greenback.Meanwhile rate hikes from the Fed – which are expected to begin later this year – will naturally leader to tighter monetary conditions in economies everywhere from Mexico to Hong Kong.It is this divergence in the actions of the world’s major central banks which could lead to a new global liquidity crisis,according to the governor of the Bank of England.Despite robust job creation and economic output in the domestic economy of the US, the trend towards lower global interest rates will probably slow the extent of the Fed’s rate hikes once it finally gets off zero, according to Kit Juckes at Société Générale.“The best we can hope now is that the dollar’s advance is orderly and the impact on global capital flows is limited” said Mr Juckes.
Uzbekistan’s central bank cuts its refinancing rate to 9 percent from 10 percent.
Romania’s central bank cuts its key interest rate by a total of 50 basis points, taking it to a new record low of 2.25 percent. Most analysts polled by Reuters had expected the latest cut.
The Swiss National Bank stuns markets by scrapping the franc’s three-year-old exchange rate cap to the euro, leading to an unprecedented surge in the currency. This de facto tightening, however, is in part offset by a cut in the interest rate on certain sight deposit account balances by 0.5 percentage points to -0.75 percent.
The Reserve Bank of India surprises markets with a 25 basis point cut in rates to 7.75 percent and signals it could lower them further, amid signs of cooling inflation and growth struggling to recover from its weakest levels since the 1980s.
Egypt’s central bank makes a surprise 50 basis point cut in its main interest rates, reducing the overnight deposit and lending rates to 8.75 and 9.75 percent, respectively.
Peru’s central bank surprises the market with a cut in its benchmark interest rate to 3.25 percent from 3.5 percent after the country posts its worst monthly economic expansion since 2009.
Turkey’s central bank lowers its main interest rate, but draws heavy criticism from government ministers who say the 50 basis point cut, five months before a parliamentary election, is not enough to support growth.
The Bank of Canada shocks markets by cutting interest rates to 0.75 percent from 1 percent, where it had been since September 2010, ending the longest period of unchanged rates in Canada since 1950.
The ECB launches a government bond-buying programme which will pump over a trillion euros into a sagging economy starting in March and running through to September next year, and perhaps beyond.
Pakistan’s central bank cuts its key discount rate to 8.5 percent from 9.5 percent, citing lower inflationary pressure due to falling global oil prices. Central Bank Governor Ashraf Wathra says the new rate will be in place for two months, until the next central bank meeting to discuss further policy.
The Monetary Authority of Singapore unexpectedly eases policy, saying in an unscheduled policy statement that it will reduce the slope of its policy band for the Singapore dollar because the inflation outlook has “shifted significantly” since its last review in October 2014.
Albania’s central bank cuts its benchmark interest rate to a record low 2 percent. This follows three rate cuts last year, the most recent in November.
Russia’s central bank unexpectedly cuts its one-week minimum auction repo rate by two percentage points to 15 percent, a little over a month after raising it by 6.5 points to 17 percent, as fears of recession mount following the fall in global oil prices and Western sanctions over the Ukraine crisis.
The Reserve Bank of Australia cuts its cash rate to an all-time low of 2.25 percent, seeking to spur a sluggish economy while keeping downward pressure on the local dollar.
China’s central bank makes a system-wide cut to bank reserve requirements — its first in more than two years — to unleash a flood of liquidity to fight off economic slowdown and looming deflation.
The Danish central bank cuts interest rates a remarkable four times in less than three weeks, and intervenes regularly in the currency market to keep the crown within the narrow range of its peg to the euro.
Sweden’s central bank cut its key repo rate to -0.1 percent from zero where it had been since October, and said it would buy 10 billion Swedish crowns worth of bonds
Indonesia’s central bank unexpectedly cut its main interest rate for the first time in three years
The Bank of Botswana reduced its benchmark interest rate for the first time in more than a year to help support the economy as inflation pressures ease.
The rate was cut by 1 percentage point to 6.5 percent, the first adjustment since Oct. 2013, the central bank said in an e-mailed statement on Wednesday.