Hong Konked

August tends to be negative for emerging markets. Stocks such as HSBC are right at major support. Some such at LFC have similarly large topping patterns. CHL looks primed for a breakdown with support maybe around $25. I don't think the March 19 low at $29 and change will hold if tested.

Miners Ready For Big Move

I'm hedging with puts on large miners and GDX. Long small juniors and explorers. Here are the top-10 holdings in GDX. I don't know which miner could fall the most.

In general, I see a lot of bullishness in the stock market and metals, but aside from gold itself and some of the small caps, everything is at lower highs including the FANGs. I remain long-term bullish on gold and miners, but it seems like the time to exit everything was 3 weeks ago. The island reversal on $SPX is intact.


Nasdaq Listed Kingold Borrowed $2.8 Billion Backed by Gold-plated Copper Bars

Caixin: The Mystery of $2 Billion of Loans Backed by Fake Gold
Well, plenty, as at least some of 83 tons of gold bars used as loan collateral turned out to be nothing but gilded copper. That has left lenders holding the bag for the remaining 16 billion yuan of loans outstanding against the bogus bars. The loans were covered by 30 billion yuan of property insurance policies issued by state insurer PICC Property and Casualty Co. Ltd. (PICC P&C) and other smaller insurers.

The fake gold came to light in February when Dongguan Trust Co. Ltd. set out to liquidate Kingold collateral to cover defaulted debts. In late 2019 Kingold failed to repay investors in several trust products. Dongguan Trust said it discovered that the gleaming gold bars were actually gilded copper alloy.
It wasn't a surprise to locals:
“We knew for years that he doesn't have much gold ― all he has is copper,” said the source, who declined to be named.

Local financial institutions in Hubei have avoided doing business with Kingold, but they don’t want to offend him publicly, the source said.

“Almost none of Hubei’s local trust companies and banks has been involved in (Kingold’s) financing,” he said.

Public records showed that most of Kingold’s creditors are from outside Hubei.
Not great timing given the increased U.S. scrutiny on Chinese shares.

Shenzhen Rents near Hong Kong Fall 20pc

As one commuter explained, Hong Kong and Shenzhen are 100 meters apart, but it takes 28 days to travel because of a 14-day quarantine rule in Hong Kong and a 14-day quarantine in Shenzhen.

iFeng: 深圳房租罕见下调20%,租房市场要“凉凉”?长租公寓还好吗?
As usual, Zhou Jin’s house is not only next to the Luohu port, but also a “subway room”. Such a house is generally very popular among practitioners who travel between Shenzhen and Hong Kong and the student groups who come to Hong Kong to study. "It was very good to rent a few years ago, and sometimes the next tenant takes over in less than a week." Zhou Jin said, but this year, this is the first time that the rent price has been reduced by nearly 20%. And not only their own houses, but due to factors such as port closures and Hong Kong's anti-epidemic measures, the rental prices of the entire district are affected.

..."It is 100 meters apart and it takes 28 days to travel." A driver who commuted to work in Shenzhen and Hong Kong described his isolation experience to reporters. Although geographically, Shenzhen and Hong Kong are less than 100 meters apart, they started from mid-April. To go to Shenzhen for work, Hong Kong needs to be isolated and observed in Hong Kong for 14 days. After arriving in Shenzhen to work, it needs to be isolated in Shenzhen for 14 days before returning to Hong Kong. One month has passed.

...In addition to the Luohu District, which has been greatly affected, the reporter, as a tenant, successively asked landlords and intermediaries in Nanshan District, Futian District, Baoan District and Longhua District, and found that Nanshan District and Futian District, which are at high rents, occupied themselves. Type rental apartments (different from public rental housing and low-rent housing) generally have a year-on-year increase in vacancy rate and a reduction in rent, but the range is not as high as that near Luohu Port, basically between 5% and 10%.

The rents in Bao'an District and Longhua District are relatively stable, and the rents of some apartments with prices not exceeding RMB 2,500 have even increased slightly. "It can be said that it is a kind of rental downgrade. Several tenants have asked me to find a cheaper house because of unemployment and a sharp drop in income." A rental agency told reporters that there are areas in Baoan District and Longhua District. The rent price is relatively low, such as a one-bedroom less than 2,000 yuan, so it has become a popular choice for tenants.
While the overall rental market in Shenzhen isn't as bad, the trend there and nationally is still down.
As of early June, the decline in rents in key domestic cities has not stopped. According to the data from Shell Search, in the first week of June, the rent level of the key 18 city rental market was 41.7 yuan/square meter, a decrease of 4.3% from May and a decrease of 5.2% from the same period last year.


