Tag: news

How do you “fix” a nations’ banking system’s increasingly desperate need (and dependence upon) for government-provided liquidity without giving in and just providing all the inflation-stoking liquidity the banks demand? Simple – in China – you ban the media from discussing it. As The FT reports, Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue. The censors have warned reporters not to “hype” the multiple-sigma spikes in overnight-funding rates and have forbidden the press from using the Chinese words for “cash crunch.”

Of course – early prints in today’s repo market are seeing levels normalize back to around 4-5% (just as Goldman Sachs ‘suggested’ they would because this liquidity spike is nothing but ‘seasonals’ – hhhmm)

 

Via The FT,

Chinese propaganda officials have ordered financial journalists and some media outlets to tone down their coverage of a liquidity crunch in the interbank market, in a sign of how worried Beijing is that the turmoil will continue when markets reopen on Monday.

 

Short-term interest rates for loans in the interbank market shot up last week in an apparent repeat of the cash crunch in June

 

…

 

Money market rates surged again on Friday, even after China’s central bank announced on Thursday evening that it had carried out “short-term liquidity operations” to alleviate the problem.

 

…

 

In response Chinese censors have warned financial reporters not to “hype” the story of problems in the interbank market, and in some cases have forbidden them from using the Chinese words for “cash crunch” in their stories, according to two people with direct knowledge of the matter who asked not to be named.

 

The Communist party’s powerful propaganda department and various other party and government bureaux frequently issue bans and detailed instructions to Chinese media on “sensitive” issues that could undermine party legitimacy.

 

…

 

That directive also ordered media to “strengthen their positive reporting” and “fully report the positive aspect of our current economic situation, bolstering the market’s confidence”, according to a copy obtained by the FT.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Zv1I63MfpJs/story01.htm Tyler Durden

Just shy of the new year, financial markets continue to be dominated by the extent of monetary accommodation. Especially in major advanced economies, bonds and stocks have shrugged off the summer sell-off and posted gains on the view that low policy rates and large-scale asset purchases would persist longer. Much attention has been given to the hope of a strengthening in the U.S. economy.

In Abe Gulkowitz’ latest The PunchLine letter, he highlights the key elements from a very slowly improving labor market to the amazing moves in asset markets with ‘all the charts you can eat’ in between. The unnatural easing stance, though necessary, spurred an aberrant demand for assets in the riskier end of the spectrum. By and large, such assets have so far lived up to their promise. The new year may again challenge that assumption as the likelihood of unlikely events rises.

Markets took in stride a two-week US government shutdown and uncertainty over a US technical default. By contrast, a wide range of country-specific strains weighed on several large emerging market economies, preventing a full recovery of local asset valuations and capital flows. Much attention has been given to the hope of a strengthening in the U.S. economy.

Real estate values and equity market valuations have bolstered both business and household wealth — and the outlook for spending in 2014. The perceived postponement of Fed tapering gave rise to significant gains in global bond and equity markets. Indeed, some have questioned whether the recovery in home prices in some areas has moved too quickly. Any move to normalcy, however gradual, will test markets.

The dreaded tapering will remain a key focus of markets… As the accommodative monetary policy stance persisted in all major currency areas, so did investors’ desperate search for yield. The unnatural easing stance, though necessary, spurred an aberrant demand for assets in the riskier end of the spectrum. By and large, such assets have so far lived up to their promise.

The new year may again challenge that assumption.

 

 

TPL Dec 16 13

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FpB6rF0Kiz0/story01.htm Tyler Durden