China to inject $174B of liquidity on Monday as markets reopen
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Re: China to inject $174B of liquidity on Monday as markets reopen
#2Here's a map with the latest coronavirus data: https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.h...
Re: China to inject $174B of liquidity on Monday as markets reopen
#3...most of which is just repos being rolled over yielding a surprisingly small net 150b CNY injection.
But I guess there's no reason the PBOC can't legitimately go PPT a la BOJ and just buy equities. They have the reserves.
Re: China to inject $174B of liquidity on Monday as markets reopen
#4Wilbur Ross's comments come off as a little callous but whatever.
Anyway, these repo operations are meant to stabilize the markets in the event of a flash crash where there is a major dislocation on the price of equities, due to the coronavirus. Still might be a major downside move, but it should stave any long term move downwards.
Re: China to inject $174B of liquidity on Monday as markets reopen
#5Here's a map with the latest coronavirus data: https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.h...
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Re: China to inject $174B of liquidity on Monday as markets reopen
#6China = 20% of global GDP -> shutdown until Feb 17th.
China = ??% of global supply chain -> shutdown until Feb 17th.
This is the current status quo. If the situation isn't controlled by Feb 13th you can kiss at least 1/3 of global GDP goodbye.
And, don't get me started on possible outbreaks elsewhere.
Re: China to inject $174B of liquidity on Monday as markets reopen
#7China = 20% of global GDP -> shutdown until Feb 17th. China = ??% of global supply chain -> shutdown until Feb 17th. This is the current status quo. If the situation isn't controlled by Feb 13th you can kiss at least 1/3 of global GDP goodbye. And, don't get me started on possible outbreaks elsewhere.
What will happen 17th?
Re: China to inject $174B of liquidity on Monday as markets reopen
#8A friend of mine is leaving HK today - he lives there, so this is not a casual trip abroad. He said the level of fear is making it impossible to live there as a single person. The shops and restaurants are closed. Even his own employer shut its doors indefinitely - and they’re just a video production company.
The virus won’t be what ruins China. It’s the panic itself.
Re: China to inject $174B of liquidity on Monday as markets reopen
#9Wilbur Ross's comments come off as a little callous but whatever. Anyway, these repo operations are meant to stabilize the markets in the event of a flash crash where there is a major dislocation on the price of equities, due to the coronavirus. Still might be a major downside move, but it should stave any long term move downwards.
China is a major manufacturing partner and it is Wilbur Ross's job to identify and discuss weaknesses in that setup. What do you expect him to do, quietly put his head in the sand?
Repo gives liquidity to banks, which may prevent them from selling other assets in order to maintain operations and meet any balance sheet requirements they may have. It doesn't automatically support equities. China's government may also buy equities when markets open, but that would be kind of foolish because they could simply wait and buy lower, where they probably would have more price impact.
China has historically had major issues with liquidity and balance sheet. Look up the 2013 Liquidity Crisis and you'll see what I mean. Not to mention that many banks participate in risky practices like meeting balance sheet requirements only on disclosure deadlines and dealing in loans secured with ghost collateral.
Re: China to inject $174B of liquidity on Monday as markets reopen
#10Wilbur Ross's comments come off as a little callous but whatever. Anyway, these repo operations are meant to stabilize the markets in the event of a flash crash where there is a major dislocation on the price of equities, due to the coronavirus. Still might be a major downside move, but it should stave any long term move downwards.
The emergency repo operations were required long before the coronavirus, we have liquidity issues in the US. Economy will start to collapse shortly... Fed can't expand the balance sheet without exacerbating the problems.