China's Central Bank Shuts the Spigot
But in China, such grand statements usually precede reality by years, decades or worse.
The central bank might take more inaction when lenders need it, meaning the case last month was the start of a trend. Or the injury inflicted on lenders could prove a one-off move, only to scare banks into a healthier lifestyle.
In that case, interbank liquidity would rise, rates would fall and money would flow once again into investments -- and probably derivatives. To extend the medical metaphor, that means back to smoking and drinking.
"Once that reminder has been sent out, so policymakers move on," says James Berkeley, managing director of London-based management advisory service Ellice Consulting. "My multinational clients and investors' overwhelming response was that this had been a planned move at the outset. As for the future, without hard evidence, it is too early to tell what further action may be taken."At the time of publication the author had no position in any of the stocks mentioned. Ralph Jennings is on LinkedIn. This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV