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Chinese Stocks Slide As Latest PBOC Cash Injection Again Disappoints Traders

Chinese Stocks Slide As Latest PBOC Cash Injection Again Disappoints Traders

The ongoing decline in China’s credit impulse, which we have discussed extensively here in recent weeks, just made its latest appearance and the market was not happy

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Chinese Stocks Slide As Latest PBOC Cash Injection Again Disappoints Traders

The ongoing decline in China's credit impulse, which we have discussed extensively here in recent weeks, just made its latest appearance and the market was not happy.

Chinese stocks fell on Thursday, after the central bank underscored its intention to contain leverage and pursue policy normalization by adding just enough cash to maintain medium-term liquidity.

On Thursday, the PBOC injected 150 billion yuan ($23 billion) into the financial system on Thursday with its medium-term lending facility. That was slightly less than the medium-term lending facilities due in April even as liquidity is set to tighten this month, with 100 billion yuan due and 56.1 billion yuan of targeted loans maturing on April 25.

The PBOC withdrew a net 40.5 billion yuan of one-year funds in the first quarter, as policy makers address the twin challenge of a buildup in leverage while supporting the economic recovery from the pandemic. The tightening ricocheted through markets, with the main equity gauge falling from the highest in more than a decade while the benchmark money-market rate jumped to a three-year high in February.

In kneejerk response, the CSI 300 Index pared an earlier 1.6% decline to close 0.6% lower, just above its 200-day moving average.  Banks fell, with the CSI 300 Financial Index declining the most in three weeks.

The CSI 300 Index has lost 15% since climbing to a 13-year high in February, amid investor concerns about tighter monetary policy as the economy recovers. The “PBOC’s operation confirmed the relative pessimistic expectations,” said Wang Chen, partner at XuFunds Investment Management Co., noting that it had a negative impact on the market.

And while money markets barely reacted, unlike the last time China's tightened financial conitions, Bloomberg notes that the decline in stocks showed how equity traders are struggling to come to terms with plans by Chinese policy makers to gradually wind back pandemic-fueled stimulus: "The test for the economy will come in the weeks ahead as banks need to help corporate clients pay taxes, and as sales of government bonds are forecast to accelerate."

“The expectation in the market is that the central bank will gradually tighten its liquidity as it seeks policy normalization after the pandemic,” said Zhang Gang, a strategist at Central China Securities Co.

“PBOC is fully aware of the impact of tax payment and local government bond issuance in April on domestic liquidity,” says Tommy Xie, head of Greater China Research at Oversea- Chinese Banking Corp. in Singapore

He added that authorities will probably add more cash via open-market operations, noting that "It looks like PBOC is phasing out TMLF as they rely more on re-lending and re-discount to support the demand from smaller companies, MLF rollover is actually higher."

Also notably, the PBOC’s stance on Thursday suggests it isn’t concerned about possible contagion from the recent credit stress engulfing China Huarong Asset Management Co., one of the nation’s largest distressed-debt managers.

Which is odd since Chinese policy makers have always been cautious about rapid increases in leverage. In 2017, the PBOC guided money rates higher, driving the benchmark 10-year yield to a three-year high, after low borrowing costs spurred a surge in property prices. The government has said it aims to keep macro leverage “basically stable” in 2021, after the country’s debt-to-GDP ratio soared to a record 279% late last year following a series of stimulus measures deployed to blunt the virus impact.

The central bank’s operation Thursday “is a bit disappointing to the bond market and funding costs will rise,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. in Shanghai. The PBOC is likely to add more cash through seven-day reverse-repurchase agreements to plug the liquidity gap as the tax payment season starts later this month, he said.

That said, as Bloomberg notes, banks aren’t suffering from a severe shortage in cash. The 7-Dau repurchase rate is close to its average level for the past year, and the 10-year sovereign bond yield is near its lowest level in more than two months. Of the analysts surveyed by Bloomberg, two had forecast a neutral stance from the PBOC, with the third seeing a gross injection of 150 billion yuan to 200 billion yuan.

The PBOC looks to be phasing out the usage of targeted loans, and is instead focusing on other policy tools to support small firms, according to Tommy Xie, head of Greater China research at Oversea-Chinese Banking Corp. in Singapore.

Tyler Durden Thu, 04/15/2021 - 10:17

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Spread & Containment

Middle-aged Americans in US are stressed and struggle with physical and mental health – other nations do better

Adults in Germany, South Korea and Mexico reported improvements in health, well-being and memory.

Middle age was often a time to enjoy life. Now, it brings stress and bad health to many Americans, especially those with lower education levels. Mike Harrington/Getty Images

Midlife was once considered a time to enjoy the fruits of one’s years of work and parenting. That is no longer true in the U.S.

