“Inflation is always and everywhere a
monetary phenomenon.”
Milton
Friedman, Money Mischief: Episodes in
Monetary History
After taking a week off to celebrate one of three “Golden
Week” holidays, China’s stock casinos still await clarity on the China
Evergrande implosion.
In the US casinos, a relief rally. Uncle Sam will not now
default on his debts and obligations until December 3rd. All can now
focus on today’s US employment figures.
Of course, Uncle Sam will not be defaulting at all. Some
sort of botch compromise will be reached before December 3rd. It’s just
that US politicians like to play the default game once or twice a year. It gets
them a lot of free air time with the voters.
Unhelpfully, “the US
Energy Department’s statement on not having plans to tap into the nation’s oil
reserve for now,” sent energy traders rushing to cover their previous day short
positions and natural gas prices higher again. Bangladesh paid record prices
for two cargoes of LNG.
Below, the state of play before the US employment report.
Chinese stocks rise on return to
trade; oil prices jump
SINGAPORE — Chinese stocks rose on the first day of trade
after a week-long holiday, tracking other stock markets across Asia-Pacific as
markets on Wall Street rallied. Data on Friday also showed that the services
activity in China returned to positive levels.
Mainland Chinese stocks pared earlier gains but were still
higher in the afternoon. The Shanghai
Composite was up 0.33%, while the Shenzhen Component was higher by 0.55%.
The CSI 300 rose around 1%.
“With the market reopening today, investors are likely to
focus on issues in the Chinese property market. With property developers
struggling [with] high debt levels, the spectre of strong demand for steel and
iron ore remains low,” analysts at ANZ Research wrote in a note, referring to
Evergrande’s debt woes and signs
of stress in the broader property sector.
China’s CSI 300 real estate index was down more than 1% by
the afternoon.
Japan’s Nikkei
225 surged 1.72%, and the Topix jumped 1.35%. The S&P/ASX 200 in Australia rose
0.72%.
In South Korea, the Kospi was down 0.16%. In its earnings
estimates on Friday, Samsung
said its operating profit for the quarter that ended in September was
likely up 28% from a year ago to 15.8 trillion Korean won ($13.26 billion).
----Activity in China’s
services sector grew in September, data from a private survey showed on Friday.
The Caixin/Markit services
Purchasing Managers’ Index (PMI) rose to 53.4 from 46.7 in August, recovering
from the lowest level seen since the height of the pandemic last year,
according to Reuters. The 50-point mark separates growth from contraction.
Oil prices jumped more than 1% on doubts surrounding
supply. International benchmark Brent crude futures was up
1.2% to $82.93 per barrel. U.S.
crude futures jumped 1.33% to $79.34 per barrel.
“Energy prices remained volatile with oil prices rising on
Thursday, following the US Energy Department’s statement on not having plans to
tap into the nation’s oil reserve for now,” Mizuho Bank said in a Friday note.
----Wall Street
rallies
Stocks
rallied as lawmakers reached a deal to increase the debt ceiling in the
short term. The Dow Jones Industrial Average rose 337.95 points, or roughly 1%,
to 34,754.94.
The S&P 500 rallied 0.8% to 4,399.76 and the
technology-focused Nasdaq Composite jumped nearly 1.1% to 14,654.02. Thursday’s
gains put the major averages in the green for the week.
Chinese property bonds, shares
slump as Evergrande angst spreads
October 8,
20216:33 AM BST
SHANGHAI, Oct 8 (Reuters) - Bonds and shares issued by
Chinese developers slumped on Friday as onshore markets returned from a
week-long holiday with few clues as to how regulators propose to contain the
contagion from cash-strapped China Evergrande Group's debt problems.
Evergrande (3333.HK),
whose shares remain suspended since it requested a trading halt on Monday
pending a major transaction announcement, is facing one of the country's largest
defaults as it wrestles with more than $300 billion of debt.
The company last month missed
coupon payments on two dollar bond tranches and faces three more early next
week totalling nearly $150 million. The possible collapse of one of China's
biggest borrowers has triggered worries about contagion risks to the property
sector in the world's second-largest economy, as its debt-laden peers are hit
with rating downgrades on looming defaults.
That uncertainty battered bonds
issued by property firms such as Kaisa Group (1638.HK),
Central China Real Estate (0832.HK) and Greenland (600606.SS)
over China's National Day break.
On Friday, onshore bonds caught
up to the selling. The Shanghai Stock Exchange suspended trading of two bonds
issued by smaller developer Fantasia Group China Co, with one dropping more
than 50%, after controlling shareholder Fantasia Holdings Group (1777.HK) missed
the deadline on a $206 million international market debt payment on Monday.
Coming soon, a higher global corporate minimum tax now that
Ireland has agreed to join in. With stocks priced to perfection, inflation
soaring and higher interest rates just around the corner, something is likely
mis-priced.
