The most important event in China in five years is about to take place, and Beijing isn't taking any chances.
Ahead of the Communist Party’s twice-a-decade congress - an event so massive that according to Bloomberg "nothing escapes its pull" - which is slated to start on October 18 in Beijing, regulators have made it clear to the nation’s top brokers, bankers and financiers that they don’t want to see any major turbulence in markets.
S&P futures are slightly lower (ES -0.1%) as traders paid little attention to the latest missile test by North Korea on Friday, with shares and other risk assets barely moving, gold lower and focus rapidly returning to when and where interest rates will go up. Most global market are mostly unfazed, and the Korean Kospi actually closed up 0.4%, by the latest geopolitical escalation after a North Korean ballistic missile flew far enough to put the U.S. territory of Guam in range. European stocks edged fractionally lower while Asian shares advanced.
Global stocks backed off from all time highs, and S&P futures are unchanged ahead of the much anticipated US CPI report, which is expected to break a streak of five consecutive misses, while eyeing disappointing overnight Chinese economic data which missed across the board. European stocks and Asian markets were also modestly in the red, with the relentless global rally to new daily record highs taking a breather amid some concerns China's economy is rolling over, which weighed on commodities including base metals, which in turned dragged down mining stocks.
For the first day in three S&P futures have pulled back modestly from record levels as some investors cautioned that gains had gone too far, too fast, European shares are mixed while Asian equities extended their longest rising streak in almost two months as continued gains in Japan and India offset the losses in Hong Kong. The dollar ended a two-day advance as TSY yields dropped in what has become a close correlation trade (see below) while oil and gold rose, perhaps in response to the ongoing plunge in bitcoin.
Pretty soon, China bears will be as rare as the Giant Panda.
At least that’s what Bloomberg suggested in a story about how Chinese markets have continued to defy proclamations that country’s economy would soon collapse in an avalanche of bad debt, exposing rampant corporate fraud. Or that a rash of outflows and the pressure of short sellers would force a massive yuan devaluation. Or that the exposure of rampant fraud and abuse in its corporate sector would tank local markets, which rely heavily on shady investment products.