Deaths of despair and chronic pain among middle-aged adults have been increasing for the past decade. Today’s middle-aged adults – ages 40 to 65 – report more daily stress and poorer physical health and psychological well-being, compared to middle-aged adults during the 1990s. These trends are most pronounced for people who attained fewer years of education.

Although these trends preclude the COVID-19 pandemic, COVID-19’s imprint promises to further exacerbate the suffering. Historical declines in the health and well-being of U.S. middle-aged adults raises two important questions: To what extent is this confined to the U.S., and will COVID-19 impact future trends?

My colleagues and I recently published a cross-national study, which is currently in press, that provides insights into how U.S. middle-aged adults are currently faring in relation to their counterparts in other nations, and what future generations can expect in the post-COVID-19 world. Our study examined cohort differences in the health, well-being and memory of U.S. middle-aged adults and whether they differed from middle-aged adults in Australia, Germany, South Korea and Mexico.

A middle-aged woman looking sad sitting in front of artwork.
Susan Stevens poses for a photograph in her daughter Toria’s room with artwork Toria left behind at their home in Lewisville, N.C. Toria died from an overdose. Eamon Queeney/For The Washington Post via Getty Images

US is an outlier among rich nations

We compared people who were born in the 1930s through the 1960s in terms of their health and well-being – such as depressive symptoms and life satisfaction – and memory in midlife.

Differences between nations were stark. For the U.S., we found a general pattern of decline. Americans born in the 1950s and 1960s experienced overall declines in well-being and memory in middle age compared to those born in the 1930s and 1940s. A similar pattern was found for Australian middle-aged adults.

In contrast, each successive cohort in Germany, South Korea and Mexico reported improvements in well-being and memory. Improvements were observed in health for each nation across cohorts, but were slowed for Americans born in the 1950s and 1960s, suggesting they improved less rapidly than their counterparts in the countries examined.

Our study finds that middle-aged Americans are experiencing overall declines in key outcomes, whereas other nations are showing general improvements. Our cross-national approach points to policies that could could help alleviate the long-term effects arising from the COVID-19 pandemic.

Will COVID-19 exacerbate troubling trends?

Initial research on the short-term effects of COVID-19 is telling.

The COVID-19 pandemic has laid bare the fragility of life. Seismic shifts have been experienced in every sphere of existence. In the U.S., job loss and instability rose, household financial fragility and lack of emergency savings have been spotlighted, and children fell behind in school.

At the start of the pandemic the focus was rightly on the safety of older adults. Older adults were most vulnerable to the risks posed by COVID-19, which included mortality, social isolation and loneliness. Indeed, older adults were at higher risk, but an overlooked component has been how the mental health risks and long-haul effects will likely differ across age groups.

Yet, young adults and middle-aged adults are showing the most vulnerabilities in their well-being. Studies are documenting that they are currently reporting more psychological distress and stressors and poorer well-being, compared to older adults. COVID-19 has been exacerbating inequalities across race, gender and socioeconomic status. Women are more likely to leave the workforce, which could further strain their well-being.

A older women hugs her daughter.
Middle-aged people often have parents to take care of as well as children. Ron Levine/Getty Images

Changing views and experiences of midlife

The very nature and expectations surrounding midlife are shifting. U.S. middle-aged adults are confronting more parenting pressures than ever before, in the form of engagement in extracurricular activities and pressures for their children to succeed in school. Record numbers of young adults are moving back home with their middle-aged parents due to student loan debt and a historically challenging labor and housing market.

A direct effect of gains in life expectancy is that middle-aged adults are needing to take on more caregiving-related duties for their aging parents and other relatives, while continuing with full-time work and taking care of school-aged children. This is complicated by the fact that there is no federally mandated program for paid family leave that could cover instances of caregiving, or the birth or adoption of a child. A recent AARP report estimated that in 2020, there were 53 million caregivers whose unpaid labor was valued at US$470 billion.

The restructuring of corporate America has led to less investment in employee development and destabilization of unions. Employees now have less power and input than ever before. Although health care coverage has risen since the Affordable Care Act was enacted, notable gaps exist. High numbers of people are underinsured, which leads to more out-of-pocket expenses that eat up monthly budgets and financially strain households. President Biden’s executive order for providing a special enrollment period of the health care marketplace exchange until Aug. 15, 2021 promises to bring some relief to those in need.

Promoting a prosperous midlife

Our cross-national approach provides ample opportunities to explore ways to reverse the U.S. disadvantage and promote resilience for middle-aged adults.

