On Monday, China lowered several key rates in an effort to increase economic growth and try to avoid deflation. Perhaps also, in anticipation of a Trump victory that for sure will bring more tariffs to Chinese products. Both short term lending rates, the 1 year and 5 year term were cut by 10 bps, and collateral requirements were lowered. The PBOC also cut its 7 day reverse repo rate in the same amount. Chinese leaders are realizing that you cannot depend on the Real Estate lever to grow indefinitely, and that troughs are long and hard to overcome. It is relevant for the US in terms of Trade and because they own a significant portion of US government debt. On the domestic front, Alphabet and Tesla presented results yesterday and both disappointed investors. That push them lower in after hours trading (-2% and -8% respectively). Nasdaq futures are slightly down this morning. The equity market rotation continues.
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