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China's central bank is under increasing pressure from policy advisers to let the yuan currency fall quickly and sharply, by as much as 10-15 percent, as its recent gradual softening is thought to be doing more harm than good.
The People's Bank of China (PBOC) has spent billions of dollars buying yuan over recent months to defend the exchange rate, but has failed to stabilize market sentiment. The currency has steadily lost another 2.6 percent against the U.S. dollar even after the bank sprung a surprise devaluation of nearly 2 percent in August.
Policy insiders are now calling for a quick and sharp yuan depreciation, backed by tighter capital controls to curb speculation and the flight of money out of the country.
"We should let the yuan have a considerable depreciation, but we should have a bottom line; it cannot create a big impact on the economy and the financial system, and big panic in the capital market," an influential government economist told Reuters, suggesting the yuan be allowed to depreciate by 10-15 percent over an unspecified timeframe.
Letting the yuan fall sharply and quickly could help cushion many of China's debt-laden companies as the government pursues far-reaching structural reforms. Beijing is keen to restructure industry through "supply side" reform, especially reducing industrial over-capacity.
To restructure without triggering mass bankruptcies and redundancies, sources said the PBOC is being encouraged to let the yuan fall, keeping downward pressure on interest rates and relieving some of the debt servicing burden on businesses.
"The yuan should depreciate at least 10 percent to have any impact on exports ... but I don't think the authorities will take this step," said a researcher at the commerce ministry. "If China wants to rely on expanding exports to spur growth, other countries may follow suit."
While a weaker yuan would make Chinese exports cheaper overseas, and foreign products more expensive in China, it would be unlikely to go down well among the country's trading partners. The United States, for one, regularly accuses Beijing of manipulating its exchange rate to dump under-priced goods on foreign markets.
When the PBOC weakened its morning yuan guidance rate by 0.5 percent on Thursday, stock market investors panicked and pushed the CSI300 index down 7 percent within the first half hour, triggering circuit breakers and bringing the day's trading to a premature halt - for the second time in only the first week that these mechanisms have been in operation.
Shares plunged 5% when the market opened, triggering a new “circuit-breaker” closure of markets for 15 minutes.
When trade resumed, the selling continued, with the benchmark CSI300 falling through 7%, triggering an automatic shutdown of trading for the rest of the day.
The market was only open for around 15 minutes of trade.
China's market circut breaker trips twice in 15min of trading and they're done...it'll be interesting to see how tomorrow goes....
I wonder if Monday (Jan 11) is going to be like Monday Aug 24, 2015, when all the mom and pop investors and others who don't follow the market day to day saw/read the news over the weekend, panicked and put sell orders in?
The Dow dropped up to 1,089.42 points (6.62%), the S&P dropped up to 103.88 points (5.27%), and the Nasdaq dropped up to 413.9 points (8.8%) that day.
Might have to put in a few low ball limit orders just in case.
1. The jobs report is suspect- it indicates 45k new construction jobs in the middle of winter. I'm sure that's possible; however, these reports often get revised a month later too. At first the market thought things were great, but it's how things close that matter and again the dow is down in triple digits (-167).
2. If you look back in history (I have a Stock Traders Almanac which makes this easy), you'll see that 1960 had the worst January of the last 50+ years with a -8.4% drop for the month. We have done just one week and are at 6.9%. 1960 was a year that remarkably was only down -9.3%; however, there are other years like 2008 that go down much more. I think 2016 is more like 2008 than 1960 in economic weakness.
3. Of the industry groups I follow, 16/18 are in Bear markets. Only one industry (utilities) is good at the moment and 2nd best is Consumer Staples with a 54% or middle of the road reading.
I nibbled more on GDX today and added a position at $14.42- I have a $30 price target on it and it pays a small dividend as well.
That should be easy to figure out..... 40,000,000,000%
Close enough!!!
When you have that much money and is popping big expensive bottles left and right at the club it dont matter!
Originally Posted by YeuEmMaiMai
if you win, please share
Of course!
I will hit up the annual AcuraZine meet here in KC in the summer and have massive drawings for prizes and moneys and a grand prize of 1 winner getting all expenses paid to get the new NSX!!!
