While the biggest news of the night had nothing to do with either oil or China, all that mattered to US equity futures trading also was oil and China, and since WTI managed to rebound modestly from their biggest 2-day drop in years, continuing the trend of unprecedented, HFT-driven volatility which has far surpassed that of equities and is shown in the chart below…

… despite the API reporting a jump in oil inventories, rising back over $30, and with China falling only 0.4% overnight after the National Team made a rare, for 2016, appearance and pushed stocks to close at the day’s high, US E-minis were able to rebound from overnight lows in the mid-1880s, and levitate above 1900. Whether they sustain this level remains to be seen.

However, as noted above, the biggest news was neither oil nor China whose rigged volatility is now watercooler humor talk across trading floors, but the BOJ’s Kuroda, who as reported previously, made many headlines overnight during a speech on NIRP such as the follolwing:

• KURODA: POSSIBLE TO CUT NEGATIVE RATE FURTHER IF NEEDED
• KURODA: BOJ NEEDS TO DEVISE NEW TOOLS IF MEASURES INSUFFICIENT
• KURODA: BOJ WILL DO WHATEVER IT CAN TO REACH PRICE TARGET

What was disturbing about these is that not only was the BOJ unable to push the USDJPY, or Nikkei (which plunged 3.2%) higher, but the Japanese currency surged overnight wiping out almost all post-NIRP losses, and suggesting that central bank credibility is virtually gone. A few more “emergency actions” like the BOJ’s and not all the HFT algos igniting upward momentum will be able to offset the avalanche of selling that is “pent up” and just waiting for the central bank admission of terminal failure, before all markets around the global are concurrently halted “due to market reasons.”

But while US equity futures are enjoying today’s crude levitation, Europe’s benchmark equity gauge dropped for a third day, with Italian banks leading losses, and the Markit iTraxx Europe Index of credit-default swaps on investment-grade companies surpassed 100 basis points for the first time since October 2013. The yen strengthened for a third day. Oil recovered after its biggest two-day drop in almost seven years, buoying Russia’s ruble, and zinc climbed to the highest in almost three months.

Where we stand now:

• S&P 500 futures up 0.3% at 1905
• Stoxx 600 down 0.4% to 333.2
• FTSE 100 down 0.8% to 5874
• DAX down 1.3% to 9461
• German 10Yr yield down less than 1bp to 0.3%
• Italian 10Yr yield down 2bps to 1.47%
• Spanish 10Yr yield up less than 1bp to 1.59%
• MSCI Asia Pacific down 2.1% to 119
• Nikkei 225 down 3.2% to 17191
• Hang Seng down 2.3% to 18992
• Shanghai Composite down 0.4% to 2739
• S&P/ASX 200 down 2.3% to 4877
• US 10-yr yield up less than 1bp to 1.85%
• Dollar Index down 0.22% to 98.66
• WTI Crude futures up 1.5% to $30.33
• Brent Futures up 1.5% to $33.20
• Gold spot up less than 0.1% to $1,130
• Silver spot up 0.6% to $14.39

Looking at regional markets, we start in Asia where the oil slump continued to linger and weigh down on global markets with local markets tracking Wall Street losses as WTI returned to sub-USD 30/bbl levels. Nikkei 225 (-3.2%) underperformed in the region as the dampened sentiment brought forth from oil with pressure also coming from a firmer JPY. ASX 200 (-2.3%) was unable to escape the grasp of the plunge in the energy complex, with the decline in oil dragging the index into negative territory. Shanghai Comp (-0.4%) abided by the trend set between the regional bourses as the index shrugged off the better than prior Caixin PMI readings in which the services figure printed a 6-month high. JGBs were supported by the risk off sentiment in the region alongside spill over buying in USTs, with yields falling to record lows across the curve.

