Rabo: This Is How We Get To The "Unthinkable" 10-Handle In The Yuan
Submitted by Michael Every of Rabobank
The 'Clause is Cause' Clause
As we had flagged repeatedly in recent days, US-China relations have suddenly deteriorated. US President Trump claims to have evidence that Covid-19 started in the Wuhan Institute of Virology. Moreover, he is allegedly considering an executive order to prevent an initial USD50bn of government retirement savings funds held by the Thrift Savings Plan being transferred to Chinese capital markets in line with the increased weighting China now has in the MSCI All Country World Index - something several members of Congress have been calling for. Other reports have it that trade advisor Navarro is pushing hard to onshore US manufacturing of key health goods as soon as possible by executive order - and is seeing ‘wait-and-see’ push-back from Treasury Secretary Steven Mnu-China. But recall this Thrift Savings Plan tug-of-war was being won by the doves until yesterday.
正如最近几天我们屡屡警告的那样，中美关系突然恶化。美国总统川普声称有证据表明中共武汉肺炎（Covid-19）始于武汉病毒研究所。 此外，据称他正在考虑执行一项行政命令，以防止节俭储蓄持有的500亿美元的政府退休储蓄资金投入到中共国的资本市场 （最初计划如此），这与中共国现在在摩根史丹利（MSCI）国家指数中所占比重的提高有关- 一些国会议员持续对此呼吁。 其他报道称，贸易顾问纳瓦罗正在通过行政命令尽力推动美国国内关键健康产品的制造，与此同时能看到财政部长史蒂芬·姆努-中（谐音梗，史蒂芬·梅努·欽）用“再看一看”行动来阻碍。 但是想想看，直到昨天鸽派还是这个节俭储蓄计划拔河比赛的赢家。
Meanwhile, the word “reparations” is actually being bandied about by some China hawks in DC, with one story even suggesting there were even White House plans to default on US debt to China as compensation. Larry Kudlow had to be wheeled out yesterday to deny that the US to do so. That’s like being in a dispute with your neighbour over the line of a fence and them calmly telling you “I can assure you that we don’t plan to burn your house down over this.” Is one reassured by that kind of thing or not? The hows and whys and ifs and maybes of what was once a crackpot leftfield is now out there actually being discussed on trading floors.
同时，“赔偿”一词实际上已经被华盛顿特区的一些对中共鹰派所用，甚至有一个故事暗示着白宫有计划搁置美国对华债务作为补偿。拉里·库德洛昨天不得不否认美国计划这样做。 这就像在栅栏上与邻居发生争执，他们平静地告诉您“我可以向您保证，我们不打算为此烧毁您的房屋。”有人对这种事情感到放心吗？那些曾经被认为是怪异的、不寻常的事： 方式，原因，假设和可能，现在正在交易大厅中被讨论。
Beijing, and much of Asia, is out for the May Day holiday today so there is unlikely to be any kind of official Chinese reaction. However, where we have seen a knee-jerk response has been in USD/CNH, which at time of writing was at 7.1280 having been as low as 6.87 back in early January when the Phase One trade deal was on the table (and as we were saying “Don’t believe the hype”.) This is likely to put a serious dent in the head-scratching, math-defying risk-on rally we have seen for much of the week. Indeed, now month-end positioning is out of the way it has the potential to open up an entire new phase of USD buying vs. EM in particular – and this time CNY and CNH not being the exceptions.
北京和整个亚洲大部分地区今天仍处在五一假期，所以中共国官方不太可能做出任何反应。 但是，我们看到美元/离岸汇率出现了急转直下的反应，在撰写本文时，汇率为7.1280，早在1月初谈论第一阶段贸易协议时，汇率曾低至6.87（ 当时大家一直说“别相信炒作”）。这很可能会严重削弱我们在本周大部分时间里看到的那种令人头疼，违反数学的风险反弹行情。 确实，现在月末定位已成为可能，它有可能开启一个新的阶段，尤其是美元对新兴市场的购买-这次，人民币和离岸人民币并非例外。
This time last year, when we were all still going abroad regularly (right now just ‘outside’ is becoming a psychological barrier if I am honest) I was traveling with a presentation titled “Clause is Cause”. This argued that from a geostrategic ‘Von Clausewitz’ perspective, not a neoliberal “Let’s assume world peace” version, the US would at some point realise the USD/Eurodollar was a weapon it could wield vs. China, and when it did we would see three key strings cut: trade; tech; and then capital flows. The first was evident during the trade war – which has not been concluded is likely to get far worse soon; the second is also abundantly clear on a variety of fronts, much to Silicon Valley’s chagrin; and potentially, now we see the start of that third step – because if the US does block this first USD50bn going in, other such steps will follow, just as they did on the previously unthinkable idea of US tariffs on China.