The nations we studied vastly differ in their family and work policies. Paid parental leave and subsidized child care help relieve the stress and financial strain of parenting in countries such as Germany, Denmark and Sweden. Research documents how well-being is higher in both parents and nonparents in nations with more generous family leave policies.

Countries with ample paid sick and vacation days ensure that employees can take time off to care for an ailing family member. Stronger safety nets protect laid-off employees by ensuring that they have the resources available to stay on their feet.

In the U.S., health insurance is typically tied to one’s employment. Early on in the COVID-19 pandemic over 5 million people in the U.S. lost their health insurance when they lost their jobs.

During the pandemic, the U.S. government passed policy measures to aid people and businesses. The U.S. approved measures to stimulate the economy through stimulus checks, payroll protection for small businesses, expansion of unemployment benefits and health care enrollment, child tax credits, and individuals’ ability to claim forbearance for various forms of debt and housing payments. Some of these measures have been beneficial, with recent findings showing that material hardship declined and well-being improved during periods when the stimulus checks were distributed.

I believe these programs are a good start, but they need to be expanded if there is any hope of reversing these troubling trends and promoting resilience in middle-aged Americans. A recent report from the Robert Wood Johnson Foundation concluded that paid family leave has a wide range of benefits, including, but not limited to, addressing health, racial and gender inequities; helping women stay in the workforce; and assisting businesses in recruiting skilled workers. Research from Germany and the United Kingdom shows how expansions in family leave policies have lasting effects on well-being, particularly for women.

Middle-aged adults form the backbone of society. They constitute large segments of the workforce while having to simultaneously bridge younger and older generations through caregiving-related duties. Ensuring their success, productivity, health and well-being through these various programs promises to have cascading effects on their families and society as a whole.

[Get the best of The Conversation, every weekend. Sign up for our weekly newsletter.]

Frank J. Infurna receives funding from the National Institute on Aging and previously from the John Templeton Foundation. The content is solely his responsibility and does not necessarily represent the official views of the funding agencies.

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Economics

Inflation In Context: A Liquidity Adjusted CPI Index

First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at…

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First, folks, please send your prayers, thoughts, good feelings, positive energy, miracles, healing touch, whatever you got, and whatever it takes to GMM’s beloved Carol K., who keeps battling, never giving up against a serious disease in Boston at one, if not the best hospital in the world.  Even in her critical condition, she contributed to this post — though she may not agree with all its final points.  She’s truly an amazing and incredibly strong human being.  Semper Fi and Godspeed, CK.  

We had a few requests to write up something about today’s hot U.S consumer price inflation data. So we put together a quick note in honor of our friend from down in the Land of Oz, GMac, one of the most decent human beings on earth. He is one proud father of a super studly 18-year son, who is an incredible surfer and someday wants to surf Mavericks.  God. Bless. His. Soul.

Let us preface our inflation note with one of our favorite quotes:

World War II was transitory – GMM

Recall our post in January, Ready For 4 Percent CPI By Mid-Year?, when we speculated the U.S. would be experiencing 4 percent inflation, possibly 5 percent by mid-year.  We were beaten down like a red-headed stepchild (I am at liberty to say that as I have been a ginger most of my life).

GMM was also one of the first to point out the base effects (12-month comps) would kick in April and May 2021 due to the deflation that troughed last year from the COVID crash.  But don’t be gaslighted the lastest few month-on-month core prints essentially negate the base effect excuse for high inflation as three-month core CPI is now running at 7.9 percent on an annual basis.

We don’t know for certain if inflation will stick and move higher or lower but as better folk we are taking the over, however.

Liquidity Tsunami

We do know the major global central banks have pumped in a shitload of high-powered money into the global financial system over the past year — as in around $10 trillion, close 50 percent increse of their collective balance sheets.   Here’s Dr. Ed’s excellent chart,

Moreover, banks now seem eager to start lending, thus creating more endogenous money on top of the trillions upon trillions of base money central banks have already injected.

Transitory?  Yeah, right.   

It’s not a question whether the Fed has the tools to reign it in, it’s do they have the ‘nads?  Given the multiple asset bubbles that would burst, and bust spectacularly, if the Fed draws it word,  we seriously doubt it. 

The following chart from Dr. Ed also illustrates not only has the digital printing press been working overtime, the credit system is just fine and dandy as deposits are expanding.  Don’t be confused by, yes, the base effect, as the money aggregates have a much large base to grow from they did a year ago before the pandemic.

Tough to beat comps after expanding over 25 percent 

Note, these are monetary aggregates, which include cash in circulation, bank deposits among near money and other short-term time deposits, not the expansion of the Fed’s balance sheet, though it does hugely influence the data.  