Chinese Developers Dump Property to Repay Debt, Issue High Interest USD Bonds

iFeng: 降价清盘!楼市再现抛售潮,刚需上车的机会到了!
June-July is the life-and-death robbery of many developers. The debt of 1.46 trillion yuan due in 2020 will reach its peak in July, with an amount of 149 billion yuan due.

Debt service pressures are occurring year after year, and this year is particularly heavy. Hurry, hurry, hurry!
Since 1.46 trillion divided by 12 equals 122 billion, it sounds like repayment pressure is a near constant this year.
Without one-size-fits-all, without flooding, developers' financing channels are tightened. Either cut prices and sell, or compress projects to cut people and lay off staff, or go overseas for financing.

Or, only one fell apart!

Under heavy pressure, all developers this year, whether it is discounts or sales policies, have revealed a taste of selling.

I monitored the frequency of "zero down payment" and "instalment down payment" in the national real estate field through the public opinion monitoring system.

From mid-March to mid-June, 11,859 new messages were detected across the network, compared with 7,666 in the same period in 2019, a year-on-year growth rate of 54.7%.
Overseas debt (U.S. dollar) is playing a role in the pressure:
Tens of thousands of people shake their numbers and wind up in seconds. Messages of "robbing houses" are emerging everywhere.

Friends who want to get on the bus seem to come to a suitable time node.

So, is this developer's best time to ask for "money" a thirsty time? Or is it that the debt crisis of Chinese housing companies will rise every year?

Under the environment of “no housing, no speculation” and tightening of financing channels for domestic housing companies, let’s discuss an important factor affecting the cash flow of domestic housing companies: overseas debt.
Develoeprs are also paying high interest rates to borrow US dollars as they repay existing US dollar debt.
Borrow new debt! Pay off old debts! Since June, news of overseas financing of Chinese housing companies has also frequently spread.

On June 1, Minfa Group, a developer of the Min system, issued an announcement to issue $176 million in bonds at an unprecedented 22% interest rate.

On June 5th, Fujian-based developer Zhengrong Real Estate announced the issuance of US$200 million in 3-year USD bonds with an annual interest rate of 8.3%.

In 2019, Zhengrong Real Estate ranked at the forefront of the country with 9 US dollar bonds. And this debt is already the fourth dollar bond issued by Zhengrong in 2020.
On June 10, Fujian-based developer Jinhui Group issued a $250 million, 3-year U.S. dollar bond on the SGX with a final coupon rate of 8.8%.

This is Jinhui Group’s third dollar debt in the past year and the lowest interest rate. In October 2019, a $250 million 2-year U.S. dollar bond with a coupon rate of 11.75%. In January 2020, a $300 million 2-year U.S. dollar bond was issued with a coupon rate of 10.5%.

On the same day, Minxi Rongxin China issued an announcement that it issued US$250 million in debt to refinance its existing debt, with a 2-year period of 7.35%.

On June 11, Min developer Baolong Real Estate issued an announcement to issue an additional US$250 million of 3-year U.S. dollar bonds to repay debts that are due to mature within one year at an annual interest rate of 6.95%.

This June, the radical Min real estate enterprise set off a wave of dollar debt. Borrowing debt to repay money, behind these not-so-low financing costs, reveals the developers' hot anxiety.
This chart shows the average interest rate on debt (red line), new issuance (red bar) and maturing debt (blue bar).
Even more debt is coming due:
A lot of debt this year? More debt is due in the next few years than this year!
The chart below shows the amount of foreign debt coming due each quarter.
The National Development and Reform Commission General Office Document No. 778 of 2009 stipulates that the issuance of foreign debt by real estate companies can only be used to replace mid- and long-term overseas debt due within the next year.

In 2021, the scale of US dollar debts pending for Chinese housing companies is higher than this year. Continue to borrow through 2021? The above-mentioned debts due in 2022 are already about to lift the scale of outstanding debt in 2022 to a higher level.


Taco Tag

SWN tagged a nice support area, but I didn't buy today. I suspect this correction has further to run.


