Ye Xie
@xieyebloomberg
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I cover global macro at Bloomberg News; Also write a China newsletter. Terminal users can subscribe China Today. Opinions are my own, RT not endorsement.
New York
Joined October 2010
Open interest of call options of iShare China ETF (FXI) has surged in recent weeks. It's similar to the move in late 2022, just before Beijing abandoned Covid Zero. What they know now we don't? .#China $HSI $KWEB $FXi
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Hedge funds have boosted China exposure toward previous peak, per Goldman Sachs.
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Volatility of yuan fixing has collapsed to zero. The PBOC has effectively re-pegged the yuan to dollar. Will it last? @Brad_Setser @adamkwolfe
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Chinese housing starts and sales have plummeted 40% from the pre-pandemic level, but home prices have barely adjusted. more pain to come. Chart from IMF.
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Chinese version of the "Fed Model": Stock earnings yields are now 5.5% higher than 10y local yields. Historically, once this threshold is hit, the forward 12m return is always positive, with an average return of 57%. Is this time different?
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China reopening is seen as a trade, not an investment, for now.
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China’s equity rout this month was exacerbated by quant funds stampeding to exit positions, akin to a 2007 episode in the US, says Man Group via @markets with @MarkTannenbaum1
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Paradigm shift: South Korea and Taiwan's exports to US surpassed China for the first time since China's joining in the WTO in the early 2000s. H/t to @GoldmanSachs economist Hui Shan. @Brad_Setser @michaelxpettis @adamkwolfe
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Record equity inflows to China, led by passive funds. Guess who's behind?
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Paradigm Shift 2: On nominal terms, Japan is growing faster than China.
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Bond investors who were once convinced that the Fed would start cutting interest rates in March are surrendering to a higher-for-longer reality via @markets w/t @michaellachlan @BWilliLiou
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Invesco's Justin Leverenz considers himself the dominant player in the market — and after a wiepout that sparked an investor exodus, he's determined to climb back to the top via @business @symmaki @davidelgreco.
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A bond ETF is up 200% since the start of 2022. via @markets @MarkTannenbaum1 @kgreifeld @ConvexityMaven
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Is the day of reckoning for the U.S. stock market finally upon us?
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China's bank lending to non-bank financials surged last month. This potentially points to National Team's stock rescue --state banks lent to government-affiliated funds to buy stocks.
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Some investors are so pessimistic about China that they went short what strategists told them to go long.
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Yield curve has never been inverted for so long. Maybe that why the Fed is desperately looking to ease.
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China's deflation pressure is similar to periods during the Asian financial crisis and '08 crisis.
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Cash beat the aggregate bond index over the past five years. And this bond investor is happy to hold 2/3 of his portfolio in cash. via @markets @michaellachlan
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Hang Seng Index's dividend yield has reached to levels (~4.5%) that typically pointed to a bottom. The only exception of the past 30 years was 2008. Is 2024=2008?
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A day after a labor indicator with a mixed record showed the US adding the most jobs in over a year, the soft payrolls report Friday had traders repeating an old mantra: "Never trade on ADP data" via @markets @VildanaHajric @_SidVerma.
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President Xi wants a financial system “with Chinese characteristics.” Investors are worried.
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I'll try this.
This is a "long-distance haircut", designed to make customers feel safe amid the coronavirus outbreak.
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The great market inflation hedge of the pandemic era is officially over, as retail investors pull billions from US ETFs that focus on inflation-linked bonds via @markets w/t @isabelletanlee.
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Beijing’s growth plan focuses on the supply-side, while not doing enough to boost demand. It’s not exactly the remedy to defeat deflation. @MichaelHirson summarized the problem well.
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Despite the economic recovery, most investors incline to cut their positions there, according to JPMorgan's survey of clients on the sideline of IMF meetings. Geopolitical risks are cited as the biggest concern. Is it a contrarian signal?
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Long China is officially the most crowded trade, according to BofA's Global Fund Manager Survey.
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India is New China. MSCI India has outperformed MSCI China by 100 percentage points since 2021.
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A beautiful essay from my colleague @PattyLaya
After years of writing about others' experiences it was surprisingly hard to write my own. Here I try to explain what it's been like to return home: a couple of disorienting yet grounding months that I'm really fortunate to have experienced
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One feature of the recent US data is that "soft data" (PMI surveys, etc) has been much weaker than actual data (ADP this morning). The divergence between Bloomberg's surprise index for soft and hard data is at the most extreme since 2002!
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This is a remarkable chart flagged by $GS' EM strategist Caesar Maasry and his colleagues. The performance of EM stocks excluding China is almost identical to DM ex-US. In other words, outside the US and China, it's just one big beta trade. @GoldmanSachs
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Yuan trading volume surged. There's momentum behind CNH move. PBOC is not standing in the way. for how long, though?
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If you look at the real effective exchange rate over the past year, RMB depreciation kept up with JPY, because of deflation. @albertedwards99
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Isn’t Fed’s rate path now in the hands of Beijing? Solid domestic growth met with strong cross currents overseas. via @markets.
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OK. China's National Health Commission reiterated firm adherence to Covid Zero. Party is over.
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What was supposed to be the darling trade of 2024 has unraveled. Betting on curve steepening ahead of the easing cycle sounds easy, but you have to time it right given the punitive carry costs. via @markets w/t @mccormickliz @GarfieldR1966
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Making a call on the Chinese economy now is essentially calling on when the housing market can stabilize. So far, there's no sign that the crisis is ending. H/T to Zhaopeng Xing at @ANZ_AU the chart.
