Home > May 2017 > May 9,2017 China Continues to Slow..the Theme of 2017

May 9,2017 China Continues to Slow..the Theme of 2017

Over the weekend China released it’s trade data and it missed across the board due to a lack of demand in commodities. Tonight China released a story on how they will be cracking down more on State Owned Companies making investments overseas, (they are seeing alot of fraud around it). On Monday the Euro finally sold off vs the USD. It was sort of weird on Friday when the USD actually sold off on the NFP beat, but Monday it finally acted the way it should. THe Shanghai Futures continue to have Copper and the other metals weaker. Futures are Flat after a weaker Asian Session. I am amazed we aren’t selling off hard?? I guess everyone is holding up the market while they borrow stock to short?

May 2017

  • Trading_Nymph

    More color on the Chinese Crackdown, from Shanghai Daily…CHINESE authorities will introduce an improved, rigorous system of auditing overseas investment by state-owned companies as the pressure of cross-border capital flow remains.

    The auditing system focuses on decision-making by state-owned companies on overseas investment and joint ventures, and their financial management and internal control, in addition to capital security, operating benefits and risk control of overseas state-owned assets.

    Major methods of auditing include domestic inspection, auditing and analysis of documents and inquiries into relevant parties.

    If necessary, regulators will go overseas for on-site verification and evidence collection in accordance with international practices and laws of the countries in which state-owned companies invest.

    Outbound investment has grown rapidly in recent years and played an important role in deepening mutually beneficial cooperation between China and other countries as well as promoting domestic economic restructuring.

    However, irrational speculation, illegal transfer of assets, and fake transactions all disrupt China’s foreign exchange and financial markets, causing state-owned asset losses and hurting national interests.

    A recent report released by China’s foreign exchange regulator unveiled some cases in which companies had illegally transferred assets overseas under the guise of outbound investment.

    Some newly established firms, which had produced nothing, were providing large sums of outbound investment. Some heavily indebted companies borrowed more to acquire companies overseas. These are just a few of the examples listed by the State Administration of Foreign Exchange.

    Risks are inherent in any investment and cannot be avoided. Given growth in overseas state-owned assets, regulation of those assets has been a new challenge facing Chinese authorities.

    In support of the country’s “going out” strategy for investment, businesses of state-owned companies, especially centrally administered ones, have expanded to more than 150 countries and regions with over five trillion yuan (about 725 billion U.S. dollars) in overseas assets, earning global fame for high-speed train, nuclear power and ultra high voltage projects.

    Compared to foreign multinational giants, Chinese state-owned companies lack experience in overseas operations and risk control.

    With more companies “going out,” China’s overseas investment has been exposed to complicated problems in culture, human resources and corporate management. Some enterprises have paid high prices for those problems.

    “The first step is to roll out measures to regulate overseas investment, the second is to stipulate company operations strictly, and the third is to develop a system of accountability,” said Xiao Yaqing, head of the State-owned Assets Supervision and Administration Commission (SASAC).

    Noting an irrational tendency in outbound investment, Chinese authorities have set stricter rules and advised companies to make their investment decisions more carefully.

    Since the beginning of 2017, SASAC has introduced negative lists and designated investment redlines for both domestic and overseas investment by state-owned companies.

    “There is no doubt that a more comprehensive and stringent auditing system will help standardize China’s overseas investment and contribute to maintaining and increasing the value of state-owned assets,” said Li Jin, chief researcher with the China Enterprise Research Institute.

    China’s outbound direct investment fell by 64 percent year on year to reach 20.9 billion U.S. dollars in the first quarter, thanks to increasingly rational market players and guidance by relevant government departments.

    Last year, the country’s outbound direct investment surged over 40 percent from a year earlier, the result of an increasingly globalized Chinese economy and also stemming from some irrational or illegal acts.

  • panther341

    Hi TN – haven’t had much to say so …. not hiding under covers. At least not hiding from market. Recovering from last storm damage – another storm due through today.

  • panther341

    full moon. I am a believer that things can get weirder around the full moon.

    In the meantime: oil. https://www.bloomberg.com/news/articles/2017-05-09/top-oil-trader-warns-shaky-demand-risks-scuppering-opec-mission

  • Trading_Nymph

    there are traders out there that REALLY focused in on the Moon and their cycles. I think I have even seen a few books on it lol

  • Trading_Nymph

    Hi Panther, Ouch Stay Dry…it really is such a strange market. It should sell off really hard but EVERYONE is still out there buying the dip. I have been watching and learning how to build a Brick Mail Box, lol..It is for sure not your typical Mail Box…

  • Trading_Nymph

    I will post EIA full report later, they always wait till 1 to post it. Surprise Draw down.

  • Trading_Nymph

    CHina last night indicate they would add liquidity. SHanghai FUtures were just a little bit up over it, nothing big. Aussie and Kiwi are doing a relief rally but that should be given back once Asia opens up…China is slowing.

  • panther341

    you and I aren’t buying the dips! LOL I have been selling puts – but only in NFLX and AAPL.

  • panther341

    WFM – I have known this store since it was just one little store here in Austin. In the last month there has been a great disturbance in the force – as they say in other arenas. I am clueless where they are headed – apparently a new chairman and half the board. Plus you have activist investors involved and several suitors.

    2 weeks ago I went in to buy about 6 things, and 2 were no longer in the store. They had NO buckwheat flour anywhere in the store including in the bulk bins. They had one buckwheat pancake mix which they tried to sell me whose first ingredient is whole wheat! So much for gluten free! Plus years ago when I first went on an allergy elimination diet and couldn’t eat much but rice and tapioca and baked or boiled potatoes- I got hooked on tapioca – made with rice milk or almond milk or whatever. I still eat tapioca probly more than I should. So I am looking for the tapioca. They have NONE. No more. The guy in customer service said “we sell alot of that – I wonder why we don’t carry it any more?”

    Anyway they reported earnings tonight. There are alot of rumors that any one of 3 or 4 different people might buy them out and …. I found organic buckwheat on sale somewhere else, and also tapioca.

    It used to be fun and a not so corporate place. Now it is just corporate and a mess at that. Maybe new leadership and ownership would improve things!

  • panther341

    Kohl’s and Macy’s earnings were both this morning and both worse than expected – and expectations were low. retail is in trouble. http://www.marketwatch.com/story/macys-stock-swoons-12-after-profit-sales-miss-2017-05-11

    The AMZN buying Sears rumor has been around at least 3 years. http://www.businessinsider.com/amazon-should-acquire-sears-2014-4 Sears has more real estate than stores – that is an old model from World War 2 or earlier. If AMZN is trying to locate warehouses or even brick and mortar of any type – real estate is a factor.

    Another rumor has AMZN – and others – after WFM. LOL
    https://www.bloomberg.com/news/articles/2017-04-11/amazon-said-to-mull-bid-for-whole-foods-before-jana-stepped-in

    Somehow I think AMZN is smarter than that. LOL

  • panther341

    Macy’s bad earnings reflected in rest of retail. Nordstroms reports tonight after the close, down 7% last I checked – ahead of earnings!

  • panther341

    Macy’s 6 year low. Ouch.