Via GEFIRA,
The world’s third largest economy has an aging and shrinking population and will simply disappear. The low fertility is not unique to Japan. The same problem besets Taiwan, China and Korea as well as the United States and Europe. In the West the establishment has opted for population replacement.
One lesson from the 2007-08 crisis was that the vast majority of financial market participants, never mind the general public, were unfamiliar with subprime mortgages until the crisis was underway. Even now, we doubt many have much understanding of repo, the divergence between LIBOR and Fed Funds from 9 August 2007 and Eurodollar liquidity.
One look at S&P futures this morning reveals an unchanged market, however it is again the violent sector rotation that is taking place behind the scenes that is the real story, with defensive sectors real estate, retail, food, utilities outperforming while investors continue to bail and book profits on tech stocks after sharp gains since the start of the year.
In early November 2017, we returned to one of our favourite subjects, systemic risk in China related to its big four highly-indebted conglomerates, HNA, Anbang, Evergrande and Dalian Wanda. In particular, we asked whether the extortionately high coupon of 9% on an HNA dollar bond issue, with less than one year to maturity, marked the beginning of China’s Minsky moment?
Late last week, China for the first time confirmed the deployment of its J-11B jet fighters to the heavily disputed South China Sea islands. Footage was released by Government-run China Central Television (CCTV) in the form of military propaganda directly challenging the United States and its allies in the disputed waters. The footage confirmed the aircraft are residing in various hangars on Yongxing island, a Chinese name for Woody Island, which is in the contested Paracel Island chain.