China

Authored by Daniel Lang via SHTFplan.com,

One day after yesterday's at times painfully uncomfortable first official meeting between Angela Merkel and Donald Trump, it will hardly come as a surprise that during today's G-20 meeting in Baden Baden, Germany- the first for the Trump administration, whose delegation is led by Treasury Secretary Steven Mnuchin - where the dominant topic is trade, and specifically globalization vs protectionism, that a row would break out over how the post-Trump world will deal with trade.

A couple of research reports released overnight by Deutsche Bank and Bank of America, respectively, come to a sobering conclusion: the fate of the global economy may be in the hands of the Chinese housing bubble. As a reminder, China is a serial bubble inflator courtesy of a closed (capital account) economy, and nearly $30 trillion in bank deposits which slosh from one asset class to another, be it the stock market, bitcoin, commodities, farm animals or - most often - housing.

As we reported on Wednesday evening, something interesting took place on Thursday morning in Beijing: in a case of eerie coordination, China tightened monetary conditions across many of the PBOC's liquidity-providing conduits just 10 hours after the Fed raised its own interest rate by 0.25% for only the third time in a decade.

It is fitting that just a few hours until the Fed's second rate hike in two quarters, and one day after Goldman downgraded global stocks to Neutral for the next 3 months, not to mention with the results of the anticipated Dutch election due shortly, that global stocks as well as S&P futures are higher, while crude oil has finally managed to stage a rebound as the Dollar DXY index is fractionally in the red.