FINTS

2016-09-27

Saudi Bleeding Dollars

Be it China or Saudi Arabia or Deutsche Bank. they are all running into problems that can trace back to the U.S. dollar.

Jeffrey Snider at Alhambra: The Dollar Perspective Matters
The Kingdom’s problem is withdrawal, as in dollars not riyals. The Interbank Offered Rate surged to its highest in seven years last week, as the government prepares to borrow under extraordinary circumstances. The placement of that debt offering is telling; it is to be a $10 billion or so Eurobond flotation. In the mainstream, Saudi Arabia’s problems are pitched as oil prices, and thus quite understandable as being their own.

When the TIC figures were updated for July, even the media began to notice that central banks including Saudi Arabia had been selling consistently for some time. In this Bloomberg article, the authors cite this trend as a risk to UST prices as perhaps another sign that “rates have nowhere to go but up”; a cliché that has been constantly deployed since 2011 and has yet to be done so appropriately.
Selling is happening in a buyers market as demand for low risk assets is high. Rates will have nowhere to go but up once the cycle bottoms and investors have better opportunities.
The same can be said of Saudi Arabia, China, and the primary dealers who are not holding bonds as their sacred American duty but hoarding collateral in a repo system that is increasingly unstable. The mainstream is going to great lengths to avoid putting the words “dollar” and “shortage” together because orthodox ideology means that cannot possibly be the case. Therefore, every financial problem around the world that can be otherwise easily distilled by just recognizing the “dollar shortage” is instead chopped up and isolated as if individual anomalies of idiosyncratic circumstances.

It’s Not Really About Deutsche Bank

As has been the typical mainstream reaction, Deutsche Bank is being written about right now in a vacuum as if the actions and behavior (and losses) of last year were left only to last year. When global illiquidity first popped up (again) in the second half of 2014, it was regarded in the same way – a series of purportedly random, unrelated events. They had to be strung together in a benign chain of distinct actions because convention still holds QE to be money printing. Ditching that convention has the effect of connecting all these dots as a logical and ongoing progression of a “rising dollar” that is really a euphemism for “dollar shortage.”

And it really doesn’t take too many dots to connect. This isn’t to say that Deutsche Bank is in danger of a wholesale liquidity run, only that the bank is perhaps far closer to it than anyone in the mainstream will ever admit. As I wrote last year, it really isn’t even about Deutsche Bank.

2016-09-26

Ping Pong Policy: Bubble to Crash to Bubble

Only four years ago China was worried about overheating housing markets. Then it was worried about a crash. Now it's back to overheating.

China Daily: Nanjing further tightens control on property market
Nanjing, capital of East China's Jiangsu province, adopted new rules restricting home purchases in a bid to cool the red-hot housing market on Sunday, according to a report by Shanghai Securities Daily.

The rules, effective on Monday, symbolize a restart of restrictive policies that were scrapped two years ago.

...Nanjing adopted the most stringent regulations on the property market in February 19, 2011, restraining local residents from buying more than two houses and allowing non-local residents with one full-year social security and tax payment to buy only one house.

Home sales and prices plummeted following the initial adoption of the regulations, but picked up later as people found ways, such as fake divorces or forging social security certificates, to bypass the restraints. In mid-2014, housing prices fell again as banks tightened mortgage loans. The local government then removed regulations on September 22, 2014. Since then, the property market has warmed up and the frenzy has continued.
Early 2014 credit slows and mortgages tightened. Months later buying restrictions lifted as the government panics amid housing slowdown. Two years later the bubble is is back and so are the buying restrictions...
Caijing: 时隔两年 南京楼市重启限购措施

Financial Markets in One Minute

Debate Night: State of the Race

The market shifted in favor of Clinton and Republican House/Democrat Senate ahead of tonight's debate.

2016-09-25

Zhengzhou Housing Title Transfer Backlog

Zhengzhou has only processed 42 titles in the past 28 days, creating a backlog of 5174 sales. Existing home buyers are in a state of panic. Some buyers made high interest loans in the expectation of having a mortgage-able property and are struck paying high interest:
"Real estate is now completely 'frozen', and do the real estate titles stuck, and I now have to repay nearly 50,000 yuan in high-interest monthly." Zhengzhou Ms Zhou said, since the seller was urgent need of money, she borrowed high-interest loans to pay the full amount of 1.8 million yuan, the thought that after the completion of the transaction she can mortgage the house, with a bank loan to repay high-interest loans, but now they could not complete the registration of real estate, cannot get title to the real estate, banks are not lending. "I signed a contract in May, in August changed residence, the Housing Authority has deeded, before you could get the title in seven days band get a mortgage. But now two months, the title isn't done, I am almost frantic." Zhou said.
iFeng: 某城市28天仅发42份产权证 引发购房者恐慌

Shenzhen Birdcage Apartments Sell in Half a Day

"Birdcage" apartments with an area of 6 square meters sold for 150,000 yuan per square meter this weekend. The rooms are in a building built as a hotel on Shahe East Road, in the Nanshan District. A common kitchen area and bathroom is available.

iFeng: 深圳9套6m²“鸽笼房”半日售罄 均价每平15万(图)

Hangzhou Housing Frenzy

Surveillance camera caught the shocking moment a new real estate in east China's Hangzhou city open for sale on September 24. The spree was prompted by the new restrictions on Monday which prevent people born outside Hangzhou from buying more than one property.

The said real estate was sold out in a mere couple of hours, according to reports from local media.
People's Daily: Chinese housing market frenzy: shocking scene at the opening of a new real estate in Hangzhou

2016-09-24

China Merchants Branch in Shanghai Launches Home Equity Loans

A branch of China Merchants Bank in Shanghai has launched a product characterized as similar to "American subprime" by critics: home equity loans for consumer or business uses. Homeowners need not have paid off their existing mortgage to qualify for a home equity loan. The largest and longest terms for the loan is 20 million yuan for 20 years, clearly marking it as a product aimed at office workers and small property owners.

Similar products may not spread across China due to local regulation. Beijing passed a law in 2014 restricting consumer loans to 1 million yuan over 10 years.

iFeng: 招行分行推 “有房就贷”产品 专家:似美国次贷危机