This image has an empty alt attribute; its file name is yardeni.png

Big spurts from the digital printing press without a credit crisis and an impaired financial system — as was the case after the Great Financial Crisis — will almost always generate inflationary pressures.   Stimulating demand without production during a supply shock is not optimal unless carefully targeted to those who need it most.   

It’s very amusing to us to see the FinTweets, “peak inflation has arrived.”  True, if the financial markets crash.  But what do they base their conclusion on?  A warm feeling in their tummy?   

Show me the money data, Jerry.  

Banks Itching To Lend

Banks now seem eager to start lending, thus creating more endogenous money on top of the trillions of base money central banks have injected.  

Loans are “starting to pick up,” and there’s plenty of borrowing capacity because companies have unused credit lines, {BofA CEO Brian ]Moynihan said. Loan growth has been a challenge across the banking industry because many consumers and businesses are sitting on cash from savings and stimulus during the pandemic. – Bloomberg, June 6

This should send shivers up the Fed’s spine, but we are not so sure.  We are also not so sure they are not flying blind and will again miss the next big one just as they have in the past. 

The Chart: Liquidity Adjusted Inflation. 

It’s late and we want to present the chart in honor of GMac. 

We have taken the non seasonaly adjusted year-on-year change of CPI and subtracted a scaled up version of the Chicago Fed’s  National Financial Conditions Index (NFCI), which measures how loose or tight monetary conditions are in the U.S..  It’s has been running at an extreme historical low — i.e., very loose financial conditions.   

You can see the 105 indicators it is based upon here.

We are trying to give context to the inflation data of how loose and accomodative finnancial market and monetary conditions are currently.   As you can see, today’s year-on-year CPI print less the NFCI is at the highest level since November 1990, which was in the middle of the first Gulf war, Where the Fed was facing spiking inflation due to the run-up in oil and a recession.  

Prior to that our adjusted inflation index hasn’t been so high since the high inflation late 197Os and early ‘80s.  Gulp. 

Clearly, it is a different environment in today’s economy.  In fact, just the opposite – the economy is ready to roar for the next several quarters as consumers are flush with cash, the supply chain is still a mess due to the “bullwhip effect” (more on this in a future post), and new businesses should be looking for credit and loans to rebuild and start new ventures.    

Most of all, folks, the central banks still have their pedal to the metal and balls to the walls, and as we all know (well some of us),

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. – Milton Friendman 

The Upshot

Inflation is way too high given exremely easy financial and monetary conditions.  There will be blood. 

Finally 

Life is transitory. 

Inflation has eroded my purchasing power in my transitory life.  Bring back the $.35 Big Mac, which was only about 20 percent of the minimum wage.  Now?  About 40-50 percent.  Enough to spark a revolution. 

Finally, the Democrats should begin to worry.

Stay tuned. 

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Economics

Top Stocks To Buy Now? 3 E-Commerce Stocks To Watch

Could these e-commerce giants be a steal at their current price tags?
The post Top Stocks To Buy Now? 3 E-Commerce Stocks To Watch appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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3 E-Commerce Stocks For Your June Watchlist

As we continue to see U.S. vaccination and stimulus efforts strengthen the economy, the retail industry could gain momentum. In particular, some of the top e-commerce stocks in the stock market now would be in focus. For the most part, this would be the case as consumers would be eager to spend their saved-up pandemic funds. Sure, some would argue that e-commerce trends could slow as we see the return of brick-and-mortar operations across the country. But, digital shopping offers one key benefit over in-person shopping, convenience. You can’t deny that consumers have spent the past year shopping online more than ever. Now, it has simply transformed from a matter of necessity towards a quality of life service. Because of this, investors and companies alike could stand to benefit.

Even now, some of the biggest names in the e-commerce space continue to bolster their services and offerings. For instance, we could look at the likes of Chinese e-commerce giant, Alibaba (NYSE: BABA) now. Just this week, the company launched its interactive cloud-based Livestream shopping service. On top of that, CTO Cheng Li recently revealed plans to develop autonomous delivery trucks over the next year. Truly, the integration of tech and retail, that is e-commerce, continues to push boundaries. Understandably, this appears to be the industry working hard to retain the customers it gained throughout the pandemic.

Meanwhile, even conventional retailers who quickly adopted e-commerce practices are flourishing now. Take Restoration Hardware (NYSE: RH) and Signet Jewelers (NYSE: SIG) for example. RH is a high-end furniture retailer, while Signet is the largest retailer of diamond jewelry. Both RH stock and SIG stock have more than tripled in value over the past year. On that note, here are three top e-commerce stocks worth noting in the stock market today.

