Posted on 01/28/2021 6:07:45 PM PST by MtnClimber
(Note: David Goldman AKA Spengler)
American equity investors cut and run in response to an action by the People’s Bank of China.
NEW YORK – A 3% plunge in the S&P 500 isn’t frequent. We have had just 24 trading days this bad during the past seven years. It’s noteworthy that it occurred on a day when the US Federal Reserve took pains to declare that it would support the market with security purchases for the indefinite future, and on which no important data was released.
Greed overwhelmed fear, moreover, in parts of the market; market professionals watched drop-jawed as day traders more than doubled the price of a moth-eaten video game retailer, Gamestop, during the Thursday session. A $3.5-billion hedge fund, Maplelane Capital, lost a third of its value shorting Gamestop in January.
What happened was a literal illustration of chaos theory, namely the proverbial butterfly that flapped its wings in Beijing and caused a hurricane in the Caribbean. The Beijing butterfly in this case was the People’s Bank of China (PBOC), which pushed up the benchmark 7-day repo rate to 3.1% from 2.5% on January 25, a significant tightening that was mirrored in banks’ cost of funding.
Hong Kong stocks and European stock futures dropped immediately, followed by S&P futures (the subsequent drop in the S&P during the Wednesday New York trading session isn’t shown on the chart).
It may seem crazy for European and US equity investors to cut and run in response to an action by the People’s Bank of China, whose provision of liquidity has no direct impact on Western money markets. That’s what the intraday numbers suggest, however.
China and the CCP is positioning Western Civilization right where they want us.
Well a butterfly can be pretty effective on some agility carries.
No worries, Slow Joe Xiden is at the helm!
China and the CCP and the Dem's
Or you could say an America-Hating, Normal-Hating, Business-Hating Communist was installed as POTUS.
And coincidence is NEVER possible. It HAS to be causal.
This reminds me of something my great grandfather, a somewhat sad but truly wise old man, told me.
A long time ago, he woke up early in the morning in terrible pain, thinking he was having a heart attack.
The good news was it turned out to be gas.
The bad news, however, was that upon the sudden and terrible release of that gas, the city of San Franciso fell into ruin.
This was about 1906.
He never forgave himself.
No kidding.
Bkmk
With a lot of help from Biden.
“the butterfly’s gone, man”
no one here will know what that is from but i thought of it when I saw this title and laughed
The range on the left axis is +/- 2%. Within that the S&P varied within about a half a percent, not sure what that downward dash at the end of the chart is.
Doesn’t seem like the correlation between stoxx whatever that is and the Chinese repo rate whatever that is, is real tight since one move appears inversely correlated, yet a similar change appears to have zero correlation.
Critical thinking appears to be lacking...
“A butterfly flaps its wings in Beijing and the stock market crashes”
And the next day reverses itself. The market is so frothy that even the sligh[st negative news will send it diving.
It’s not for people with weak stomachs, or get rich quick schemes... especially now.
The Bidens will see to that.
Sleepy Joe was not asleep.
The American people were.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.