Business

China have suspended their banks from the Foreign Exchange markets and ordered them to stop buying U.S. Dollars.  China’s foreign exchange regulator has ordered bank’s to limit the purchases of U.S. dollars for at least one month in an attempt to stem capital outflows. Superstation95.com reports: The move comes as China reported its biggest annual drop in foreign exchange reserves on record in 2015, while the central bank has allowed a sharp slide in the Yuan currency to multi-year lows, raising fears of more capital flight.

"Our balance sheet - the strongest in recent history - represents a significant advantage as we continue to identify high value growth opportunities across the products and geographies we operate in. Maintaining our investment grade rating with the international rating agencies is a vital part of this strategy."

      - Noble Group 2014 Annual Report, p. 27

      * * * * *

In late 2014 and early 2015, we tried to warn anyone who cared to listen time and time and time again that crashing crude prices are unambiguously bad for the economy and the market, contrary to what every Keynesian hack, tenured economist, Larry Kudlow and, naturally, central banker repeated - like a broken - record day after day: that the glorious benefits of the "gas savings tax cut" would unveil themselves any minute now, and unleash a new golden ago economic prosperity and push the US economy into 3%+ growth.

Submitted by Pater Tenebrarum via Acting-Man.com,

Portugal’s Rickety Banking System

After the unseemly bankruptcy of the Espirito Santo Group and the associated bank, then Portugal’s second biggest (likely a result of not praying enough, see: “Big Portuguese Bank Gets Into Trouble” and “Fears Over Banco Espirito Santo Escalate” for the gory details), Portugal’s state-run deposit insurance fund basically ran out of money.

As we have reported on numerous prior occasions, the biggest marginal buyer of stocks in both 2014 and 2015 (and forecast to remain in 2016), are corporations themselves, using debt-funded buybacks to push their stocks to record highs, allowing the smart money to sell in record amounts.

But what happens when companies are so levered that they can't possibly afford to issue any more debt, virtually all of which has been used to repurchase stocks, as we have shown before...