Yes Virginia...It's a Bubble...

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

http://www.bloomberg.com/news/2014-0...na-credit.html

More corporate bonds onshore may default this year, said Li Ning, an analyst in Shanghai at Haitong Securities Co. Companies with bonds that lack guarantees and have higher credit risks similar to the Chaori debt include Zhuhai Zhongfu Enterprise Co. (000659), Star Lake Bioscience Co. and Nanning Sugar Industry Co., Li said.

Calls to Zhuhai Zhongfu went unanswered yesterday and there was no immediate reply to e-mailed questions after normal office hours. An official at Star Lake declined to comment over the phone and didn’t immediately reply to e-mailed questions. An official in the securities department of Nanning Sugar said the company couldn’t answer questions before March 14 when the annual report is due.

The yield on the 2015 securities of Zhuhai Zhongfu, a beverage packaging manufacturer, has surged 234 basis points this week to a record 24 percent, according to exchange data. The rate on Nanning Sugar’s 2019 notes has jumped 27 basis points to 10.6 percent. It had a debt-equity ratio of 316 percent at the end of 2012.

Four companies pulled domestic bond sales on the Chaori news. Suining Chuanzhong Economic Technology Development Co. will delay a 1 billion yuan offering due to “serious fluctuations in the bond market,” it said on ChinaBond’s website March 5. Taizhou Kouan Shipbuilding Co., Xining Special Steel Group and Qunsheng Group Co. scrapped offerings for similar reasons.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

another dead roach in the kitchen and this one is state-owned:

http://www.businessweek.com/news/201...s-losses-mount

Baoding Tianwei Baobian Electric Co. (600550)’s bonds and stock were suspended from trading today after the Chinese electrical equipment maker said it reported losses for a second year running.

The company, which also makes solar panels and is based in the northeast province of Hebei, reported a net loss of 5.23 billion yuan ($852 million) in 2013 versus a 1.55 billion yuan earnings deficit a year ago, according to a statement to the Shanghai stock exchange yesterday. The exchange, in line with its rules, will decide in seven trading days whether to continue the trading halt on Tianwei Baobian Electric’s bonds until its losses are reversed.

The yield on Tianwei Baobian Electric’s 1.6 billion yuan of 5.75 percent bonds due 2018 has soared 537 basis points over the past year to 11.13 percent as of yesterday, according to exchange data. Its stock has fallen 37 percent.

Baoding Tianwei Group, a central-government owned company and Tianwei Baobian Electric’s controlling shareholder, provided a full, unconditional and irreversible guarantee for the notes, according to the notes’ 2011 prospectus.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

the housing bubble burst started with the failure of 2 small bear stearns hedge funds. we're all left to wonder whether this failure is a similar harbinger of things to come, or if the pboc et al come to the rescue and start pumping harder once again.

You all probably saw this already, but just in case:

http://www.bloomberg.com/news/2014-0...estimates.html

The nation in late January averted its first trust default in at least a decade as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured.

[jk]

Re: Yes Virginia...It's a Bubble...

the housing bubble burst started with the failure of 2 small bear stearns hedge funds. we're all left to wonder whether this failure is a similar harbinger of things to come, or if the pboc et al come to the rescue and start pumping harder once again.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

Chaori Solar bond default:

“We doubt that the financial system in China will experience a liquidity crunch immediately because of this default but we think the chain reaction will probably start,” Hong Kong-based strategists David Cui, Tracy Tian and Katherine Tai wrote in a note yesterday. During the U.S. financial crisis, it took a year “to reach the Lehman stage” when investors began to panic and shadow banking froze, the strategists added.

http://www.bloomberg.com/news/2014-0...bofa-says.html

Chaori’s default has no “systemic implications” even as more failures may follow “in line with normal cyclical volatility,” analysts including Kenneth Ho at Goldman Sachs Group Inc. wrote in a March 8 report.

http://www.bloomberg.com/news/2014-0...ay-bondholders

"It's just like when you find a dead roach in your kitchen. You would know there must be more to come," said Huang Cendong, an analyst at Sinolink Securities Co., a Chinese brokerage firm.

http://online.wsj.com/news/articles/...24890826876568

[vinoveri]

Re: Yes Virginia...It's a Bubble...

I think that this is completely explained by the wealth effects of QE. The pullback in spending coincided nearly exactly with the market pullback in January. A reversal and uptick in spending when the february numbers come out would reinforce that opinion.

or maybe it was "the weather"

[mkeplinger]

Re: Yes Virginia...It's a Bubble...

