In the aftermath of this weekend's disappointing G-20 summit in Shanghai in which the much anticipated "grand Chinese devaluation" was not only not discussed, but any abrupt devaluation was taken off the table (if only for the time being), the market has shifted its attention to the next big policy event, which is the March 10 ECB announcement where much more easing is already priced in.
Submitted by David Stockman via Contra Corner blog,
The Red Chip casino took another one of its patented 6.5% belly flops this week. In fact, more than 1,300 stocks in Shanghai and Shenzhen fell by 10% - the maximum drop permitted by regulators in one day - implying that the real decline was far deeper.
Over the weekend, we presented what according to Bank of America was perhaps the last remaining bullish catalyst for a big market move higher when Bank of America's Michael Hartnett said that "we remain sellers into strength in coming weeks/months of risk assets at least until a coordinated and aggressive global policy response (e.g. Shanghai Accord) begins to reverse the deterioration in global profit expectations and credit conditions."