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| China made another decisive move to address its ongoing economic woes, this time by saying it will cut the reserve requirement ratio for banks within two weeks while hinting at more support measures to come. The disclosure arguably illustrates a mounting sense of urgency across Xi Jinping’s government to shore up the world’s second-largest economy and halt a $6 trillion stock-market rout. The RRR will be lowered by 0.5 percentage points on Feb. 5 to provide 1 trillion yuan ($139 billion) in long-term liquidity to the market. Regulators also added more measures to bolster slumping property and stock markets, broadening the use of commercial property loans for developers to help them repay other debt, and giving a boost to China and Hong Kong equities by unveiling steps to deepen financial ties with Hong Kong. The reserve ratio move, however, marked a rare and transparent reveal of a policy change by the People’s Bank of China. Shen Meng, managing director at Beijing-based Chanson & Co., said “announcing an RRR cut in advance suggests there’s no other effective tools available to stem the market rout.”
Time to raise taxes. Former Treasury Secretary Robert Rubin said the US is in a “terrible place” with regard to its federal deficits and called for tax increases to reverse course. “The risks are enormous and some of them are materializing already, like higher interest rates,” he said. The danger is greater than in the early 1990s when incoming President Bill Clinton crafted a budget-tightening package to shrink the deficit. The risk, Rubin said, is that when markets are “out of sync with reality,” they can then “correct savagely.”  Robert Rubin Photographer: David Paul Morris Nikki Haley is vowing to press on with her bid for the Republican presidential nomination despite losing to Donald Trump in New Hampshire Tuesday night. Thanks in part to the backing of Wall Street titans, she’ll have the money to do it. Wealthy donors and a group funded by industrialist Charles Koch are among those members of the GOP who want Haley to face US President Joe Biden in the general election. Indeed, billionaires Stanley Druckenmiller, Henry Kravis, Ken Langone and Cliff Asness are scheduled to co-host a New York fundraiser for her on Jan. 30. Just twenty-four days into 2024, and the S&P 500 has already blown past the consensus over where the index would finish the year. Helped by advances in Nvidia and Microsoft, the equity benchmark has been heading in the direction of 4,900 over the past week. But the more experienced among Wall Street’s hands are beginning to hear the voice of Alan Greenspan. Ed Yardeni is one of them. Even though valuations and retail-investing activity suggest this equity advance has stronger foundations than previous bouts of euphoria, its speed is worrying the founder of Yardeni Research Inc. “The S&P 500 may be starting a tech-led meltup similar to what happened during the second half of the 1990s,” he wrote in a note. “We are wondering whether a bout of irrational exuberance might push the multiple higher, inflating a speculative bubble.” Here’s your markets wrap. Two months of missile and drone attacks in the Red Sea have caused the biggest diversion of international trade in decades, pushing up costs for shippers as far away as Asia and North America. Repeated rounds of retaliatory strikes by the US as well as a multinational naval operation haven’t stopped the assaults by Iran-backed Houthi militants who have said they are in response to Israel’s bombing of the Gaza Strip in its war with Hamas. With sailors demanding double pay and insurance rates skyrocketing, shipping lines are steering clear of a waterway that normally carries 12% of the world’s seaborne trade. And the disruption is spreading, fueling fears of broader economic fallout.  People in Sanaa, Yemen during an anti-Israel and anti-US rally on Jan. 22. Photographer: Mohammed Huwais/AFP The criminal hacking gang LockBit said it was behind a ransomware attack that shut down some of the operations of EquiLend, a financial-technology firm that processes trillions of dollars of securities-lending transactions every month. The company, partly owned by financial firms including Goldman Sachs and JPMorgan, said a “technical issue” involving “unauthorized access to our systems” caused portions of its systems to go offline. Betting against Germany. Qube Research & Technologies has amassed a short bet of more than $1 billion against German companies amid a downturn in global demand that’s slowing Europe’s biggest economy. The hedge fund added to wagers against the likes of automaker Volkswagen over the last two weeks, including disclosing a $131.8 million short against Deutsche Bank. It’s the biggest disclosed short seller of the country’s stocks. British billionaire Joe Lewis pleaded guilty to passing inside corporate information to his private pilots and girlfriend, putting a black mark on the 86-year-old investor’s rise from London’s East End to one of Britain’s richest men. Lewis pleaded guilty to three counts of securities fraud, including conspiracy, in Manhattan federal court on Wednesday. The plea comes six months after he was charged with more than a dozen counts, including securities fraud. The plea deal will likely drastically reduce any sentence for Lewis, who faced as long as 45 years in prison.  Joe Lewis Photographer: Yuki Iwamura/Bloomberg
The Indian-born financier who helped open up Middle Eastern wealth for Masayoshi Son’s $100 billion Vision Fund is attempting a second act. At SoftBank Group’s splashy tech vehicle, Rajeev Misra helped secure commitments worth $45 billion from Saudi Arabia’s Public Investment Fund and $15 billion from Abu Dhabi’s Mubadala Investment Co. Investments in high-flying startups ensued—Uber Technologies and WeWork among them. Many bets blew up as markets turned, and Misra largely stepped back in 2022 after a tenure marred by internal clashes and writedowns. But now he’s back, and this time he’s going solo.  Rajeev Misra Photographer: Sumita Sharma/Bloomberg
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