After a night of binge drinking there is always a price to pay the next day. After extending 8.9T yuan of bank loans ytd thru Oct vs 4.9T all of last year, its time to sober up for Chinese banks. The 5 biggest Chinese banks gave regulators their plans to raise capital to fill holes created by the massive lending. This coming supply sent the Shanghai index down 3.5% and the rest of Asia was lower. European stocks are hanging in after Germany’s IFO business confidence # rose to the highest level since Aug ’08 at 93.9, 1.4 pts above estimates. Add Russia to the list of nations who are steering policy for the sole purpose of weakening their currency vs the US$. They cut rates by 50 bps to 9% and specifically said it was intended to stem the rise in the ruble. With long term implications for the US$ as a reserve currency, the Hong Kong Monetary Authority ceo said China is thinking about expanding its program to use Yuan for the settlement of trade.

Category: MacroNotes

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