RISK-ON: DO THE CENTRAL BANKS NOW HAVE A 'STEALTH' ACCORD IN PLACE?
SOURCE: 01-18-19 - Charts Courtesy of ZeroHedge
Investors Sentiment has changed to a "Risk-On" based on the charts showing central banks may be operating behind the scenes since the "Mnuchin Massacre" on Christmas Eve when the Treasury Secretary signaled he was meeting with the PPT (Plunge Protection Team). It is critical to determine whether this is true and we have another January 2017 when the central banks last coordinated massive liquidity injections.
Evidence is clear that China has in fact dramatically injected liquidity. China just injected a record 1.16 trillion yuan into the financial system.
One week after unveiling its latest monetary easing in the form of an RRR cut, China unveiled yet more stimulus, this time fiscal, announcing it will cut taxes "on a larger scale," increasingly relying on tax cuts as the first line of defense against a slowing economy, in a departure from the infrastructure binges of the past.
China’s state planning agency said on Tuesday it will aim to achieve “a good start” in the first quarter for the economy in a signal of more growth-boosting steps. State television also quoted Chinese Premier Li Keqiang as saying the government is seeking to establish conditions helpful to meeting this year’s economic goals.
As Bloomberg notes, the potential stimulus in China and warm welcome it received from markets reflects the delicate balance underpinning 2019’s risk-asset rebound: The same weak macro data that prompted a sell-off at the end of last year has the potential to spur looser monetary policies and therefore ignite a rally.
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Stocks gained ground overnight as China announced it would start implementing a package of stimulus measures to boost its economy. They include a cut to VAT rates for selected industries and tax rebates for others, helping brighten the outlook for its economy and easing fears about a global slowdown. Senior policy officials also pledged that tax reductions on a "larger scale" are in the pipeline, which JPMorgan Chase economists estimate will impact around 2T yuan ($300B), or 1.2% of GD