China Prepares For Trade War With Trump

Having warned U.S. President-elect Donald Trump yesterday, through Chinese state media, that he’ll be met with "big sticks" if he tries to ignite a trade war or further strain ties, China’s central government has reportedly "compiled possible countermeasures" against "well-known U.S. companies or ones that have large Chinese operations."

As Bloomberg reports, China is prepared to step up its scrutiny of U.S. companies in the event President-elect Donald Trump takes punitive measures against Chinese goods and triggers a trade war between the world’s two biggest economies after he takes office, according to people familiar with the matter.

The options include subjecting well-known U.S. companies or ones that have large Chinese operations to tax or antitrust probes, the people said, asking not to be identified because the matter isn’t public. Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of American products, according to the people.

The move illustrates how the fallout from escalating tensions between the two nations could spread to companies. Trump has made China a frequent target of his attacks and nominated trade-related officials that the Communist Party’s Global Times newspaper said would form an "iron curtain" of protectionism.

While specific details of China’s options weren’t immediately clear, the retaliatory measures could affect companies related to agriculture, pharmaceuticals, technology and consumer industries, according to the people.

China’s central government compiled the possible countermeasures after collecting opinions from various departments, the people said. The punitive steps would only be carried out if the U.S. acts first and after senior Chinese leaders sign off on them, they said.

Representatives at China’s Ministry of Commerce, National Development and Reform Commission, State Administration of Taxation and General Administration of Customs either didn’t respond or couldn’t immediately comment to Bloomberg queries.

Representatives at Trump’s transition team didn’t respond to a request for comment.

Today's comments were much more directly aimed than yesterday's more prosaic langauge...

"There are flowers around the gate of China’s Ministry of Commerce, but there are also big sticks hidden inside the door -- they both await Americans," the Communist Party’s Global Times newspaper wrote in an editorial Thursday in response to Trump’s plans to nominate lawyer Robert Lighthizer, who has criticized Beijing’s trade practices, as U.S. trade representative.

For now China appears to have fallen off Trump's radar (as maybe he is letting them blow themselves up with massive spikes in Yuan and overnight depoist rates as liquidity freezes), and instead over the past few days the president-elect has been focusing on the ongoing Russian hacking fiasco, crashing the Mexican peso, and slamming "head clown" Chuck Schumer for the mess that is Obamacare.

Fonte: qui

P.S.: potete usare la funzione TRANSLATE di Google(sulla colonna di destra), selezionando prima un qualsiasi linguaggio e poi successivamente, l'italiano, per avere la traduzione automatica.

Global Debt Sales Hit A Record $6.6 Trillion In 2016

Earlier in 2016, the US Investment Grade bond market passed an key milestone when some time around August, the total amount of high grade debt outstanding hit $6 trillion, tripling from $2 trillion at the time of the financial crisis. Most, if not all, of the new funding was used to buyback stock. 

And now, as we come to the end of 2016, another $6 trillion number makes a dramatic appearance, this time in a slightly different metric: according to Dealogic, global debt sales hit a record in 2016, led by corporations rushing to load up on cheap borrowing costs, now threatened by Trump’s vague policies to boost the US economy. As the FT reported, courtesy of record low rates throughout most of 2016, overall debt issuance in the year rose to just over $6.6 trillion, breaking the previous annual record set in 2006.Corporates “took advantage of low rates,” said Monica Erickson, portfolio manager with DoubleLine Capital. “The cost of capital is low so it makes sense for them to come to market.” Companies accounted for more than half of the $6.62 trillion of debt issued, underlining the extent to which negative interest-rate policies adopted by the European Central Bank and the Bank of Japan encouraged the corporate world to increase its leverage. The problem: rates are now rising rapidly.

Corporate bond sales - both investment grade and junk - climbed 8% year on year to $3.6tn, led by blockbuster $10bn-plus deals to finance large mergers and acquisitions.

The remaining debt included sovereign bonds sold through bank syndication, US and international agencies, mortgage-backed securities and covered bonds. The figures exclude sovereign debt sold at regular auction.

However, the annual bond issuance record may remain untouched for a while: the recent Trumpflation rally has accelerated the move higher in interest rates that some investors fear will make debt burdens harder to bear in 2017. It will certainly make new issuance more expensive for corporate Treasurers and CFOs.

Cited by the FT, Pimco's Scott Mather said that “the low cost of financing with record-low interest rates simply made building up leverage tempting. This happens every economic cycle, but what makes this one special is the added incentive to issue debt at very low interest rates. It sows the seeds of the next downturn or the next credit event.”

As the following chart shows, eight of the 10 largest bond sales underwritten by banks this year were from companies, including offerings from brewer Anheuser-Busch InBev, PC manufacturer Dell and Microsoft.

To be sure, 2016 was a "special" year with the universe of negative-yielding bonds touching $14tn at one point, forcing asset managers to "stomach lower returns."

It wasn't just corporations, however, rushing to load up on debt: the year’s debt sales were buoyed by China and Japan-based issuers, up 23 and 30 per cent respectively, from a year earlier.

Investors say they expect 2016 is likely to prove a high-water mark for debt issuance in this cycle, with the Fed forecast to raise rates further and question marks growing over the future of bond-buying programs from the BoJ and the ECB.

For a world drowning in debt, where by some estimates total debt/GDP is now around 225% (after clocking in at 199% in Q2 2014 per "that" McKinsey study)...

... any slowdown in debt issuance, or any roadblocks to the rolling over of tens of trillions in short-term debt, could prove calamitous. which is also why many market watchers are convinced that after a spike in yields in the next few months, fears of the next recession will sent yields to even lower, all time lows.

Fonte: qui

P.S.: potete usare la funzione TRANSLATE di Google(sulla colonna di destra), selezionando prima un qualsiasi linguaggio e poi successivamente, l'italiano, per avere la traduzione automatica.