1. The jobs report is suspect- it indicates 45k new construction jobs in the middle of winter. I'm sure that's possible; however, these reports often get revised a month later too. At first the market thought things were great, but it's how things close that matter and again the dow is down in triple digits (-167).
Also does not account for the record number of people not working...
2. If you look back in history (I have a Stock Traders Almanac which makes this easy), you'll see that 1960 had the worst January of the last 50+ years with a -8.4% drop for the month. We have done just one week and are at 6.9%. 1960 was a year that remarkably was only down -9.3%; however, there are other years like 2008 that go down much more. I think 2016 is more like 2008 than 1960 in economic weakness.
2016 has a not of things NOT going for it
See point made above
oil is still going south well under $34 barrel
3. Of the industry groups I follow, 16/18 are in Bear markets. Only one industry (utilities) is good at the moment and 2nd best is Consumer Staples with a 54% or middle of the road reading.
With the coal shipments not being in good shape and new more oppressive EPA regs in the works, this may not last long.
I nibbled more on GDX today and added a position at $14.42- I have a $30 price target on it and it pays a small dividend as well.
The media reports on them saying that x amount of jobs were created while totally ignoring the nearly 93M out of work..... When you have nearly a third of the US population not working.. that's messed up.
92,898,000 are not working out of 318,868,000 (as of 2014)
The media reports on them saying that x amount of jobs were created while totally ignoring the nearly 93M out of work..... When you have nearly a third of the US population not working.. that's messed up.
92,898,000 are not working out of 318,868,000 (as of 2014)
^^^That's people not in the work force and includes retirees. I guess you missed this part of that article:
“Today’s solid employment report caps off a strong year for the U.S. labor market, which achieved a number of important milestones in 2014,” Jason Furman, Chairman of the Council of Economic Advisers, said in a statement. “Total job growth last year was the strongest since 1999, while the unemployment rate fell at the fastest pace in three decades.”
^^^That's people not in the work force and includes retirees. I guess you missed this part of that article:
“Today’s solid employment report caps off a strong year for the U.S. labor market, which achieved a number of important milestones in 2014,” Jason Furman, Chairman of the Council of Economic Advisers, said in a statement. “Total job growth last year was the strongest since 1999, while the unemployment rate fell at the fastest pace in three decades.”
There are roughly 58million getting SS benefits and while the SSA claims most of them are retired all are not. That still leaves nearly 35 million that are not working... again, how is this a good thing?
According to the SSA 165M are working out of the US population so my figures were actually off percentage wise. You actually have 1.7 people working for every one that is not....
Lowest unemployment rate my bottom end. maybe someone should explain to you why those numbers are not to be trusted...
Now add in national debt is along with unfunded liabilities along with many people not having jobs means...
Next, time to factor in the coming volatility due to interest rate hikes, GLOBAL unrest, the entire planet in insurmountable debt and you got a recipe for disaster.
The clock is ticking.... no one is getting out of the upcoming financial collapse unscathed...
Mild winter, indoor building construction... why would it be suspect? Do you have any facts to dispute the figures? Just asking...
Huh?
If you were to read the Jobs report (page 41), you'll see that there were 45,000 Seasonally adjusted construction jobs while the non adjusted number was a loss of 151k jobs- that's a 200k delta and is highly suspect. The other thing interesting note is why average hourly wages for construction went down from 27.62 to 27.59 if there was all that hiring. For construction on the West coast, there is a El Nino weather pattern that created a number of days of rain in December along with the Holidays being a slow time for hiring in general for many non-retail industries.
I have no other evidence to present other than jobs reports often get revised and the observations above. We'll see in another month or two.
Shanghai is down about 2.4% at the lunch break. The rest of Asia is down only slightly. US futures are flat (very slightly positive). Monday may not be too bad.... we shall see.
Shanghai drops 5%, Shenzhen down 6.5% in renewed sell-off
Chinese markets extended an already rough start to the year Monday, losing further ground and other Asian markets came along for the ride lower.
The Shanghai composite was down as much 5.07 percent in late-afternoon trade, while the Shenzhen Composite shed 6.4 percent. Hong Kong's Hang Seng index was down 2.24 percent on Monday, slipping below the 20,000 threshold for the first time since June 2013.
01-07-2016, 01:46 PM
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