Asian Top News:

• China Said to Plan Loosening of Limits on Foreign Fund Outflows: China’s central bank plans to loosen controls on when foreign investors can bring money in and out of the country through QFII quotas, according to people with direct knowledge of the matter
• Lenovo Tumbles as Sputtering PC, Phone Demand Hammers Sales: Rev. declines for the 1st quarter in more than 6 years
• Billionaire Ruias Said to Hold Refinery Talks With Aramco, NIOC: Exploratory talks began last month on sale of Essar Oil stake
• Panasonic Cuts Full-Year Oper Profit Forecast as China Slows: Lowers full-yr oper. profit forecast 4.7% to 410b yen; est. 426.6b yen; sales view down 5.6% to 7.55t yen; est. 7.88t yen
• Hong Kong Property Stock Gloom Seen Deepening in Options Market: Traders paid most in 4 yrs in Jan. to hedge against losses on Sun Hung Kai Properties
• BOJ Will Look Into Media Report Foreshadowing Negative Rates: Report by Nikkei news service came while Governor Haruhiko Kuroda and board were in closing stages of 2-day policy meeting
• Yuan Basket Plan Gets Momentum as Singapore-Style Fix Floated: Former central bank adviser proposes 15% band on basket
• Banker’s Accounts Said to Be Frozen in Singapore 1MDB Probe: Banker said to have been relationship manager for 1MDB Global
• Billionaire Ruias Said to Discuss Refinery Deal With Aramco: Exploratory talks began last month on sale of Essar Oil stak

European equities opened relatively flat this morning, brushing off the firm risk off sentiment in Asia, which came in spite of positive Chinese services PMI data. As we head into the North American crossover equities are broadly in negative territory however, with a bid in oil preventing a more pronounced selloff. The SMI (-0.0%) outperforms its major counterparts, after Syngenta (+5.7%) confirmed yesterday’s reports that they will be acquired by ChemChina , with the touted figure exceeding USD 43b1n or CHF 475/shr, the largest ever foreign acquisition by a Chinese conglomerate. Elsewhere, luxury names perform well in Europe following LVMH’s (+5.9%) beat on headline revenue, which they posted after the European cash close yesterday.

European Top News:

• Euro-Area Price Cuts Intensify Pressure on Draghi to Act: Euro area’s manufacturing and services industries cut prices at the fastest pace in almost a year in Jan.
• U.K. Services Firms Start to Crack as Risks Mount: Confidence at U.K. services companies fell to the lowest in 3 yrs in Jan.
• Swatch Sales Growth Forecast Draws Skepticism Amid Asia Slowdown: Watchmaker forecast sales gain “well over” 5% this year; 2015 oper. profit missed ests.
• LVMH Shares Surge as Louis Vuitton Maker Beats Asian Blues: Fashion and leather-goods lead 4Q performance; 4Q organic revenue up 5%, topping the 3.9% estimate
• BBVA Quarterly Profit Beats Estimates on Lower Provisions: BBVA 4Q net EU940m vs est. EU824.9m, Provisions for bad loans fell to EU157m in 4Q vs EU513m yr earlier
• ABB Profit Margin Widens as Cost Cuts Help Offset Slowdown: 4Q Ebita margin rises 60bps to 11.7%; sees Chinese growth in 2016, at slower pace
• Lundin Suffers Biggest Loss as Oil Collapse Forces Impairments: 4Q loss widened to $493m vs loss $436m yr ago; booked an impairment charge of $296m, FX loss of $129m
• EU Bank Rules Divide at Euro-Area Border in Draft Cameron Deal: Draft deal foresees separate rules for euro, non-euro banks, provisional pact needs endorsement of all EU leaders at summit
• Novo Nordisk CEO Sees Limited Scope for U.S. Price Increases: 4Q profit misses ests. on diabetes drug Victoza
• Statoil Seen Deepening Cuts to Keep Dividends Amid Oil Rout: Adjusted net seen dropping 33% in 4Q, seen extending investment cuts to 30% compared to 2014

In FX, the yen climbed 0.5 percent to 119.36. It’s taken back more than half of its decline against the dollar triggered when Bank of Japan Governor Haruhiko Kuroda on Friday unexpectedly cut the rate on excess reserves held by financial institutions at the central bank to minus 0.1 percent.

The New Zealand dollar jumped as the nation’s central bank signaled it won’t rush to cut its official cash rate further as inflation hovers near zero. A report Wednesday showed employment in New Zealand rebounded more than economists expected in the fourth quarter while the jobless rate tumbled to near a seven-year low.

In commodities, unlike yesterday’s rout, WTI and Brent have seen a bid since the European traders have been at their desks despite a build in API inventory levels from yesterday’s session, which printed at a build of 3.8mln. Once again we have seen some comments from Iran and Russia both stating they are willing to cooperate with OPEC in regards to the price of oil, however the rhetoric is largely a reiteration.

