I See Bubbles Everywhere...

China’s top banking regulator said he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector, sparking fresh concerns about further tightening in the world’s second-biggest economy.

"Bubbles in U.S. and European markets could burst because their rallies are heading in the opposite direction of their underlying economies and will have to face corrections “sooner or later,”

China’s financial regulators are walking a fine line of trying to curb risks at home while limiting disruptions from abroad as the economy opens wider to foreign capital.

The CBIRC vowed in January to stay “ahead of systemic risks,” after capping bank lending to the property market, slashing shadow banking activities and claiming victory in unwinding a wild expansion in peer-to-peer lending.

“China’s monetary policy has not been as easy as the U.S. and Europe,” said Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. “This latest comment will create worry of further tightening.”

A strong economic recovery, combined with a credit surge and a renewed fear of missing out have stoked buyer enthusiasm across China’s largest cities despite stricter curbs this year.

Authorities have responded with a slew of policies to fine tune the industry, including a new mechanism on bank lending for real estate and fresh land-bidding rules designed to curb high-flying land costs.

Home prices in the secondary market, which faces less government intervention, gained the most in 18 months in January, official data showed last week.

Existing-home prices of certain popular projects in Shanghai surged more than 30% last year, according to China Real Estate Information Corp.

Today, the Consumer Financial Protection Bureau (CFPB) issued a report that warns of widespread evictions and foreclosures once federal, state, and local pandemic protections come to an end, absent additional public and private action.

Over 11 million families are behind on their rent or mortgage payments: 2.1 million families are behind at least three months on mortgage payments, while 8.8 million are behind on rent.

Homeowners alone are estimated to owe almost $90 billion in missed payments. The last time this many families were behind on their mortgages was during the Great Recession.

“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest”.

The Governor stated clearly that “the Bank remains committed to the 3-year target and recently purchased bonds to support the target and will continue to do so as necessary”.

 🇩🇪 German Retail Sales (Jan):

🔹 MoM: -4.5% vs. Exp. -0.3% (Prev. -9.6%)

🔹 YoY: -8.7% vs. Exp. 1.3% (Prev. 1.5%)

🎩 @Newsquawk— PiQ (@PriapusIQ) March 2, 2021 

 Ugly German retail sales numbers. Even with the normal heap of salt required to interpret these data, it looks as if goods spending is now taking it on the chin due to sustained restrictions in non-essential retail and the VAT hike in Jan.— Claus Vistesen (@ClausVistesen) March 2, 2021 

 While our February 18th monthly client call argument for rising #RealRates appeared prescient, we were surprised by the magnitude of last week’s #move and would expect a more benign evolution toward #equilibrium going forward.— Rick Rieder (@RickRieder) March 1, 2021 

Rishi Sunak will use his Budget to launch a post-Brexit fightback by the City of London, setting in train new rules to help it compete with centres such as New York, Amsterdam and Frankfurt in attracting fast-growth companies.

The chancellor and Boris Johnson, prime minister, want to create a new stock market listings regime as part of their efforts to build an “agile” new economy after Brexit and the pandemic, focused on innovation and technology. Alongside his Budget, Sunak will publish a review by Lord Jonathan Hill, former EU financial services commissioner, which is expected to propose changes to make Britain a more attractive place for entrepreneurs to take companies public.

Some of Britain’s most promising tech businesses are considering stock market listings in the US, increasing the pressure on the UK to change its listing rules. The FT reported last week that some UK tech companies, including Cazoo, the used-car site, and health app Babylon, are exploring potential mergers with US Spacs, according to people familiar with the talks.