Financial Review

Fans of Gridlock

http://media.blubrry.com/eatthebankers/p/content.blubrry.com/eatthebankers/SINCLAIR_NOE-SEG_1-11-21-2014.mp3Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)Subscribe: Apple Podcasts | Android | RSSFinancial Review by Sinclair Noe DOW + 91 = 17,810 SPX + 10 = 2063 NAS + 11 = 4712 10 YR YLD – .02 = 2.32% OIL + .77 = 76.62 GOLD + 5.80 = 1201.30 SILV + .15 = 16.50 Record highs for the Dow and the S&P. China has cut interest rates for the first time in more than 2 years. The first thought is that China is trying to stimulate growth for a slowing economy. However, in making the announcement, the People’s Bank of China tried to emphasize that the economy is growing within a reasonable range, and the rate cut was not about spurring growth. Instead, they emphasized the need to reduce corporate financing costs to help struggling companies. So, you might think that lower rates would only encourage more borrowing in a country that already has too much debt. What the Chinese central bank appears to be doing is making it feasible to refinance the existing debt at lower rates, which would allow Chinese companies to lessen their debt burdens. So, in this way, lower rates is a way to deleverage. And this is not the first attempt at reducing borrowing costs. Since September the People’s Bank of China has provided more than $130 billion in medium term loans to banks on the condition they lower borrowing rates for small businesses; trying to channel to certain industries, including …

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