Yesterday it was:
...Just like it makes little sense for the US to be so dependent on China for some types of medicine and rare earths, it makes little sense for China to be dependent on foreign chip makers. We have noted Japan's exports of semiconductor fabrication equipment to China. Now one of China's chipmakers (Yangtze Memory Technologies) claims to have the capability to build the most advanced chips (128-layer 3D NAND flash memory chips). Presently, the 96-layer 3D NAND is being done by global players, but the 128-layer is the next generation....Today he also highlights China.
From Marc to Market:
Overview: The recovery in equities stalled, and the risk-off mood has helped lift the US dollar, which had been trending lower. Taiwan and Malaysia were notable exceptions in the Asia Pacific regions to the heavier equity tone. The Nikkei gave back almost 0.5% after surging more than 3% on Tuesday. Europe's Dow Jones Stoxx 600 is ending a five-day rally. The S&P 500 gapped higher yesterday and may test the lower end of the gap (Monday's high) near 2782.5. Core bond yields are paring recent gains. The US 10-year yield is off seven basis points to 0.68%. Peripheral European bond yields are firmer, with Italy's benchmark yield up five basis points. The dollar is stronger against all the major currencies, including the Japanese yen. With WTI slipping below $20 and lower tolerance for risk, the Norwegian krone and dollar-bloc currencies are under the most pressure. Outside of a handful of small Asian currencies, the emerging market complex is weaker, led by the Mexican peso and South African rand. Gold continues to trade more like risk assets than a safe haven, and it is snapping a four-day advance.
Asia Pacific
The People's Bank of China cut the one-year medium-term lending rates by 20 bp to 2.95% and injected $14 bln in the banking system. The rate move underscores expectations that the benchmark Loan Prime Rate, which was unexpectedly left unchanged last month, will be cut when it is set next week. The one-year LPR stands at 4.05% and is expected to be reduced by at least 20 bp. Separately, China will be the first large country to report Q1 GDP estimate tomorrow. Many expect China to admit to around a12% quarter-over-quarter decline, which translates into about a 6% year-over-year contraction.
Baseball is not particularly popular in China, but the handling of the corona crisis may be Secretary-General Xi's third strike. Admittedly, the pall over Chinese politics, which it assuredly has, despite being a one-party state, makes it hard to know with a high degree on confidence. And it goes contrary to the idea that Xi has tenure for life. The sustained demonstrations in Hong Kong and the trade war with the US had already spurred subtle but clear criticism for the mishandling. And now, Covid-19. In his concentration of power, Xi has made numerous enemies.
Even others were slow to respond to intelligence reports or were ill-prepared despite warnings of a pandemic risk, Beijing is widely understood to has misportrayed and deceived about the virus. That the factory and pharmacy of the world, achieved often with the help of state funds, has sent PPE and medical supplies to other countries is fine and good, but it is not like there is a scale that commerce offsets the deception. The handling of the crisis can only accelerate the re-thinking of supply chains that had been spurred by the increase in the US tariffs, most of which remain in place. As we have noted, Japan has budgeted funds to help companies re-onshore from China. Other countries concerned about Chinese businesses buying their companies are considering tightening the relevant rules. Taiwan has also used the opportunity to build goodwill. Not that there are no other pressing issues, but is it really too early to begin thinking about Xi's succession like conventional thinking has it? His second term five-year term is half over....
.... MUCH MORE