Chinese Stay Local, Opt for Nature During Dragon Boat Festival

21st Century: 端午小长假周边游回暖 长三角、珠三角短途出行最活跃
On June 24, data from several OTA platforms showed that the reservations for hotels, air tickets, and holiday products for the Dragon Boat Festival holiday this year increased slightly from May, and there are still certain travel routes around cities in the Yangtze River Delta, Pearl River Delta, and Chengdu-Chongqing areas In addition, the park green space and natural ecological scenic spots in the city are very popular, and the natural scenic spots with good air flow have become the first choice for many people.

...The 21st Century Business Herald reporter interviewed many tourists from Beijing, Shenzhen and Hubei and found that visiting relatives and surrounding tours are still the mainstream choice. Mr. Zhang in Shenzhen chose to go to Huizhou with his family. He has no plans to travel long distance in the near future. Mr. Liu from Hubei plans to return to his hometown in Hubei from Jiangsu and take his children to a farming day trip on the outskirts of the city.

It is worth noting that, due to the epidemic, outdoor eco-tours that are close to nature are more popular than ever. On weekends and holidays, the urban parks in the city have become a "showground" for young people to have a picnic, and it is also a family style. The first choice for parent-child activities.
The government has mandated that tourist spots operate at 30 percent capacity. Various data all point to tourist staying local, traveling only to nearby cities:
In terms of peripheral tours, data from Qunar.com shows that intra-provincial and peripheral tours continue the previous momentum and continue to be the preferred way for tourists to travel on small vacations. In terms of train travel, Shenzhen-Guangzhou, Guangzhou-Shenzhen, and Chengdu-Chongqing have become the three most popular routes for the Dragon Boat Festival. Shanghai-Hangzhou, Kunming-Dali, Chengdu-Nanchong and other classic tourist routes also entered the Top 10 of the popular train line for the Dragon Boat Festival.
Some data show a good recovery in travel:
Flying pig data also shows that the demand for peripheral tours around the country is higher this year, and the overall number of tourists has returned to 60% of the same period last year. Guangzhou South-Shenzhen North, Hangzhou East-Shanghai Hongqiao, Changsha South-Guangzhou South, Chengdu East-Chongqing North, Nanning East-Guangzhou South are the busiest sections of the Dragon Boat Festival.

...Recently, domestic aviation companies have also done a lot of promotional activities to stimulate consumer spending. A Southern Airlines source told the 21st Century Business Herald reporter on June 24 that his airline's flight schedule on June 24 returned for the first time to nearly 90% of last year's daily level, marking the first small climax of the number of flights this year.
Beijing is currently under quarantine and citizens are advised to stay within the city during the holiday.

4 Chinese Cities Expand

Chengdu, Changchun, Yantai and Xingtai all expanded this week. It follows expansion of other cities as they absorb surrounding counties into the city.

iFeng: 大扩张!一周4个城市“扩容”,下一个是谁?
It is not just these cities that are taking the pace of expansion.

As early as May, the expansion of Chongqing's main urban area was settled, from 9 districts to 21 districts.

After the expansion, the area, permanent population and total economic volume of the main urban area of ​​Chongqing reached 28,700 square kilometers, 20.27 million and 1.8 trillion yuan, respectively.

Prior to this, the planning of the Shenzhen metropolitan area invited Dongguan, Huizhou, Heyuan, and Shanwei to jointly participate. The Guangzhou metropolitan area , in addition to Foshan, Zhaoqing, Qingyuan will, Shaoguan, Yunfu into the radiation range.

Prior to this, Xi'an, Chengdu and Jinan have all taken steps to expand.

Employment Recovery Stalled Again

The red line shows the population adjusted peak of the initial claims 4-week moving average. Above 1 million indicates no economic recovery. The pace of decline has slowed, but the economy is still sinking.


That Was Sudden: New Era of Low to No Immigration Begins in USA

President Trump limited temporary work visas and immigration visas this week in response to the pandemic. While politics is unpredictable, my suspicion is it may be a long time before these restrictions are fully lifted because I do not expect an economic recovery. More to the point, I believe unemployment will remain stubbornly high.

The Guardian: Trump executive order extends ban on employment-based visas
The presidential proclamation, issued on Monday, will extend a ban on green cards issued outside the US until the end of the year and adds many temporary work visas to the freeze, including the H-1B visas, which permit employers to hire foreign workers with specialized knowledge and are used heavily by technology companies and multinational corporations.