去年的这个时候，当我们所有人仍定期出国时（老实说，现在“外面”一词正成为一种心理障碍），当时我的演讲题目是“条件即原因”。 这表明，从地缘战略上的“冯·克劳塞维茨”观点（《战争论》作者，译者注），而不是新自由主义的“让我们假设世界和平”的观点来看，美国在某个时候会意识到美元/欧元是它可以对付中共国的武器，而当我们这样做的时候将会看到了三个关键：贸易、科技以及资本流动。 头一个在贸易战中很明显–效果尚未结束，可能很快就会恶化。 第二个方面在各个方面也都非常清楚，这让硅谷非常恼火。 而且有可能，现在我们看到了第三步的开始–因为如果美国确实阻止了这第一笔500亿美元的流入，那么其他步骤将随之而来，就像先前美国对中共国征收关税的难以想象的想法一样。
CNH is right to be selling off, albeit in a traditionally limited fashion, because if you don’t buy from China and you don’t help China up the value-chain and you don’t invest in China then China is not going to be getting much USD liquidity at all. The US hawks probably don’t get the Eurodollar iron logic there; they are likely just pressing buttons in anger. The outcome would be the same nonetheless.
离岸人民币是时候进行抛售了，尽管以传统上有限的方式进行，因为如果你不从中共国购买商品，并且不帮助中共国建立价值链，并且不投资中共国，那么中共国将完全不会获得美元流动性。 美国鹰派可能不了解欧洲美元的铁逻辑。 他们可能只是在愤怒中按下按钮。 尽管如此，结果还是一样的。
I can hear the market bulls and technocrats of the world saying “But China has USD3 trillion in reserves!” Perhaps. Most think it’s far lower than that. And not earning USD means you have to dig into that stockpile. And when you do, the PBOC either has to contract the local money supply (because every USD is backed by 7.xx CNY on the other side of the balance sheet) or it just creates new CNY anyway and supply-demand sees CNY move sharply lower – as we have been seeing in all other EM FX. Looking at the drop in BRL, ARS, ZAR, TRY, etc., or even THB, this would be how we would get to the ‘unthinkable’ 8 (9? 10?) handle in CNY. That would also crush those other EM crosses in tandem - and AUD and NZD, as the former tries to navigate its own geopolitical spat with Beijing.
我能听到世界市场巨头和技术专家在说：“但是中共国有3万亿美元的外汇储备！” 也许吧。 大多数人认为远低于此。 而且，不赚取美元意味着您必须挖掘库存。 而当您这样做时，中共国人民银行要么不得不与当地货币提供者签订合同（因为每笔美元都在资产负债表的另一侧得到了7.xx人民币的支持），要么反而只是创造了新的人民币，而供需则认为人民币大幅削减–正如我们在所有其他新兴市场（EM）的外汇市场（ FX）中所见。 看看巴西雷亚尔、阿根廷比索、南非兰特、新土耳其里拉 （BRL，ARS，ZAR，TRY）等，甚至是泰铢（THB）的下降，我们将采用这种方法达到“难以想象的”8（9？10？）人民币兑换。 这也将压垮其他新兴市场交叉货币，如澳元和纽元，由于前者试图与北京争夺自己的地缘政治争端。
I can also hear the market bulls and technocrats of the world saying “But the US relies on Chinese capital inflows!” Really? Really?! As the Fed is creating trillions of USD on its balance sheet with no end in sight, and with yields at historic lows, are you really going to try to peddle the myth that the US needs Chinese capital? It is flooded in cash – and has shown it can create it as needed. The only issue is how it is *distributed*. Do you seriously think US Treasuries are about to sell off from any Chinese action? In a risk-off geopolitical trade environment? With an activist Fed? Also, please recall the simple fact that Chinese (or any) capital inflows to the US are always the inverse of the export earnings they are getting from the US! If they don’t sell the exports, they don’t invest the capital. That was going to happen anyway in this downturn.