West Texas Intermediate crude futures climbed 1.6 percent to $30.37 a barrel in New York after falling 11 percent on Monday and Tuesday, the most since March 2009. Analysts are projecting prices will soar more than $15 by the end of 2016. New York crude will reach $46 a barrel during the fourth quarter, while Brent in London will trade at $48 in the same period, the median of 17 estimates compiled by Bloomberg this year show.

The Bloomberg Commodity Index rallied 0.4 percent for the first advance in three sessions as oil rebounded from the biggest two-day drop in almost seven years.

Zinc for delivery in three months led metals higher, gaining 0.7 percent to $1,685.50 a metric ton on the London Metal Exchange. Lead climbed to the highest in about a month, with copper, aluminum and nickel also higher.

Some notable headlines in the space:

• Oman’s Foreign Minister says there is no agreement on the timing of an OPEC meeting, but he expects it will be announced soon (RTRS)
• Iran are calling for closer ties between Russia, Iraq and Venezuela on energy issues according to the Iranian Supreme Leader. (RTRS)
• Russia’s Foreign Minister Lavrov says they are ready for talks with OPEC if there is a consensus, according to IFX. (BBG)

Looking at today’s calendar, It’s a busy afternoon of data in the US this afternoon where a lot of focus will be on the January ADP employment change print ahead of Friday’s payrolls. Remember the employment component of the ISM-manufacturing was particularly poor last month. Speaking of which, the aforementioned ISM nonmanufacturing print will be of focus while we’ll also get the final revisions to  the services and composite PMI’s for the US. There’s little in the way of Central Bank speakers due up, however earnings season rolls on with 31 S&P 500 companies set to report including General Motors and Merck.

Global Top News:

• ChemChina Agrees to Buy Syngenta in Record $43b Deal: ChemChina offered $465 a share in cash, is ~20% higher than the stock’s last close; acquisition would be biggest ever by a company in China
• Yahoo Signals It’s Open to Sale in What May Be Final Flip- Flop: Co. to cut ~15% of staff, shutter some offices and units and exit product lines; to consider putting the company’s core assets up for sale, ; 4Q adj. EPS beats est.; sees 1Q adj. Ebitda, rev. ex-TAC below ests.
• Editas Raises $94.4m in First U.S. IPO of the Year: Sold 5.9m shares for $16 apiece, according to data compiled by Bloomberg, after offering them for $16 to $18 each
• Oil Seen Surging About 50% by Fourth Quarter as Supply Eases: WTI seen averaging near $46 a barrel in Q4; Brent at about $48; U.S. sees domestic oil output falling by 620,000 barrels a day
• America Supplies OPEC With Oil Freed From 40-Year Export Ban
• Chipotle Served With New Subpoena as Criminal Probe Expands: Says 2016 will be a “very difficult year,” says EPS Should Be “around” break even in 1Q, est. $1.95
• SunEdison Evaluating ‘Least Bad’ Options for Closing Vivint Deal: Deal hinges on flipping Vivint portfolio of rooftop systems
• 3M Boosts Dividend as $10 Billion Share Buyback Authorized: A Quarterly payout of $1.11/shr an 8% increase
• Gilead Seeks Deals as U.S. Hepatitis C Sales May Flatten: 4Q EPS beats ests., adds $12b to buyback plan
• Bill to Privatize U.S. Air-Traffic Control Bans In-Flight Calls: U.S. air-traffic control system would be spun off to a nonprofit corporation and airline passengers wouldn’t be allowed to talk on mobile phones
• Exxon Faces First Downgrade Since Depression as Oil Rout Worsens: Chevron’s debt rating cut by S&P for first time since 1987
• Starboard Said to Take 6.7% of Marvell; Hires Advisers: WSJ: Starboard sees opportunity for Marvell by cutting costs, for instance by exiting mobile-device business, WSJ reports