The administration cast the effort as a way to preserve US jobs amid the economic downturn. A senior official who spoke to reporters on condition of anonymity estimated the restrictions will free up to 525,000 jobs for Americans.
Social mood says it's over. The door has closed. Last time it shut for 40 years. I would think 20 years is probably a conservative bet as to how long this will last. Even if the order is lifted by Democrats after November (should they win control of the House, Senate and Presidency), I suspect it will be quickly reimposed by whomever replaces them in office.

SCS Tensions Rising

SCMP: Risk of military conflict between US and China higher than ever, experts say
Wu Shicun, the president of the National Institute for South China Sea Studies, said that with Beijing and Washington locked in a rivalry on multiple fronts, the political distrust that had built up between them had led to hundreds of “track one” intergovernmental communication channels shutting down.

According to a report about US military presence in the Asia-Pacific region released by the institute on Tuesday, communication between the US and Chinese armies has been in sharp decline since 2018.

...But as the tension between Beijing and Washington has grown, so have been the fears of a new Cold War. For the first time since the actual Cold War, three 100,000-tonne US Navy aircraft carriers are now patrolling in the Pacific Ocean, while the US Pacific Fleet said last month that all of its forward-deployed submarines were conducting operations in the western Pacific.

...Zhu Feng, a professor of international relations at Nanjing University, said the existing mechanisms might not be sufficient to keep every encounter under control, and the two sides should come up with a more effective way to manage possible crises.

“I am quite concerned as the encounters of the two armies in the South China Sea and Taiwan Strait appear not to be incidental but intentional, both at sea and in the air,” he said.


Coronavirus: Vermont Travel Map

All the green counties are allowed to travel to Vermont as long as they use a personal vehicle. Vermonters can also visit those counties without quarantining upon return.

Geely Flying Car Prototype Coming Soon

36Kr: 打“飞的”梦想再近一步?吉利飞行汽车原型机即将问世
Geely has made new progress in the field of urban air travel.

On June 22, Taili Speed, a subsidiary of Geely Technology Group, announced the appearance of the TF-2A prototype for the first time, and announced that the TF-2A full-size prototype will be available soon.

TF-2A is the eVTOL pure electric vertical take-off and landing vehicle for the urban air travel field, and it is the latest generation of the product of Tally. The shape of TF-2A resembles the "Ocean Overlord" tiger shark. Compared to the multi-rotor and tilt wing configurations, TF-2A has chosen a composite wing configuration that is convenient for passing airworthiness certification and achieving a more ideal economic effect. Safety backup, equipped with three-point wheeled landing gear, so that the speeding car has more emergency landing point options.
The design is American, but Geely bought the company:
On November 13, 2017, Geely Holdings announced that it has reached a final agreement with the American Terrafugia Flying Car Company.
German companies are working in partnership with Geely:
On September 9, 2019, Geely Holding Group announced that German city air travel company Volocopter completed the first round of financing of 50 million euros, led by Geely Holding Group, Daimler AG participated in the investment, and each party held 10% of the shares.


If Unemployment Looks Like This Forecast, Depression

Peak of unemployment in the early 1980s was around 1 million (4wk average, population adjusted). If this forecast from BMO is right, the economy is doomed. It will be stuck at the 1980s peak for weeks on end.
ZH: The Magnitude Of The 2nd Round Of Job Losses Won't Be Apparent Until After The Election
These ambitions are consistent with reemploying as many workers displaced by the pandemic shutdown as possible, but the fact of the matter is a large number of the jobs lost during the second quarter simply are not going to return. This isn’t to suggest that an elevated unemployment rate will be a permanent feature in the US, rather that the snap-back scenario is unlikely given the dizzying array of uncertainties that persist. The October 31 expiration of the payroll protection program has undoubtedly kept the ranks of the unemployed lower than had the initiative not been deployed; even if a more cynical interpretation implies that another round of job-shedding has only been delayed to the final two months of 2020. The fact the magnitude of the second-round losses won’t be evident until after voters go to the polls on November 3 isn’t lost on us; but was it ever going to be any other way? We digress.
The stock market is either insanely overvalued or pricing in insane amounts of inflation (in which case crypto/precious metals related plays are insanely undervalued). Industrial commodities and real estate are less certain since high long-term interest rates and a stagnant economy will crush consumer demand.

