China’s central bank and other regulators announced a slew of targeted measures aimed at helping companies, banks and individuals hurt by the viral pneumonia outbreak. The central bank will supply 1.2 trillion yuan ($174 billion) to money markets on Monday, according to a statement on Sunday. The money will be supplied using reverse repurchase agreements to ensure liquidity is “reasonably ample” during the outbreak, according to the People’s Bank of China announcement, which did not say the tenor of the agreements. That announcement follows a a joint statement with other ministries and financial regulators on Saturday, which promised to use open market operations, the standing lending facility and other tools to ensure interbank liquidity is sufficient to keep money market rates stable The PBOC urged banks to increase lending to the whole economy, and said it will give banks 300 billion yuan in relending to help them provide more money to a list of affected companies. Banks were told they shouldn’t withdraw loans from firms affected by the virus, especially from smaller ones. Banks should also consider rolling over loans or cutting interest rates to help affected companies, and regulators will allow those firms to delay reporting their results for 2019 and the first quarter of 2020. Lending Boost The new measures follow the announcement last week that China’s biggest banks will lower interest rates for firms in Hubei, the center of the outbreak. In the Saturday statement, financial institutions were told to maintain the pace of overall credit expansion and continue to lower borrowing costs across China, especially to manufacturers, and to small and private firms. The PBOC will “keep close contact with financial institutions and financial markets to stay fully on top of the liquidity situation and demand,” PBOC Deputy Governor Pan Gongsheng said in an Q&A with the bank’s newspaper, Financial News, which was released at the same time as the announcement. The PBOC will “release policy information in a timely manner and guide market expectations,” he said. Pan also said the central bank will temporarily waive the cap for foreign exchange settlement for companies in need, as long as it’s for reasons related to the virus. The central bank will be less strict in its checks on banks’ required reserves at the end of January, and will facilitate companies’ use of foreign exchange to ensure that offshore borrowing isn’t impacted and goods needed to battle the virus can be imported without problems. https://www.bloomberg.com/news/arti...idity-amid-coronavirus-outbreak?sref=61mHmpU4 They are copying the FED - just do it more boldly than the rookies at the NY FED....!
Yep ...just what I thought. Print more money and more money... More money printing in china and everywhere else. If the markets continue their drop here next week, the fed will do an emergency rate cut of .25 basis points and flood the market with more trillions of dollars.
Crazy. Markets drop 2-3% off of all-time highs, and people are already looking for the next rate cut. Sunday night opening might be amusing.... the effect of the virus spreading vs. the Chinese money-pump insertion. (And of course Powell has already stated that if the virus causes a slowdown-recession, the Fed will jump in with their own "cuttin'-and-pumpin'.") I just wonder if the virus causes enough economic slowdown that the CB's interventions become seen as ineffective. Then what? There are pics of cities in China under quarantine where the stores, shops, streets, subways, et al are all empty like ghost towns. How much good will money pumping do to reverse that scenario? The Black Plague took about 4 years to run its course through Europe. Is the coronovirus spread going to take even half that long... or what if just 6 months? I dunno.
That is how you run a planet. How about the precision and slippage factor? Bolstering an economy when it is actually needed should mitigate the DOW dropping further. Akuma
Tonight and tomorrow is a total guessing game on where markets are headed. On one hand new confirmed cases have been announced and still no slow down to any extent on the transmission, and on the second hand with the announcement of China central banks injecting hundreds of billions of dollars it could be an up or down 2% kinda day tomorrow. I'm thinking futures drop hard, markets open red and then grind higher making up for fridays huge losses.
You hit the nail on the head. The Fed has effectively spoiled the market. The market has become the biggest crybaby, or rather an entitlement whore. It believes its's entitled to a rate cut.
I agree, but we've all known this for years. The progression from the 2008 bailout vote thru QE1, QE2, QE3, the Yellen flip-flop, the Powell flip-flop, now Repo-gate. It's moral hazard to the nth degree. Each crisis requires an exponential leap forward in "liquidity provisions" to keep the system afloat.
I will say that AMZN up 8-10% on Friday with the NQ being sold ugly the whole way down was very spring 2000 to me. If you remember back 20 years ago there was a point when Nasdaq was going full bore parabolic with dow basically flatlining. These recent dislocations last week with Tesla and Amazon were out there.