Bulletin Headline Summary from RanSquawk and Bloomberg

• Brent and WTI have retaken USD 33.00 and USD 30.00 bbl respectively, shrugging off yesterday’s API data
• In FX, GBP was the main mover in London trade, aided by positive services PMI data and ahead tomorrows ‘Super Thursday’
• Looking ahead, highlights include, US ADP Employment Change and ISM Non-Manufacturing, comments from ECB’s Draghi and Knot
• Treasuries lower in overnight trading despite continued selloff in global equity markets as oil stabilizes; 10Y yield closed yesterday at 1.84%, lowest since April 3.
• China’s central bank plans to loosen rules on when foreign investors can bring money in and out of the country, according to people with direct knowledge of the matter
• The gap between the Chinese yuan’s exchange rates at home and abroad expanded to the biggest in three weeks, a sign that international traders are reviving bets against the currency after getting burned by the central bank earlier this year
• “The markets are a gift in the sense that there are prices out there that make no sense,” Bill Miller, whose Legg Mason Opportunity Trust has lost 23% year-to-date, said in a Bloomberg interview, “Almost everything is a buy in my opinion”
• Banks complaining that regulation is damaging Europe’s €5.6 trillion ($6.1 trillion) market for borrowing and lending securities as repo agreements showed a sharp drop in the availability of securities to use as collateral
• Bankers in Europe have the most to fear in 2016 job cuts as cost reductions haven’t been enough to revive the profitability of the region’s lenders which were slower than their U.S. counterparts to eliminate jobs, reduce salaries
• Confidence at U.K. services companies fell to the lowest in three years last month as a mounting litany of threats took its toll with indicators of sentiment and order backlogs giving little reason for optimism
• Analysts are projecting prices of New York crude will reach $46 a barrel during the fourth quarter, while Brent in London will trade at $48 in the same period, the median of 17 estimates compiled by Bloomberg this year show
• The San Francisco Bay area is the first region to host a Super Bowl and like other businesses, local pot shops are offering promotions aimed at the throngs of visitors in town for the festivities
• Enrollment for food stamps remains near record levels even as the unemployment rate has fallen by half. About 45.4 million Americans, roughly one-seventh of the population, received aid last October, the most recent month of data
• Sovereign 10Y bond yields mostly lower, led by Australia (-10bp). Asian, European stocks lower; U.S. equity-index futures drop. Crude oil, gold, copper rally

US Event Calendar

• 7:00am: MBA Mortgage Applications, Jan. 29 (prior 8.8%)
• 8:15am: ADP Employment Change, Jan., est. 193k (prior 257k)
• 9:45am:
  • Markit US Services PMI, Jan. F, est. 53.7 (prior 53.7)
  • Markit US Composite PMI, Jan. F, (prior 53.7)
• 10:00am: ISM Non-Manufacturing Composite, Jan., est. 55.1 (prior 55.3)

DB’s Jim Reid concludes the overnight wrap

Hopes of an OPEC production cut meeting are fading fast with Persian Gulf Arab oil producers the latest to weigh in by rebuffing earlier claims which had helped to send Oil markets into a bull market. Instead, the focus is turning back to what is still a difficult fundamental picture with Oil markets succumbing to a second consecutive sharp loss yesterday. WTI (-5.50%) plummeted back below $30/bbl, eventually closing at $29.88/bbl. It’s holding around that level this morning too. The energy sector was also rocked with the news of S&P downgrading credit ratings on some of the big US drillers including Chevron and Hess, while in Europe Shell was cut by one notch to A+ and to its lowest rating on record. Weaker than expected results were announced from BP, although there was a slither of positivity to take from Exxon’s results after earnings came in ahead of analyst forecasts (which may show how low expectations have fallen more than anything).

All told risk assets were hit hard yesterday. European equity markets finished broadly 2% lower, while the S&P 500 finished with a -1.87% loss as a poor day for financials also added to the woes. Credit indices were under considerable pressure also with both CDX IG and Main finishing around 5bps wider. Sovereign bond yields resumed their downward spiral after briefly pausing for breath on Monday. 10y Bund yields were down over 4bps by the close of play at 0.305% while 10y Treasury yields collapsed 10.4bps and at 1.846% are at the lowest now since April last year (yields have now fallen over 40bps since the turn over the year). It won’t come as much surprise to hear then that Fed Funds rates are following a similar path. In fact, the probability of just the 1 rate hike this year has fallen below 50%. That’s after we started the year with the market pricing in a 93% probability that the Fed would move at least once in 2016.

Clearly the BoJ move last week has heated up the negative rates chatter and an eye-catching headline which caught our eye on Bloomberg yesterday was one which reported that $7.1tn of global government debt is now trading with a negative yield. JGB yields are currently negative up to the 8.5 year maturity mark with 9y and 10y yields currently 0.2bps and 5.9bps respectively – the latter close to joining Switzerland as the only country with negative 10y benchmark yields.

