Jawbones at the ready? Reserve Bank governor Glenn Stevens must have something to say about the economy that he wants us all to understand. Otherwise, why unsheath his jawbone twice in the next eight days? The first will be at a Goldman Sachs function in New York City early tomorrow morning, our time, where he will no doubt tell us what the Reserve Bank thought of last week’s strong jobs data for March and lay out the economic background to the federal government’s second budget next month (to help Treasury get it right this time). Then in Sydney a week tomorrow, Stevens releases his inner jawbone for a second time in eight days, and this time he will be able to talk about the March quarter’s Consumer Price Index, due out on Wednesday, which will contain no fears for the central bank. And interest rates no doubt will be raised at both meetings. — Glenn Dyer

China slide? China’s central bank whacked a massive 1% off its key required reserve (asset) requirement ratio last night for the second time this year to try to get the country’s banks to lend more money to business (especially property companies and buyers). The cut, to 18.5%, applies from today and was only the second cut of its size recorded in China — the other was in late 2008 in the depths of the GFC as the economy teetered on the brink of recession. The latest cut could help take some of the pressure off the country’s sharemarkets this morning by allowing more money to be pumped into the already hot markets. This comes after Chinese market authorities tried to cool the boom in Chinese and Hong Kong markets late on Friday. By the time Crikey readers digest this bite, trading in markets from Sydney to China and beyond will be well underway today and we will know if the cut in the reserve ratio has offset what could be a nasty, red ink-stained start to the week as investors react to those moves on Friday. This morning the Australian business-focused papers, The Australian Financial Review and The Australian (despite a page one story on China and reports on the market boom on pages 23 and 24), missed the reserve ratio move completely, even though it was known by 7pm in Australia. — Glenn Dyer

China shorts. But there’s a bit of a mixed message from China: on Friday night, regulators and the two exchanges and the securities industry sparked a sell-off on the futures market, and then in Europe and the United States. How? Well, China’s securities regulator issued its strongest warning yet about the country’s sharemarket, telling new investors to be careful about risk, and tightened rules on margin lending by brokers. Meanwhile, the country’s two stock exchanges in Shanghai and Shenzhen said they would make it easier to short more than 1000 big and medium-sized stocks that have been favoured by punters in the Chinese and Hong Kong markets. Shorting is one of capitalism’s most aggressive and controversial sharemarket practices. For the government to approve and encourage its use, it must mean that it is very scared the market surge could get out of hand, if it hasn’t done so already. So was this also why the reserve ratio decision appeared last night, in time for the start of trading in Asian markets this morning? The reserve decision will allow Chinese banks to go on funding the market boom (and not lending to companies needing low-cost loans). The sharemarket boom has well and truly bolted, and any correction from now on is likely to be rough and expensive. The Shanghai market jumped 2.2% on Friday alone before the regulators’ announcements were issued. That took the rise in April to 14% and 33% so far this year. The Hong Kong market is up more than 17% so far in 2015. A move or two too late? — Glenn Dyer

Greece plays blind date. It’s the latest way of playing Blind Date in Europe: the partners for the “romantic” getaway are known — Greece and the other members of the eurozone, plus the International Monetary Fund. The location and date for the getaway has been selected in advance — Riga, the Latvian capital, and April 24. But just who goes home with Greece remains the US$170 billion question, but no one is betting there will be a Perfect Match by the end of the meeting on Friday night. So it’s more like a game of Jeopardy. At the weekend European Central Bank President Mario Draghi rejected speculation that Greece may be forced to abandon the euro, reiterating that the single eurozone currency is irrevocable. He told a Washington press conference that he stood by a comment he made in August 2012 that the euro “cannot be reversed”. But Reuters reported at the weekend that sources said the Greek government was rounding up every euro it could find to allow it to pay 2.16 billion euros at the end of this month for public servants wages, salaries and pensions. And Greece’s Ekathimerini newspaper reported on Friday that central banks of south-eastern European countries have told subsidiaries of Greek lenders operating in their countries to exit all exposure to Greek sovereign debt, which the market analysts say is a sign that a Greek default is imminent and no one wants to be stuck with dodgy Greek debt and big losses. — Glenn Dyer

Peter Fray

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