Top E-Commerce Stocks To Buy [Or Sell] Now

Chewy Inc.

Chewy is an e-commerce company that focuses on pet products and services. It aims to be one of the most trusted and convenient destinations for pet parents everywhere. The company is currently a preeminent source for pet products, supplies, and prescriptions as a result of its broad selection of high-quality products. It also continues to develop innovative ways for customer engagements and partners with more than 2,500 of the best brands in the pet industry. CHWY stock currently trades at $75.08 as of 2:27 p.m. ET and is up by over 50% in the last year. Yesterday, the company reported strong first-quarter 2021 financial results.

Firstly, the company reported net sales of $2.14 billion, growing by 31.7% year-over-year. Net income for the quarter was $38.7 million. This great start to the year is looking to be an exciting and busy time for the company. The company also said that it has been continuing to execute its growth roadmap, expand its database, and increase its addressable market-expanding verticals. Despite its main business being pet retail, the company also has been expanding on its telehealth services for pets.

In May, the company expanded its proprietary and popular telehealth service called Connect with a Vet. It introduced a series of features enhancing the experience of customers and veterinarians. This would include video consultation, the ability to preschedule a virtual vet consultation, and extended hours of operation including weekends. These features will no double help make pet health and wellness more accessible and affordable everywhere. For these reasons, will you consider adding CHWY stock to your portfolio?

[Read More] 4 Artificial Intelligence Stocks To Watch Right Now

Amazon Inc.

Next on this list is e-commerce titan, Amazon. Amazon is a multinational technology company that not only focuses on e-commerce but also has a portfolio of tech services. This would include cloud computing, digital streaming, and artificial intelligence. In brief, it also has one of the largest online marketplaces in the world by revenue. The company is also one of the world’s most valuable companies and one of the highest global brand valuations. AMZN stock currently trades at $3,344.62 as of 2:28 p.m. ET. In late April, the company reported its first-quarter financials.

best tech stocks (AMZN Stock)

In it, the company posted net sales of $108.5 billion, an increase of 44% year-over-year. Net income increased to $8.1 billion in the first quarter or a diluted earnings per share of $15.79. Operating income increased to $8.9 billion in the first quarter more than doubling from a year earlier. The company stated that as its Prime Video streaming service turns 10, it boasts over 175 million members that have streamed shows and movies in the past year. Streaming hours are up by more than 70% year-over-year.

The company’s Amazon Web Services (AWS) has become a $54 billion annual sales run rate business, competing against the world’s largest technology companies. AWS also continues to enjoy growth and is up by 32% year-over-year. AWS also announced significant customer momentum, with new commitments and migrations from customers spanning many major industries. This would include Walt Disney’s (NYSE: DIS) Disney+ expansion to more than 100 million subscribers around the world. Given all of this, won’t you say that AMZN stock is a top e-commerce stock to consider buying?

[Read More] Best EV Stocks To Watch This Week? 4 For Your List

Shopify Inc.

Topping our list today is the leading e-commerce enabler, Shopify Inc. For some context, the company maintains and operates its proprietary e-commerce platform of the same name. On the Shopify platform, retailers across the globe can start, grow, market, and manage online stores of varying sizes. For a sense of scale, Shopify currently facilitates over 1.7 million businesses across 175 countries via its platform. As it stands, SHOP stock is currently trading at $1,236.80 a share as of 2:28 p.m. ET. Despite its current valuation, could it have more space to grow moving forward?

best tech stocks to buy (SHOP stock)

For one thing, the company does not appear to be slowing down anytime soon. This is evident as Shopify continues to grow its market reach and services with major partnerships. Firstly, the company is currently working with Google (NASDAQ: GOOGL) to connect Shopify merchants with consumers through Google Search. No doubt, this would significantly boost the exposure of Shopify’s offerings, to say the least. Now, Shopify products will appear across Google’s daily 1 billion shopping-related searches, according to the duo.

While this is great for the company, it continues to grow its collaborations list. This week, news broke of Shopify’s team-ups with financial firm Affirm (NASDAQ: AFRM) and streaming giant Netflix (NASDAQ: NFLX). With Affirm, Shopify now brings Shop Pay installments to buyers. By allowing merchants early access to Shop Pay installments, Shopify found that their average order volumes gained by up to 50%. Moreover, Netflix is reportedly selling merchandise from its increasingly popular line of self-produced series. Overall, Shopify appears to be firing on all cylinders now. Would this make SHOP stock a top buy for you?

The post Top Stocks To Buy Now? 3 E-Commerce Stocks To Watch appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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