That takes us to the latest in Asia this morning where equity markets have followed the lead from Oil-led selloff yesterday. Bourses have declined across the region, led by Japan where the Nikkei is -3.29%, while the Hang Seng (-2.75%), Shanghai Comp (-1.64%), Kospi (-0.84%) and ASX (-2.33%) have also tumbled. Asia and Australian credit indices are 3 to 6bps wider while US equity index futures are pointing towards a slightly softer start. There has been some Chinese data for us to digest meanwhile, with the non-official Caixin services PMI for January showing a 2.2pt gain last month to 52.4 and in fact the highest since July last year. That’s of course in stark contrast to the manufacturing print we got earlier in the week. The data has however supported a 0.7pt gain for the composite print to 50.1.

Moving on. Yesterday also saw the Kansas City Fed President, Esther George, weigh in with some hawkish comments. Given her reputation as a renowned hawk within the voting committee the comments weren’t seen as hugely surprising. She said that recent market volatility is ‘not all that unexpected, nor necessarily worrisome’ and that ‘monetary policy cannot respond to every blip in financial markets’. George reiterated her view that the committee should continue the gradual adjustment of moving rates higher, while opining that the US economy has proven to be resilient to a wide range of shocks including sluggish growth abroad.

Yesterday’s economic data was a bit of a sideshow. US total vehicle sales were up a better than expected 17.5m annualized rate last month (vs. 17.3 expected) having dipped to 17.2m in December, while the February IBD/TIPP economic optimism print was up 0.5pts for this month to 47.8 (vs. 47.6 expected). Meanwhile in Europe we saw the Euro area unemployment rate nudge down one-tenth to 10.4% in December (expectations had been for no change), falling to a new four-year low in the process.

Staying in Europe, it was noted yesterday that the ECB’s favored measure of inflation expectations, the 5y5y breakeven rate briefly broke below 1.5% intraday before settling at the lowest close since January 2015 (a record low) which of course was just before ECB QE1 was announced. It’s significant that the rate has failed to break higher with any bounce in Oil prices and is something to consider ahead of the ECB next month.

Speaking of which, the ECB’s Mersch generated a few headlines yesterday after comments to the WSJ. The ECB Board Member said that the Bank needs to reassess its monetary policy stance ‘in view of the deterioration since our December analysis’ and that ‘everything is on the table’. Mersch also suggested that ‘we have no constraint in the use, the diversity, or the volume of our toolbox as we see fit’.

Looking at today’s calendar now, this morning in Europe will see the final revisions to the services and composite PMI’s for the Euro area, Germany and France, while we’ll also get prints for Spain, Italy and the UK. Euro area retail sales data covering the December month is also due out this morning. It’s a busy afternoon of data in the US this afternoon where a lot of focus will be on the January ADP employment change print ahead of Friday’s payrolls. Remember the employment component of the ISM-manufacturing was particularly poor last month. Speaking of which, the aforementioned ISM non-manufacturing print will be of focus while we’ll also get the final revisions to the services and composite PMI’s for the US. There’s little in the way of Central Bank speakers due up, however earnings season rolls on with 31 S&P 500 companies set to report including General Motors and Merck (both pre-market).

via Zero Hedge http://ift.tt/1X2UMQf Tyler Durden

 

 

Ten years after the Greenspan Fed

Written by Peter Diekmeyer (CLICK FOR ORIGINAL)

 

 

 

Ten years ago this week, Alan Greenspan left his post as head of the US Federal Reserve, facing disgrace among hard money advocates, which largely persists to this day. 

However gold investors can learn an important lesson from how little influence Greenspan, one of the gold standard’s most eloquent backers, had during his 18-year tenure. A lesson that provides important clues as to future central bank monetary policy and its effect on precious metals prices.

That Greenspan was, and remains, a hard money advocate, is beyond doubt. His landmark article “Gold and Economic Freedom,” which was published in The Objectivist , an Ayn Rand-backed newsletter, fifty years ago this June, makes the case for a gold standard in layman’s terms, better than anyone before or since.

“Gold and economic freedom are inseparable,” wrote Greenspan. “The gold standard is an instrument of laissez-faire (capitalism) and … each implies and requires the other.”

Greenspan’s advocacy of the gold standard was a hugely controversial position in the 1960s and 1970s and remains so to this day. That this is so is in an illustration of the economics profession’s almost total support for policies that have turned all Western nations into de facto state-run economies.

