I guess we can call this the anti QE. China is taking matters into their own hands by counteracting the negative commodity price increases that have been caused in recent months by the irrational speculation in many markets (via the AP):
“SHANGHAI (AP) — China is banning hoarding of oil, coal and other key commodities, seeking to ensure supplies and cool prices that have surged despite repeated moves to curb inflation.
The government planning agency, in comments published Tuesday, says provinces are forbidden to limit shipments of coal beyond their borders and are required to ensure stable supplies.
Local authorities were ordered to crack down on hoarding, bogus bids meant to drive prices higher, and other illegal practices.
China is trying to cool inflation that surged to a 25-month high in October. Authorities say soaring food prices are mainly to blame, but costs for fuel and other necessities have also jumped, as supplies have run short.”
The irrational QE trade is coming undone piece by piece. The Federal Reserve has caused severe market distortions in recent months based on sheer misconception and misunderstandings of a policy they clearly don’t comprehend. It’s nice to see a foreign government taking matters into their own hands by trying to counteract this blatant attempt to keep asset prices “higher than they otherwise would be”. The Fed isn’t the only one in town who can try to blatantly manipulate market prices. They may have met their match in China.
Read Some Related Articles on Pragmatic Capitalism -
The End of Stock Picking
Jason Zweig has a nice piece in this yesterday's Wall Street Journal on the end of the stock picking asset manager. He notes: The debate about whether you should hire an “active” ...read more
Europe vs USA: the Unemployment Divergence
Here's another perspective on the incredible divergence in the US economy and the European economy (via Calculated Risk): ...read more
Q&A - Ask Me Anything
Since I am trying out the site without comments I figure the least I can do is open things up to a Q&A more often. Feel free to have at ...read more
It’s Not a Chase For Yield, It’s a Chase For Fees
“One lesson from 2008 is that if it’s very complicated and you don’t understand it, maybe you shouldn’t buy it.” – Harry Markowitz ...read more