an unhealthy market
Aug. 28th, 2015 12:33 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdThe stock markets have been shooting up like a rocket for the last few days, recovering all of the losses from last week. I've seen commentary to the effect of, "See? No big deal. Everything's fine." But healthy markets do not do shit like this. Not ever.
NO.
That down spike at 3pm Eastern in that chart? That's 2% of total market down and right back up, in a bounce. That's broken. (3pm is also margin-call time, I might add.) We are almost certainly now in a bear market in equities.
China desperately needs capital inflow right now. There is a general consensus that China's growth is overstated; some estimates say that the economy actually shrank last month. That's one of the motives for the devaluation of late.
But devaluations cost money, particularly slow ones, which is capital outflow, the opposite of what China needs. So they're dumping US treasuries to compensate for that. How much? Good question. Sale rate has been accelerating. $170B is one estimate I'm seeing around. But depending upon how things go, that's as much as $1T to keep the Yuan stable in devaluation.
As noted at the second link, that kind of undoes a lot of QE3 and forces up interest rates, particularly in the 10-year space. Which makes a lot less room for the scheduled rate hikes which had been coming up next quarter.
NO.
That down spike at 3pm Eastern in that chart? That's 2% of total market down and right back up, in a bounce. That's broken. (3pm is also margin-call time, I might add.) We are almost certainly now in a bear market in equities.
China desperately needs capital inflow right now. There is a general consensus that China's growth is overstated; some estimates say that the economy actually shrank last month. That's one of the motives for the devaluation of late.
But devaluations cost money, particularly slow ones, which is capital outflow, the opposite of what China needs. So they're dumping US treasuries to compensate for that. How much? Good question. Sale rate has been accelerating. $170B is one estimate I'm seeing around. But depending upon how things go, that's as much as $1T to keep the Yuan stable in devaluation.
As noted at the second link, that kind of undoes a lot of QE3 and forces up interest rates, particularly in the 10-year space. Which makes a lot less room for the scheduled rate hikes which had been coming up next quarter.