 

Why did Greenspan compromise?

That Greenspan compromised his views on gold is well-known. During his time there, the US Federal Reserve spawned a series of bubbles, that sowed the seeds of the financial crisis of 2007-2008, as well as of instabilities that remain in the system to this day.

However it is also fairly clear from comments that Greenspan made after his time in Washington, that he remains a hard money advocate. “Gold is a currency. It is still, by all evidence, a premier currency,” Greenspan told a meeting of the Council of Foreign Relations last year. “No fiat currency, including the dollar, can match it.”

It is also almost certain that Greenspan held that position during his entire time in Washington. Indeed one of his first acts, after he was appointed chairman of the Council of Economic Advisors in 1974, was to invite Rand, author of Atlas Shrugged, a hard money advocate herself, to his inauguration dinner.

Indeed according to a 2002 article in SmartMoney’s Donald Luskin in a 2002, 40 years after publication ofGold and Economic Freedom, Greenspan apparently told Ron Paul that he stood by his text and “wouldn’t change a single word.”

Why did Greenspan compromise his most profoundly held views? Like most people the Maestro, as he became known, is a complex individual. A desire to advance his career no doubt played a major role.

However Greenspan, like many idealists, also likely believed that, by compromising his views, he might be able to change the system from within. Indeed there are signs that he was somewhat successful in that respect, as things got substantially worse after he left.

When Ben Bernanke took over as Fed chair in January of 2006, he eventually halted the interest rate hike policy that Greenspan had begun. Later Bernanke reversed all those hikes, cut rates to zero, and began the massive Federal Reserve balance sheet expansion, the effects of which remain with us to this day.

 

Redemption: lessons learned<

However Greenspan’s most enduring contributions to the gold community may have been the numerousmea culpas that he has issued after he left office. Unlike many politicians, including Bernanke himself, Greenspan has been increasingly candid regarding his challenges in Washington.

For example the fact that even a brilliant hard money advocate like Greenspan, had little or no future, unless he towed the political line of those who appointed him, provides a strong signal that things are unlikely to change. Indeed in a widely cited background comment to Marc Faber, a newsletter writer, Greenspan denied that he ever said the Fed was independent.

The upshot is that if you believe Greenspan, despite the Yellen Fed’s current pause, the growing currency debasement spiral we are in will likely continue. The question now is will be the effect of such policies on gold prices over the next five years? When asked that question last year at the New Orleans Investment Conference Greenspan had two words for the interviewer.

“Measurably higher.”

 

 

 

For questions on this article or precious metals, please contact HERE

 

 

 

Ten years after the Greenspan Fed

Written by Peter Diekmeyer (CLICK FOR ORIGINAL)

 

via Zero Hedge http://ift.tt/1Pgyo0K Sprott Money

Submitted by Hugo Salinas Price via Plata.com.mx,

 

via Zero Hedge http://ift.tt/1R0emfs Tyler Durden

Well, don’t say we didn’t warn you.

Just yesterday, in the course of documenting the largest ponzi scheme the world has ever known (in terms of number of victims), we remarked that if China’s beleaguered masses needed yet another excuse to rise up and stage massive street protests, they got one in the form of online P2P lender Ezubao, which defrauded nearly a million people.

Ezubao’s model wasn’t exactly complicated. Investors, they said, could earn between 9% and 15% by funding a variety of projects presented on the company’s website. When the money came in, management simply absconded with it all and attempted to repay old investors with new investors’ money.

34-year-old Ding Ning – the company’s founder – had a penchant for spending investors’ hard earned money on things like CNY12 million pink diamond rings. “Among gifts that Yucheng Chairman Ding Ning gave his president, Zhang Min, were a $20 million Singapore villa, a $1.8 million pink diamond ring, luxury limousines and watches and more than $83 million in cash,” Reuters recounts, before adding that “Zhang, the group president who was marketed as ‘the most beautiful executive in online finance’, said on state broadcaster CCTV that Ding asked her to buy up everything from every Louis Vuitton and Hermès store in China, “and go overseas to buy more if that wasn’t enough.”

(Ding Ning at an “undisclosed location”)

According to a highly amusing Google translation of a Xinhua story, Ding Ning and “several closely related groups of female executives, their private life extremely extravagant, spendthrift to suck money.”