Global tax deal inches closer as
holdout Ireland agrees to sign up
reland has decided to sign up to a
global deal that will push its corporate tax rate to 15%, marking a huge shift
in its policy.
The G-7 and G-20 nations agreed
earlier this summer to join forces to tackle tax evasion and harmonize rules
across the globe. The plan, if implemented, would force multinationals to pay
tax where they operate — not just where they have their headquarters — and
would impose a minimum corporate rate of 15%.
The Republic of Ireland has one of
the most attractive rates for corporations in the world at 12.5% and had, until
now, refused to join the plan. Different Irish governments had fiercely
defended the low rate, arguing it was a tool to attract businesses to a small
economy.
On Thursday evening, Irish
broadcaster RTE reported that the Cabinet had approved an increase from 12.5%
to 15% in corporation tax for companies with turnover in excess of 750 million
euros. The news was later confirmed by Ireland’s Finance Minister, Paschal
Donohoe.
“In joining this agreement, we must
remember that there are 140 countries involved in this process and many have
had to make compromises,” Donohoe said, according to RTE.
Finally,
in the same week that Presidents Biden and Xi talk by phone and agree to uphold
the US – China “Taiwan Agreement,” someone leaked to the WSJ that the USA has
been secretly stationing troops in Taiwan for over a year.
Displeased,
China via the English language China Times, threatens to take “Israeli” style action
against them.
And
a good propaganda time was had by all, but who leaked and why? Who exactly, is
in charge in Washington, if anyone?
Does
anyone in the District of Crooks or Beijing, remember how the world blundered
into World War One?
China Fires Back at Reports of
U.S. Commandos in Taiwan
‘See whether the PLA will
launch a targeted air strike to eliminate those U.S. invaders!’ the chief of
the Chinese Communist Party’s propaganda outlet threatened on Thursday.
By Paul D. ShinkmanOct. 7, 2021, at 12:33 p.m
Leaders
in China almost immediately expressed outrage Thursday at a new report
indicating the U.S. has secretly stationed forces on Taiwan in an attempt to
bolster the island nation's defenses against the increasing likelihood of an
attack from the mainland.
The Wall Street Journal first reported that a small unit of
special operations forces have been based in Taiwan for at least a year to
train local military forces – a move China has previously said would violate
contentious agreements between Washington and Beijing that have maintained a
fragile security understanding regarding Taiwan for decades. Asian outlets
first reported last year the possible presence of Marines there.
"Why just two dozen members? Why secretly? The US
should send 240 servicemen publicly, in US military uniform, and make public
where they are stationed," Hu Xijin, the editor in chief of China's
English language Global Times, considered a mouthpiece of the Chinese Communist
Party, wrote in a tweet accompanying the Journal's article. He added of China's
military, "See whether the PLA will launch a targeted air strike to
eliminate those US invaders!"
China has previously indicated it
would retaliate swiftly and immediately to any indication the U.S. had deployed
military forces to Taiwan. When Sen. John Cornyn, Texas Republican, claimed
without explanation in August that the U.S. had roughly 30,000 forces on
Taiwan, state news in Beijing fired back that, if true, the Chinese military
would "crush them by force."
What have previously been downplayed
as idle threats have taken on new potency in recent days, following China's
steady deployment of aircraft into Taiwan's air defense zone on an
unprecedented scale. Dozens of warplanes entered Taiwanese Air Defense
Identification Zone – technically outside the island's self-described airspace
– on Friday and Saturday, the date of China's annual celebration marking the
founding of the Chinese Communist Party, followed by more than 50 on Monday,
almost doubling the scale of its largest previous provocation in June.
The latest round of threats comes at a particularly
contentious time for relations between China and the U.S., which in many ways
have arrived at an all time low following the combative economic and diplomatic
policies of the Trump administration and Beijing's increased aggressiveness in
recent months. U.S. defense officials earlier this year warned that China may
try to invade Taiwan in as little as six years, seizing territory it claims as
a renegade province of the mainland. Pentagon planners have begun referring to
the island as "Fortress Taiwan."
Since the latest aerial incursions, Taiwan's defense
minister, Chiu Kuo-cheng, has said a full-scale attack may now come as soon as
2025.
It was not immediately clear whether
the latest news would affect some signs of thawing in relations between the
Biden administration and President Xi Jinping's government. Jake Sullivan, the
national security adviser, met with his Chinese counterparts in Zurich,
Switzerland earlier this week, their first gathering since tense talks in
Anchorage, Alaska in March.
Beijing subsequently described the
latest talks as "productive" and said they "can bear
fruits."
President Joe Biden announced this
week he had agreed to a virtual meeting with Xi before the end of the year.
Following the markets on both sides of the Atlantic since 1968. A dinosaur, who evolved with the financial system as it was perverted from capitalism to banksterism after the great Nixonian error of abandoning the dollar's link to gold instead of simply revaluing gold. Our money is too important to be left to probity challenged central banksters and crooked politicians.
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