我还可以听到世界各地的市场巨头和技术专家说：“但美国依赖中共国的资本流入！” 真的吗？！真的吗？！ 当美联储在其资产负债表上创造数万亿美元而又没有尽头，且收益率处于历史低位时，您真的要尝试推销美国需要中共国资本的神话吗？ 它充斥着大量现金-并表明可以根据需要创建它。 唯一的问题是它如何“分配”。 您是否真的认为美国国债将因为中共国的任何行动而被抛售？ 在避险的地缘政治贸易环境中？ 与一个激进的美联储？ 另外，请记住一个简单的事实，即中共国（或任何国）向美国的资本流入总是与他们获得的对美出口获利相对应！ 如果他们不出售出口产品，就不会投资资本。 无论如何，在这种低迷中都会发生这种情况。
So that’s Von Clausewitz on the Eurodollar – but on good old fashioned US muscle, the picture is the same. It has been revealed by Reuters that Trump told Saudi Arabia that if they refused to sign up to a deal to cut oil production that he would not stand in the way of Congress voting to remove US military protection from the country after 75 years. Recall that the Petrodollar deal was always that the Middle East could sell as much oil to the US as desired, but had to recycle the USD earnings back into the US. It’s just that now the US has shale… So guess who blinked? Not that it is working – so prepare for round two shortly.
这就是欧洲美元上的冯·克劳塞维茨，但在老式的美国肌肉上，情况是一样的。 据路透社报道，川普告诉沙特阿拉伯，如果他们拒绝签署削减石油产量的协议，他将不会阻止国会投票表决，在75年后将美国的军事保护从该国取消。 回想一下，石油换美元计划始终是中东可以向美国出售任意数量的石油，但必须将美元收益重新用于美国。 只是现在美国有了页岩…所以猜猜谁眨眼了？ 并不只是它正在起作用–因此还为即将到来的第二轮做准备。
Folks, please disabuse yourself of the naïve belief that we live one giant happy world market where supply and demand and acronyms are all that matter and where politics and national security are dinosaur anachronisms, but in a bloc run by people who fall almost entirely into that camp, despite also relying on US military support, yesterday saw the ECB meeting.
As GDP is seen falling -5% to -12% in 2020 the ECB: left the deposit rate unchanged at -0.50%, while keeping the refi rate at 0.00%; the existing asset purchase programmes were left unchanged, APP at EUR 20bn/month plus an EUR 120bn envelope, and PEPP at a total of EUR 750bn in 2020; the temporary discount on TLTRO-III was increased by 25bp and will now be priced at -50bp under the benchmark rate (either the refi or depo rate, depending on loan growth); and a new set of 7 Pandemic Emergency LTROs (PELTROs) was launched. These are priced at MRO -25bp and will run (in a staggered manner) between May 2020 and September 2021. As our ECB team conclude, it remains to be seen whether EURIBOR-OIS spreads will ‘normalise’; the ECB is taking a very open-minded stance; and they believe further action is still necessary. I think the latter at least is clear to most readers.
预计到2020年GDP将下降-5％至-12％，欧洲央行：将存款利率保持在-0.50％不变，而将贴现率保持在0.00％的水平； 现有的资产购买计划保持不变，APP在200亿欧元/月，外加1200亿欧元，PEPP在2020年总计7500亿欧元； TLTRO-III的临时折扣提高了25个基点，现在将在基准利率（再融资利率或回购利率，取决于贷款增长）下定价为-50个基点； 并推出了一组新的7个大流行紧急LTRO（PELTRO）。 这些定价为MRO -25bp，并将（以交错方式）在2020年5月至2021年9月之间运行。正如我们的欧洲央行团队所得出的结论，EURIBOR-OIS利差是否会“正常化”尚待观察。 欧洲央行采取非常开放的态度； 他们认为仍然需要采取进一步行动。 我认为至少对于大多数读者而言，后者是显而易见的。
编辑：【喜马拉雅战鹰团】Edited by：【Himalaya Hawk Squad】