Yes, “spendthrift to suck money” and if there was anything Ezubao was particularly adept at, it was “sucking money” – from 900,000 unsuspecting Chinese who staged protests in December following the government’s move to freeze the company’s assets.

“Expect more protests to come,” we warned.

Well sure enough, disgruntled investors are now uniting in a nationwide “rights protection” movement. Their first order of business: to call for three days of protests.

“If we don’t protect our rights, make appeals and take other drastic action within three days, we will recover little,” said a bulletin making the rounds among Ezubao investors. “We need to rise up across the country and let the government know that the people’s bottom line is the return of their capital. If it is not returned our movement will not stop!”

Many investors were lured in by the company’s flashy advertising campaigns and gimmicks. “Ezubao expanded rapidly across the country by advertising extensively on Chinese Central Television.” FT writes. “It sponsored a forum about the country’s parliament on Xinhua’s website and sponsored popular events such as the China Open tennis tournament and emblazoned high-speed rail cars with its logo.”

“When you got on the train, there was an announcement saying: “‘Welcome aboard Train Ezubao’,” a company employee who lost about CNY100,000 yuan in the scheme told Reuters.

Investors who put up at least CNY150,000 were given five-gram commemorative gold bars. “I feel terrible,” an Ezubao investor surnamed Liu who said she lost CNY800,000 lamented. “I haven’t dared tell my husband yet.”

“I gave Ezubao Rmb250,000 because of their association with government activities and news outlets,” one investor told FT. “Of course we invested because of the advertising on CCTV and the high-speed trains,” another said.

“Of course” they invested. They saw an ad on a train.

This mirrors the sentiments expressed by the millions of retail investors who watched helplessly last summer as their life savings were vaporized by the harrowing decline on the SHCOMP.

It also reminds us of what happened to Fanya Metals chief Shan Jiuliang who was kidnapped by a mob of angry investors and dropped off at the police station back in August. Although Fanya was probably less of a fraud than Ezubao, the underlying story is the same: unsophisticated Chinese investors were bamboozled and once they realized they had been had, they were out for blood. 

It’s not likely that Ding Ning will see the light of day anytime soon, but if he were to go free, he might quickly wish he was back in prison given the fate Shan Jiuliang suffered early one morning last summer…

So stay tuned, because judging from the tone of the “rights protection movement” bulletin excerpted above, the villagers may be about to rise up in China.

Oh, and as for whether there may be other Ding Nings and Ezubaos lurking around in China just waiting to buckle under the weight of their own extraordinary ponzi-ness, consider this from Reuters: 

“By November, there were over 3,600 P2P platforms as the industry raised more than 400 billion yuan, according to the China Banking Regulatory Commission (CBRC). More than 1,000 of those were problematic.”

via Zero Hedge http://ift.tt/1Kp1r5j Tyler Durden

By EconMatters

The modern era of financial markets means that basically there are two assets: Risk On and Risk Off. The last two days we have been in Risk Off mode. We might switch to Risk On mode if the economic data reports coming support an optimistic view of the economy.

via Zero Hedge http://ift.tt/1TC20em EconMatters

With Nikkei 225 down 800 points from post-NIRP highs and USDJPY having almost roundtripped, there is little wonder that Japanese government bond yields are collapsing to imply considerably deeper NIRP to come. With 10Y JGBs on the verge of a negative yield, 2Y yields are now at -17bps (well below Kuroda’s -10bps level). Japanese bank stocks are a bloodbath with Nomura leading the way lower.

 

We’re gonna need more NIRP…

• *JAPAN’S TOPIX INDEX FALLS 3.3% TO 1,404.75 AT MORNING CLOSE
• *JAPAN’S NIKKEI 225 FALLS 3.1% TO 17,194.17 AT MORNING CLOSE

 

And that is what bonds are implying…

• *JAPAN’S 2-YEAR YIELD FALLS TO RECORD MINUS 0.17%
• *JAPAN’S 10-YEAR BOND YIELD FALLS TO RECORD 0.045%

 

With the entire curve to 8Y below BoJ’s -10bps level…

 

And Japanese bank stocks are plunging…

 

Led by Nomura’s 11%-plus plunge – the most since 2011…

via Zero Hedge http://ift.tt/1PyjmXO Tyler Durden

Submitted by Daniel Bier via The Foundation for Economic Education,

 

via Zero Hedge http://ift.tt/1NP2xSE Tyler Durden