What happened? On Monday, February 21, Russian President Vladimir Putin signed decrees recognizing the sovereignty of the Donetsk and Lugansk People's Republics…
China will increase economic stimulus to fight deceleration
China is going to come up with a number of measures stimulate surge against the backdrop of a trade conflict with America, although there’s limited room for hawkish stimulus in the Chinese economy already impacted by huge debts and also a property market prone to credit-powered spikes, as some policy insiders point out.
The Asian country’s deepening economic deceleration has fanned market hopes for a huge spending binge, in particular if the bruising tariff conflict with America escalates, thus increasing pressure on Chinese jobs and affecting social stability.
The given move, plans for which have frequently been denied by China's key statesmen, would come at a price. Nevertheless, similar moves in the past managed to drive surge rates, although they buried the world's number two economy under an enormous pile of debt.
The Chinese cabinet doesn’t have enough room for a strong stimulus, and risks are high due to the fact it will mainly rely on a flood of cash as well as increased leverage in the national economy, as some insiders familiar with the situation revealed.
In the 2008-09 global financial meltdown, the Chinese government came up with a 4 trillion Yuan spending package to neutralize a downturn, which cost 20 million jobs in a matter of months, rapidly regaining surge, although prompting a credit explosion.
The obsession of China's statesmen with stability resulted in policy easing in 2012 and also 2015 - a year that brought a stock market crash, a dive in the Chinese Yuan as well as steep capital outflows, which further increased debt levels and ramped up home prices.
The Chinese government has taken a raft of pro-surge moves in the past year. The measures included cuts to the levels of cash financial institutions are bound to hold as reserves to back lending, tax cuts as well as efforts to speed up infrastructure spending.
Hong Kong’s HK 50 index rose and the Chinese yuan edged up as traders assess the outcome of the first virtual meeting between US President Joe Biden and Chinese leader Xi Jinping.
A selloff in stocks stopped. S&P 500 has reversed up from the 100-day moving average. It should be the perfect time to buy the index.
The Australian Bureau of Statistics will announce the updated Unemployment Rate and Employment Change data on Thursday, May 19, at 04:30 MT.
The UK Office for National Statistics will publish Consumer Price Index (CPI) data on Wednesday, May 18, at 09:00 MT.
The US Census Bureau will announce Core Retail Sales and Retail Sales on Tuesday, May 17 at 15:30 MT.