I previously discussed post-coronavirus employment in Depression Versus Recovery in Employment. I looked at the most recent initial and continuing claims data in Extended Unemployment Benefits Stall Recovery

Big American Stocks, New Chinese Home Prices "Can't" Go Down

For years, investors have noticed that houses are to China what stocks are to the USA. Both countries rely on this primary wealth asset for "saving" and investing. Both nation's governments and central banks are fixated on the price. Both central banks unleash massive intervention when this asset depreciates. The only difference right now is that China is worried about blowing another bubble, while Powell and the Fed want the biggest bubble in history.

21st Century: 一二线城市局部过热已出现 二手房流动性风险潜伏
The outbreak did not seem to affect the property market much.

In the opening year of the Shenzhen property market, there has been a wave of magic quotes and a new trend, which seems to have caused some other cities to start to catch fire.

Last month, Hangzhou's record-breaking 50,000 people rushed to grab a house, attracting the attention of the people across the country. In Nanjing, Chengdu and other places, a similar phenomenon of "new innovation" has also appeared.

But investing in new houses will eventually be realized in the second-hand housing market. In most cities, new houses are hot, but second-hand houses are very weak. While the number of listings has soared, the liquidity is very poor, and there is no market for price.

It is not always possible to make new money. In the future, under the regulation direction of "no housing, no speculation" in the real estate market, it is difficult for the difference in the price of a second-hand house to have the profitability in the past.
This is a mirror image of the U.S. stock market. BigTech stocks are leading the market higher as smaller value companies fade away. Long-term returns on houses are going to be low in China and long-term returns on U.S. stocks will be low as well.

As for the current situation, there's speculative fever in Shanghai, Nanjing and Shenzhen. Hangzhou's housing fever was strong enough to freeze the cities' lottery system:
Hangzhou, which is next to it, also gave birth to the "50,000 Shake" that shocked the whole country.

At the beginning of June, Hangzhou Ocean Ocean Xixi Mansion launched 959 suites, which attracted 50,000 registrations and set a record. The profit-making expectations under the price limit attracted buyers to enter the market, and everyone wanted to make a big profit.

On the other side, the last batch of houses was launched in the happiness zone of Vientiane City in the north of the city, which attracted 20,000 shakers. The two hot disks met directly, which directly led to the paralysis of the Hangzhou shake number registration system.
In Guangzhou, existing home sales are weak with listing rising:
n Guangzhou, an intermediary said that the existing housing in Guangzhou is very embarrassing. Most sellers refuse to lower prices, but buyers feel that they will drop again and have been deadlocked for a long time. There are a lot of listings that can't help but cut prices.

Many property owners told reporters that the housing prices in their communities have dropped by about 5,000/flat this year.

On Lianjia's official website, the current number of existing housing listings in Guangzhou exceeds 70,000 units. Compared with June last year, the number of existing housing listings has just exceeded 50,000 units, which has increased by 20,000 units a year. Sufficient housing volume gives buyers more room for bargaining.

According to data from Guangzhou Central Plains Research Institute, in the second week of June, there were 1089 existing home residential transactions in Guangzhou, a decrease of 3.2% from the previous month.


China Growth Model At the Limit

Caixin: Over 50 Billion Yuan Raised by China’s Local Governments Left Idle
The National Audit Office found that some 50.4 billion yuan ($7.1 billion) of funds local governments raised from new special-purpose bonds (SPBs) went unused last year, including 13.2 billion yuan that had been left idle for over a year, after it examined the books of 18 provincial-level governments and 36 of their cities and counties. Hu Zejun, head of the audit office, delivered the findings in a report (link in Chinese) to lawmakers on Thursday.

SPBs are a kind of local government debt that funds commercially viable infrastructure and public welfare projects, generally repaid with income generated from the specific projects they fund. Unlike “general bonds,” another kind of debt, they are usually not allowed to be repaid from government fiscal revenue.

The audit office attributed the idle funds to unreasonable project management and suspension of some projects. But some analysts say one key factor may be that local governments had trouble finding enough valuable infrastructure projects to invest in.
The good news is they invested it. The bad news is the government is pushing for more infrastructure in 2020.


