Financial Markets Around World
- Thread starter 4Runner
- Start date
One of the nagging problems in the development of China stock markets is the unregulated short-selling outside its regulatory jurisdiction, which was one of the grave mistakes that WJB/LKQ committed during their reins of China economy. Companies like BABA went to NYSE for IPO thinking of US valuation, putting aside the factor that it is always a double-edge sword. Regulation on short-selling is one of the regulation improvements I was alluding to in a post on China stock markets above.
On this short squeeze of China stocks and ADRs in NYSE, $7B loss is not a surprise to me, given the scale and duration of the shorts and the vertical rise of China stock markets in the last few trading days.
Margin calls on mainland would be more severe if the regulators strictly enforced the rules.
It is not down much at all. Just normal action, JMHO.
What was abnormal is this rally, not often we see a squeeze like this on a major index, there probably were a lot of stop loss orders hit. Good for them.
We see what happens next.
The most important thing is the deflation.
Even though that deflation is rather small, one of those videos I saw posted in the economics section, the Chinese guy based in Shanghai, said something interesting, that the Chinese consumer is not spending because wages have not been going up lately.
That makes sense, if there is deflation, do not expect the workers to get a raise.
Inflate the property market, and get inflation going.
What the PRC should and most definitely learned from the past 20 years, is that once deflation becomes the norm, then not Japan, not Germany were able to break out of it.
External forces were able to help those countries to finally do better with their deflation.
China is too big. China must rely on itself to inflate.
The property cannot be fixed if there is deflation. The government said they will revive the property market. That is a promise to the lao ba xing.
That is Chairman Mao talking. What Chairman Mao did politically, was always take the mass line.
House ownership is very high in China. The masses own property. The masses are quasi-proletariat, and quasi-bourgeois! That is the new China for ya! Cannot help it. Like it said in Lao Tzu or Chuang Tzu, water will find its right level.
If the masses own property, and the government says they are going to support property prices to fix this problem, sooner or later everyone is going to figure out what that means. The lao bai xing, the brains are not distributed evenly. But eventually everyone will realize and know that the government has made this promise, so that will be done.
What was abnormal is this rally, not often we see a squeeze like this on a major index, there probably were a lot of stop loss orders hit. Good for them.
We see what happens next.
The most important thing is the deflation.
Even though that deflation is rather small, one of those videos I saw posted in the economics section, the Chinese guy based in Shanghai, said something interesting, that the Chinese consumer is not spending because wages have not been going up lately.
That makes sense, if there is deflation, do not expect the workers to get a raise.
Inflate the property market, and get inflation going.
What the PRC should and most definitely learned from the past 20 years, is that once deflation becomes the norm, then not Japan, not Germany were able to break out of it.
External forces were able to help those countries to finally do better with their deflation.
China is too big. China must rely on itself to inflate.
The property cannot be fixed if there is deflation. The government said they will revive the property market. That is a promise to the lao ba xing.
That is Chairman Mao talking. What Chairman Mao did politically, was always take the mass line.
House ownership is very high in China. The masses own property. The masses are quasi-proletariat, and quasi-bourgeois! That is the new China for ya! Cannot help it. Like it said in Lao Tzu or Chuang Tzu, water will find its right level.
If the masses own property, and the government says they are going to support property prices to fix this problem, sooner or later everyone is going to figure out what that means. The lao bai xing, the brains are not distributed evenly. But eventually everyone will realize and know that the government has made this promise, so that will be done.
Okay, a quick rant.
This time about asset classes. Pulling this stuff outta mah ass, because been a while. All from memory. So if times have changed, so what.
There are two asset classes, stocks and bonds, with the latter being the more senior of the asset classes.
So what happens in the bond market, can affect the stock market, but usually it never happens the other way around. That is what we got to know.
Does not matter if ya a proletariat like yours truly, or some anarchist, you must have some basic financial knowledge.
Generally speaking, if interest rates are declining, there will be a bond rally and a stock rally. If the bond collapses, sooner or later the stocks will crash. This would be considered a intermediate or long term trend.
Quick question, what the Chinese bond going up or down the past few months, and what has the stock market done in China? It finally went the same way.
Now what happens in the stock market, generally never affects the bond market. Those bond people, they are like really rich, they look at actual fundamentals of the economy and shit. Bad news is good for the bond market. That is why people hate bond players or bonds holders. At least that was how it was back in the day. Today hard to say.
Now we get to China, and of course, China is always a little different.
This is just my opinion. There are two asset classes.
However, in China, there are three asset classes. Real estate, then stocks and bonds.
Why real estate? Because in China that real estate market was the single biggest asset class in the entire world.
Look, the single biggest asset class in the entire world, has some meaning. Once that got depressed, Chinese stocks followed.
Hence, that is why I always say that once they real estate market gets going again in China, then the stock market has a chance. Looks like everyone believes that too, expect for the few stubborn shorts still there, who probably will get punished. The market is ruthless.
There is not a bull side, or a bear side to the market, there is only one side to the market and that is the right side.
The Chinese bond market, an asset class, has been doing well, now the government has pledged support for the property market, a third asset class in China, therefore the right side is to be long Chinese equity. Buy and hold your ass!
This time about asset classes. Pulling this stuff outta mah ass, because been a while. All from memory. So if times have changed, so what.
There are two asset classes, stocks and bonds, with the latter being the more senior of the asset classes.
So what happens in the bond market, can affect the stock market, but usually it never happens the other way around. That is what we got to know.
Does not matter if ya a proletariat like yours truly, or some anarchist, you must have some basic financial knowledge.
Generally speaking, if interest rates are declining, there will be a bond rally and a stock rally. If the bond collapses, sooner or later the stocks will crash. This would be considered a intermediate or long term trend.
Quick question, what the Chinese bond going up or down the past few months, and what has the stock market done in China? It finally went the same way.
Now what happens in the stock market, generally never affects the bond market. Those bond people, they are like really rich, they look at actual fundamentals of the economy and shit. Bad news is good for the bond market. That is why people hate bond players or bonds holders. At least that was how it was back in the day. Today hard to say.
Now we get to China, and of course, China is always a little different.
This is just my opinion. There are two asset classes.
However, in China, there are three asset classes. Real estate, then stocks and bonds.
Why real estate? Because in China that real estate market was the single biggest asset class in the entire world.
Look, the single biggest asset class in the entire world, has some meaning. Once that got depressed, Chinese stocks followed.
Hence, that is why I always say that once they real estate market gets going again in China, then the stock market has a chance. Looks like everyone believes that too, expect for the few stubborn shorts still there, who probably will get punished. The market is ruthless.
There is not a bull side, or a bear side to the market, there is only one side to the market and that is the right side.
The Chinese bond market, an asset class, has been doing well, now the government has pledged support for the property market, a third asset class in China, therefore the right side is to be long Chinese equity. Buy and hold your ass!
I wonder how many doomers posting/lurking here who had short positions are feeling the pain.
But then again maybe that's not important. I wonder what sort of pain guys like Muddy Waters and other big short sellers are feeling.
But then again maybe that's not important. I wonder what sort of pain guys like Muddy Waters and other big short sellers are feeling.