Doesn't the graph end with January 1?

It does, but the data was released on Feb 13, and I assumed that it was inclusive of the month of january considering it was an Advance Estimate, and it remained unclear so looked it up. Looking closer at the data and the specific calculation method, I retract my opinion about it being explained by the negative wealth effects from a january downturn, as that data does come from the december numbers. I love this site, it keeps you on your toes.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

I think that this is completely explained by the wealth effects of QE. The pullback in spending coincided nearly exactly with the market pullback in January. A reversal and uptick in spending when the february numbers come out would reinforce that opinion.

Doesn't the graph end with January 1?

[coolhand]

Re: Yes Virginia...It's a Bubble...

Of course the US Dollar is a problem. The good thing, to paraphrase the late John Connolly, is that it's their problem. The manipulated currency of a corrupt kleptocracy is hardly part of the solution...unless of course one is part of the manipulation, the corruption and the kleptocracy. Unfortunately China and USA are hardly different in that regard any longer...

This is my whole point. It has been their problem. That is why they are buying gold hand over fist & why foreign official purchases of UST's collapsed in 2013...b/c per EJ's export/import charts, they don't need the US on a net basis for any physical goods anymore. All they need the US for is for the USD trade clearing system...which the US has been using as a political weapon (see QE2, QE3, QE taper, Iran, threats of Russian sanctions.)

So their problem is easy to fix - ditch the dollar. They are doing it. Then it won't be their problem any longer. How can they do that without dollars? Well, it turns out that other Eastern nations understand money better than Westerners. They will accept gold as payment. Here is a list of nations that have established physical gold exchanges: Moscow (oil/food), Dubai (oil), South Korea (electronics/cars/mfg), Singapore (financial), Thailand (mfg) & Shanghai (mfg/electronics).

Ignore what is going on at your own peril. The " 'Merika, hell yeah!" crowd is in for a big surprise...

[mkeplinger]

Re: Yes Virginia...It's a Bubble...

recession?

I think that this is completely explained by the wealth effects of QE. The pullback in spending coincided nearly exactly with the market pullback in January. A reversal and uptick in spending when the february numbers come out would reinforce that opinion.

[Southernguy]

Re: Yes Virginia...It's a Bubble...

difficult to understand what the main street "problem" is when one looks at the fed's own data. If "banks aren't lending" then where is the credit coming from to drive this???



although a little more granular look shows a very definite roll-over:

recession?

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

They're lending. I receive unsolicated credit card and auto financing offers through the USPS on a monthly basis.

[GRG55]

Re: Yes Virginia...It's a Bubble...

Puplava has been speculating that Janet will move the show from Wall St to Main Street- she is losing sleep on all the unemployed so she wants those nasty banks to start lending

i dont know much about the inside of the bank regulations but even if she does make it more attractive to loan to main street, the amount of reserves banks are required to keep on hand and documentation requirements will not all of a sudden loosen the spigots.

Difficult to understand what the Main Street "problem" is when one looks at the Fed's own data. If "banks aren't lending" then where is the credit coming from to drive this???



Although a little more granular look shows a very definite roll-over:

[jpetr48]

Re: Yes Virginia...It's a Bubble...

There has been plenty of liquidity in the system as the SHIBOR rate shows. The problem is no one is lending..........

Puplava has been speculating that Janet will move the show from Wall St to Main Street- she is losing sleep on all the unemployed so she wants those nasty banks to start lending

i dont know much about the inside of the bank regulations but even if she does make it more attractive to loan to main street, the amount of reserves banks are required to keep on hand and documentation requirements will not all of a sudden loosen the spigots.

[jpetr48]

Re: Yes Virginia...It's a Bubble...

I assume you mean "not as much as they used to"; lending is in fact occuring just not in the amounts that allow the rate of growth to approach pre-crash levels - and remember that we always have the "lenders of last resort" if private capital becomes too Spartan.

Whether one makes $10k or $1MM per year, one now depends on the status quo of infinite liquidity and that is why their is muted objection to the insanity that one day will end in reset; keep the music going and worry about it later (b/c we'll all be dead) - Bastards!

Here is some Friday humor on the bastards. I love this guy perhaps because i am originally from NYC. Dry sarcasm at its best.

http://www.thereformedbroker.com