China Fighting A Slowdown On All Fronts

Since institutional memories are short, it is time to remind readers that it was the threat, and subsequent reality, of China overheating in the spring and summer of 2011 (when record high food prices sent the entire North African region in a state of coordinated revolt and gradually moved far east)

Every day I watch the relative performance of various equity markets. Since April, the Shanghai index has been the last to rally and the first to go down. $SSEC Shanghai Composite Index

    As we’ve noted in recent articles, the US Federal Reserve has blown another bubble in stocks and facilitating the exact same risk-taking behavior that brought about the 2008.   The Fed realizing that it’s done this, which is why it’s now trying to manage down expectations of future stimulus (see the multiple suggestions from Fed officials that the Fed might reduce QE before hitting its unemployment target).   The Fed is not the only Central Bank to have shifted tone.  

SHANGHAI (Reuters) - China's central bank cut the amount of cash that banks must hold as reserves on Saturday, freeing an estimated 400 billion yuan ($63.5 billion) for lending to head-off the risk of a sudden slowdown in the world's second-largest economy. The People's Bank of China delivered a 50 basis point cut in banks' reserve requirement ratio (RRR), effective from May 18, the third cut in six months and one that investors had called for after data on Friday showed the economy weakening, not recovering, from its slowest quarter of growth in three years. ...

By Patrick Chovanec:Wednesday night, the PBOC (China’s central bank) lowered the reserve requirement ratio (RRR) for Chinese banks by 50 basis points, down to 21% for large banks,