This is insane what's going on, mind blown right now, the rabbit hole goes deep and people will be in shock once they discover how bad the credit crisis will get... Quick thesis
Start with HSBC, Page 4 earnings shows Global Banking losses QoQ and G Markets bleeding, on a clear down trend compared to other units of the bank, Page 15 shows a dilution gain ( huh ? ) of 827 Million ( it's a net loss ), other losses marked as a gain is in operating expenses Customer Redress Program of 554 Million and 237 Million for restructuring... 827 was marked as loss, 554 and 237 weren't.
383 Billion exposure in EU, 292 in UK ( RE price crash coming ). 474 Billion in Asia, 304 Billion in HK ( RE price crash coming ). Page 33 indicates 173 Billion lent in China, 38 % SOEs and 42 % Private owned... In 2018 around 90 percent of profits came from Asia, highly exposed to HK. If valuations on assets fall 10 % in China and HK, HSBC will have more liabilities then assets and will face insolvency.
The juicy reason why they are gonna explode is they have been caught with their hand in the cookie jar... As everyone knows, PBOC is knee deep and the biggest client for US Swaps in the world, we can't know for sure the amount of exposure but I believe HSBC has been rolling the swaps for years and have accumulated serious credit risks, hence their CEO Flint firing. PBOC has been defending their currency intense since 2014 but since beginning 2016, their foreign reserves suddenly became extremely stable while their account surplus was trimming at a fast pace... How can they defend without burning reserves, as Snider points out in 2015 China had become Brazil
https://www.alhambrapartners.com/2015/10/22/confirmation-china-as-brazil/
State-owned Chinese banks were borrowing “dollars” via increasingly expensive swaps with eurodollar banks and then selling them domestically in cash to dollar-starved local banks desperate for them (shorts and shortages).
They did so because like in Brazil the central bank was subsidizing the swap via its own forwards, liquidity backstops, and I think even some term repos collateralized by those UST’s it holds. But where does the central bank end of these triparty transactions show up?
Like any financial institution, the PBOC as Banco reports a line on its balance sheet for “miscellaneous” or “other” assets. It is the proverbial black box of sundry remainder items, one of which might be our extremely important eurodollar workaround
Start with HSBC, Page 4 earnings shows Global Banking losses QoQ and G Markets bleeding, on a clear down trend compared to other units of the bank, Page 15 shows a dilution gain ( huh ? ) of 827 Million ( it's a net loss ), other losses marked as a gain is in operating expenses Customer Redress Program of 554 Million and 237 Million for restructuring... 827 was marked as loss, 554 and 237 weren't.
383 Billion exposure in EU, 292 in UK ( RE price crash coming ). 474 Billion in Asia, 304 Billion in HK ( RE price crash coming ). Page 33 indicates 173 Billion lent in China, 38 % SOEs and 42 % Private owned... In 2018 around 90 percent of profits came from Asia, highly exposed to HK. If valuations on assets fall 10 % in China and HK, HSBC will have more liabilities then assets and will face insolvency.
The juicy reason why they are gonna explode is they have been caught with their hand in the cookie jar... As everyone knows, PBOC is knee deep and the biggest client for US Swaps in the world, we can't know for sure the amount of exposure but I believe HSBC has been rolling the swaps for years and have accumulated serious credit risks, hence their CEO Flint firing. PBOC has been defending their currency intense since 2014 but since beginning 2016, their foreign reserves suddenly became extremely stable while their account surplus was trimming at a fast pace... How can they defend without burning reserves, as Snider points out in 2015 China had become Brazil
https://www.alhambrapartners.com/2015/10/22/confirmation-china-as-brazil/
State-owned Chinese banks were borrowing “dollars” via increasingly expensive swaps with eurodollar banks and then selling them domestically in cash to dollar-starved local banks desperate for them (shorts and shortages).
They did so because like in Brazil the central bank was subsidizing the swap via its own forwards, liquidity backstops, and I think even some term repos collateralized by those UST’s it holds. But where does the central bank end of these triparty transactions show up?
Like any financial institution, the PBOC as Banco reports a line on its balance sheet for “miscellaneous” or “other” assets. It is the proverbial black box of sundry remainder items, one of which might be our extremely important eurodollar workaround