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Haves vs Have-nots: Magnificent Seven's earnings jumped 56% in Q4 on average. The rest of S&P 500 declined 2%, per Marko Kolanovic @JPMorgan.
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One difference is that it used to be bond yields on par or above the policy rate, when the Fed was done with hiking. Now yields are already ~100bps below.@PeterBerezinBCA
Bond yields tend to peak around the time of the last Fed rate hike. I don’t expect any more rate hikes, which is why I turned positive on bonds recently.
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Asian stock investors remain fairly bullish on China, but global long-only funds as a whole remain underweight, per Bank of America. The further away from China, the more bearish.
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Inverted yield curve hurts banks? Not really. Higher rates matter more. via @markets with @hcarterjohnson, @CristinNara.
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Beijing’s implicit nominal GDP target comes at 7.4%. Together with real GDP target of 5%, it suggests the Beijing aims GDP deflator at 2.4%. Most economists see zero inflation for 2024. It’s an uphill battle for China to get inflation up, just as Fed struggles to get it down.
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Per GS, the market is pricing in more downside tail risks for both stocks and bonds; upside risks for USD/JPY. The market is still concerned about the risk of high US rates for longer.
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@business Looks like fed rate path is in the hands of Beijing: solid domestic growth but strong cross currents overseas.
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Goldman Sachs maps out the potential credit losses from restructuring of Chinese property developers' liabilities. The price tag is $263 billion.
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China's 30-yr bond yield is on par with banks' 1-yr borrowing costs. One of these two prices is wrong. The relentless bond rally has lured many investors. But there's 1-trillion CNY ultra-long supply coming. @GoldmanSachs warns bond market correction is coming.
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What stock bubble? TMT's forward P/E is much lower than that in 2020 and in late 1990s. NVDIA's 500+% return since 2023 is all driven by earnings, per @GoldmanSachs
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Worst of Yuan Rout Over as China Maintains Control, Nomura Says http://t.co/sVZSFxPorG via @business.
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The bond market’s losses since 2021 have been so severe that they all but wiped out any extra gains over cash over the past decade via @markets w/t @LisaAWolfson
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@HAOHONG_CFA 3% cpi is non biding. It’s a ceiling. Last year, the target was 3%. Actual cpi was 0.2%.
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Emerging Market Bond Holders Face Liquidity Squeeze, Fitch Says http://t.co/vZAEbnefsL via @business.
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The Fed has raised rates +500bps over the past two years. Yet, bond yields actually fell 67 bps around Fed meetings. I updated the work by @seba_hill who first noted the tendency for bond yields to fall on Fed days. via @markets .w/t @williamselway
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Chinese stocks massively outperformed Japan for nearly two decades. It took about three years to wipe out the extra gains. Is this the beginning of a trend?
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Almost nobody in the markets cares about China's Party Congress, according to JPMorgan survey of clients.
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The Treasury market is signaling that a recession is all but inevitable, if history is any guide via @markets
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Retail sales in the US vs China: From catching up to decoupling.
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The Fed is projecting 0.6 ppt point increase of unemployment rate next year. Historically, the US has never been able to avoid recession with such an increase.
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. Except in 1995 and 1998.
'Historically, the S&P 500 declines once the yield curve (yellow line) starts to steepen.' via @SoberLook
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The downturn in China’s property market is often blamed for sowing the seeds for even greater challenges. But Beijing shrugs it off. What gives? via @economics @hancocktom.
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Ray Dalio has a good understanding of the trade issue. Chinese-American Misunderstandings, Disputes, and Wars
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The Atlanta Fed's Sticky CPI ex-housing index grew less than 2% over the past three months (annualized). H/T George Saravelos at Deutsche Bank. Mission accomplished? DXY broke the technical support.
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Wall Street’s Guide to Surviving Emerging-Market Despair http://t.co/3mKgDQ3YlA via @business.
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Chinese President's war on corruption finds its way to Brighton http://t.co/WWQDcfct8F via @theage.
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If markets are worried about China tightening, they didn't tell MSCI China.
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R.I.P. Ken Prewitt is ``always a gentleman" .Ken Prewitt, Bloomberg Radio ‘Authoritative’ Voice, Dies. http://t.co/6v5o8N3NKk via @business.
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For the first time in over two decades, US investors are getting more bang for their buck by parking cash in Treasury bills than from the popular 60/40 portfolio mix via @markets.
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Markets think the neutral rate has shifted meaningfully higher since the pandemic? Until lately, 30-year yield had tracked the Fed's long-term dot closely.
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Larry Summers: The Past Month May Go Down as a Turning Point for U.S. Economic Power. http://t.co/J3O2neqiIo.
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@adamkwolfe Our economist David Qu believes it's a rollover:.Here’s why: 1, Any issuance that increases fiscal debt needs the approval from the NPC, or its standing committee, but there was no official statement this time.
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When markets have priced in deep rate cuts for next year, recession inevitably followed. Bond yields may have peaked?
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"Sell in May and Go Away" works for Yuan. Heavy dividend payments of HK-listed Chinese companies during June-Aug.
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@Amartinez28R @WSJ @srabil @TweetBrentJones @MeganEDouglass Congratulations, man! Good luck with everything!.
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