Best Taco Bowl

I still hold some long-term calls, but I exited most of my short-term calls the week prior. I'm short-term bearish on the whole stock market and commodities. Would love to get a test in the $2.40 area.

Beijing Transforms For Coronavirus Fight

iFeng: “特殊时期”下的北京一周
A street in Fengtai was transformed into a checkpoint.


Beijing Testing 400,000 per Day, Bans Wedding Receptions

财新: 北京已核酸检测35.6万人 餐饮企业禁止办婚宴
About 356,000 people from Shi's staff and the staff of farmers' markets in the city conducted nucleic acid testing. "Today, we will complete the testing of 355,000 people involved in the epidemic-related market screened by big data, and the nucleic acid testing of people in key industries, key areas, and key regions is also underway."

...Zhang Qiang said that the average daily sampling is about 400,000 people, and the sampling capacity will be expanded in the next few days.

...Wang Hong, a second-level inspector of the Beijing Municipal Bureau of Commerce, introduced at the meeting that after the city’s emergency response level was adjusted, the commercial department requested that the prevention and control standards be adjusted according to the second-level response standards. Catering companies suspended activities such as wedding banquets and strictly implemented masks, Measures such as measuring body temperature and checking health treasure.
Caixin: Beijing Reimposes Restrictions Amid Resurgence of Virus
The city government ordered the closing of all schools, restricted interprovincial travel and expanded virus testing among people with higher risk of exposure. Residential compounds in areas with higher risks were locked down, according to the city government.

About 40% of flights in and out Beijing were canceled Tuesday while several interprovincial shuttle bus services were suspended, Caixin learned. Among 430 flights planned to take off from Beijing’s new Daxing International Airport Tuesday, about 260 were canceled, according to a person from the airport operator.

...The city applied different degrees of restrictions on people from different areas based on their risk level. Those from regions deemed highly risky will be banned from leaving the city or be required to take a nucleic test if they have to travel, according to the Beijing government.

...“Those who have contracted the virus should display symptoms in around two days, and if cases aren’t surging by then, it’s safe to say the outbreak has basically stabilized,” Wu said. There have been no clear signs of family clusters or cross-infection between patients, Wu said.


PBoC Worried About Housing Speculation

Unlike their American counterparts, Chinese central bankers are focused on the real economy.

iFeng: 意外,降息再度落空!释放了什么信号?
The interest rate cut fell through again.

On June 15, the central bank launched a 200 billion yuan MLF operation with an interest rate of 2.95%, which was previously 2.95%.

...A signal of concern is that the MLF interest rate remains unchanged, which means that this month's LPR rate cut may fall again.

...Another signal that deserves attention is this month: the expiry amount of "spicy powder" is as high as 740 billion yuan, while the one-time addition is only 200 billion yuan.

This shows that the central bank is withdrawing cash substantially.

The third signal of concern is that the bond market has plummeted recently, and even many banks have experienced rare losses in wealth management. This is also a signal behind the loosening of expectations.

Those familiar with the financial market know that the yield of government bonds is a bottom indicator of interest rates, while the yield of government bonds is inversely proportional to the price, and bond prices have fallen sharply, which means that bond yields have risen, which further indicates that interest rates may rise.

These three signals fully indicate that currency easing is not as expected. Why is this so?

...First, the economy is recovering, and the need for "big flood flooding" stimulus has diminished.

...Second, there is no shortage of money in the market. On the contrary, there is an endless stream of arbitrage impulses, and the phenomenon of illegal capital inflows into real estate is even more so.

...Third, there is a high probability that interest rates will continue to be cut this year, but the property market will still exist as an exception.

...Once the property market goes down, all kinds of loosening will endlessly. Once housing prices rise, property market regulation will follow. Regardless of whether the RRR cuts or interest rate cuts are focused on the real economy, there will be no rain or dew.
In other words, officials do not want to stimulate real estate, only the employment and wages. Policy will tighten if they believe they have achieved this goal, and they think they are on the right track.

Only yesterday, the market expected there would be no deviation from easing money. See: Speculative Excess Appears, But PBoC Committed to Accelerated Credit Creation


Speculative Excess Appears, But PBoC Committed to Accelerated Credit Creation

Chinese regulators will be playing an increasingly intense game of whack-a-mole as credit policy unleashes speculative activity.

iFeng: 防止资金空转套利“降息”迎来窗口期
The recent operation of the central bank's monetary policy fully embodies the "flexibility and moderation" feature. Since April, the interest rate of funds has fallen sharply and there have been "idling arbitrage" and other phenomena. In this regard, the regulatory authorities have required banks to "pressure-control prices" on structured deposits to block arbitrage channels. At the end of May, the rising interest rate of funds and the intensive issuance of government bonds led to the suspension of the reverse repurchase operation for nearly two months, and the short-term interest rate broke through the policy interest rate of the same period. Since the restart, as of now, the reverse repurchase operation has been "normalized". The central bank has carried out reverse repurchase operations for 7 trading days in the first two weeks of June.
Despite emerging symptoms of easy money, the central bank will not deviate:
Therefore, the direction of "broad currency" will not change, the previous constraints will be weakened, liquidity will continue to flow, and the MLF will be renewed when the large amount expires. On the 15th and even this week, will there be further easing measures for currency regulation? Important observation time.

China Industrial Production Increases 4.4pc in May

CNBS: 2020年5月份规模以上工业增加值增长4.4%
Autos, steel and cement are being produced in huge numbers to pull production higher.
Fixed asset investment is still down year-on-year, but is was up in the month of May as catch-up investments are made.
Real estate investment has almost completely recovered to prior year levels.
Sales remain depressed though.


SARS2 Outbreak Shuts Beijing Produce Supplier, Hoarding Surges

A warehouse that supplies 70 percent of Beijing's produce shut down following the recent SARS2 outbreak. Consumers are hoarding produce in anticipation of rising prices.

iFeng: 新发地休市,北京蔬菜涨价了?有必要囤菜吗?
The Beijing Xinfadi Market, located just outside the South Fourth Ring Road in Beijing, is the largest "vegetable basket" in the capital. Newly-grown vegetables account for about 70% of the city's total supply, pork accounts for about 10% of the city's total supply, and beef and mutton account for about 3% of the city's total supply.

...On June 13, the reporter visited a number of supermarkets in different areas of Beijing and found that the number of customers buying vegetables increased significantly over the past. Some vegetables were temporarily out of stock, but the overall supply was stable.

...On the afternoon of the 13th, the reporter found in a community supermarket in Xincun Street, Fengtai District, Beijing that the vegetable area was basically empty. Many residents were asking why the vegetables were not sold, and some were discussing to go to other supermarkets. The staff told reporters: "Because it's a weekend, more food is prepared than usual, and the price is the same as usual, but it has been robbed this morning."

...The reporter found in a good fruit and vegetable supermarket in Changping District that some vegetables such as potatoes and cauliflower had been sold out. The clerk told reporters, "Our vegetables are not from the new place of origin, but are directly supplied from the place of origin. I did not expect that the new place will be closed for the market, so some vegetables are not so stocked. There are many more people who come to buy vegetables today, so Vegetables like potatoes are temporarily sold out, but they will be available tomorrow morning."

...A convenient vegetable market in Xicheng District, Beijing, the variety of vegetables is still abundant, and the price is slightly higher than the early morning of the 13th, such as potatoes rose from 2.3 yuan / kg to 3.0 yuan / kg.

The street vendor said that since the morning of the 13th, some citizens have purchased vegetables in large quantities. Her dishes are wholesale from the Yuegezhuang market. Yuegezhuang's vegetable prices and types have not changed significantly this morning, but the impact is expected to be greater tomorrow.

...In addition, Beijing has strengthened the “point-to-point” monitoring and replenishment of the supply of daily necessities in 7 primary wholesale markets, 22 large chain supermarkets, convenience stores, and secondary markets and non-chain stores. The full coverage of supply, replenishment, and monitoring of daily necessities such as meat, vegetables, eggs, and milk in retail stores ensures adequate supply and stable prices.

Wang Hongcun expressed his support for other wholesale markets to increase their cargo adjustment efforts and increase trading venues to ensure the normal supply of daily necessities, especially vegetables and fruits.

At the same time, catering enterprises and government organizations are encouraged to purchase supplies from wholesale markets such as Dayang Road, Yuegezhuang, Shuitun, large chain supermarkets or surrounding community markets during the temporary closure of Xinfadi.

...Li Yanchuan, chairman of the supermarket, told the media that most fruits and vegetables in supermarkets are directly harvested from the place of origin. Therefore, after the new place is closed, it will not have much impact on the supermarkets, and the supermarket stores have made emergency with upstream suppliers. Ready for transfer.

The relevant person in charge of Carrefour said that the fruits and vegetables in the store are mainly produced directly from the origin, and are not affected by the market closure of the new place. At present, the supply of goods is sufficient and the price is stable.

Wumei Group spokesman Xu Lina also said that Wumei pork, beef and mutton, and fresh vegetable commodities are sourced directly from the place of origin. In addition, all Wumart stores have made preparations for all kinds of people's livelihood commodities, anti-epidemic materials and emergency transfers.

Huaguan Supermarket said that pork, beef and mutton, and fresh vegetable products are mainly supplied directly from the origin and directly from the base. It has not been affected by the closure of the new place, and the current stock has increased to 3 times the usual amount. "The frequency of delivery of fresh vegetables and fruits has been temporarily increased from 1 to 2 to 3 times a day, and it can be supplemented as needed to ensure a sufficient inventory of goods in stores."


Tea Leaves

China Will Regulate Bank Withdrawals Above 100,000 Yuan

Xinhua: China to pilot regulations on large cash transactions
China has designated three pilot areas to regulate cash transactions in large amounts amid efforts to strengthen cash circulation management and curb illegal activities, the central bank said.

Hebei Province will start the two-year pilot program in July, while Zhejiang Province and the city of Shenzhen will start the experiment in October, according to a plan released by the People's Bank of China.

All three pilot areas will regulate cash transactions of 500,000 yuan (about 70,600 U.S. dollars) or above for business accounts. For personal accounts, Hebei, Zhejiang and Shenzhen have set the thresholds of regulation at 100,000 yuan, 300,000 yuan and 200,000 yuan, respectively.
This coincides with a crackdown on Bitcoin.

ATimes: China freezes crypto traders’ bank accounts
Several thousand bank accounts belonging to cryptocurrency traders have reportedly been frozen by Chinese police as a result of an extensive crackdown on illicit activities, Bitcoin.com reported.

The police in China’s Guangdong province have been freezing bank accounts of over-the-counter (OTC) cryptocurrency buyers and sellers in the country. Chinese publication 8btc reported on Monday that about 4,000 such bank accounts have been frozen since June 4 on the suspicion of being involved in illicit activities, including money laundering.
Evading capital controls.

China has been boosting its trade surplus for a reason. Money creation was turned up in the wake of the coronavirus pandemic. Ignoring any other changes, a rise in money and credit supply will increase pressure on reserves as the "permanent" demand for overseas assets has more capital to work with. However, it is also likely the official policy of money creation increased the demand for foreign currency and foreign assets.

iFeng: “大款”有变!个人存取10万以上或须登记,日常用现金会受影响吗?
The regulation of large amounts of cash this time is mainly to combat crimes and maintain national economic and financial security. Because cash is anonymous and untraceable, large amounts of cash are easy to facilitate corruption, tax evasion and other money laundering crimes and underground economic activities, which may endanger the national economic and financial order and security.

In 2017, the People's Bank of China conducted a survey and found that there was a single withdrawal of more than 100 million yuan in cash. In today's environment where bank card payments and bank transfers are very convenient, this situation is not reasonable.

The person in charge of the central bank said that in recent years, the demand for cash, especially large amounts of cash , has been on the rise. At the same time, my country's large-scale cash flow monitoring and management is still blank, and it has not adapted to the needs of my country's market economy development and social governance.

According to the incomplete statistics and investigation and demonstration of the People's Bank of China in 2017, the proportion of individual transactions exceeding 100,000 yuan in the cash deposit and withdrawal business of banking financial institutions in individual regions accounts for less than 1%, but the amount is close to 27%.

Robinhood Buyers Pour Into Fraud Stocks Amid Thursday Market Carnage

Robinhood traders were undeterred by the pullback in stocks on Thursday.

Wins Finance holdings (WINS) has seen spectacular runs in the past and it happened again on Thursday.
Robinhood customers were buying on the way up. Unfortunately, it is down about 40 percent in pre-market.
WINS has been in the news before. See: Chinese Finance on the Nasdaq

I've seen a number of Chinese stocks soar in recent days, including JFIN and DUO. Who is running these pump and dump schemes?