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Tag Archives: China

While The Fed Chases The Unemployment Rate, TIC’s Eurodollar Deflation Case Is Unusually Unambiguous

The Chinese yuan had traded in a curiously narrow range ever since mid-June. Stuck, it seemed, between 6.50 at the bottom and around 6.45 ceiling, the lack of movement in either direction raised suspicions of concerted official effort. China’s officials, obviously, certainly not those from the Federal Reserve who spend all their time scouring drug reports and benefits cliffs so as to try to legitimize the unemployment rate rather than pay any mind whatsoever to dollars and global money.On...

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Spike in Energy Prices Suggests That Sharp Changes Are Ahead

Yves here. Leroy R recommended the last Gail Tverberg piece, where she broadens out from her usual focus on energy to the issues of complexity and collapse. I decided to repost it because it’s meaty and thus likely to provoke a good discussion. That said, while I agree completely with her overview statement, that the trend towards complexity has gone too far, I have to beg to differ with her in making energy a central driver. What has made the increase in “complexity” destabilizing is that it...

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Jim Chanos: China’s “Leveraged Prosperity” Model is Doomed. And That’s Not the Worst

Yves here. We’ve pointed out from time to time with respect to China that no large economy has ever made the transition from being investment-led to consumption-led without suffering a financial crisis. Here, short-seller Jim Chanos, who has been too early with respect to China longer than Nouriel Roubini was with respect to the global financial crisis, argues that the Chinese real estate bubble has gotten so out of hand despite repeated efforts by the government to let air out of it that bad...

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Trying To Invest Prosperously In These Times Of China’s Common Prosperity

Maybe the problem is the slogans, though I seriously doubt it. There are, admittedly, way too many and perhaps there is something lost in the translation. Going from Chinese to English can be notoriously tricky, and by sheer number of official catchphrases odds are a few are going to be miscast at the very least. Rebalancing. Rejuvenation. Dual Circulation. No Sharp Turns. Nowadays what Xi Jinping and the rest are calling Common Prosperity.It doesn’t take much to filter each via the...

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The Jump in Rates Does Little for Sterling, the Canadian Dollar, and the New Zealand Dollar

Overview:  Weak growth impulses from China and a continued rise in energy prices greets the new week.  Equities are struggling.  Hong Kong, Japan, South Korea, and Taiwan fell in Asia Pacific activity.  Europe's Dow Jones Stoxx 600 is about 0.5% lower near midday, while US futures indices are also nursing small losses.  Crude is trading at new highs that puts November WTI above $83 and Brent above $85 a barrel.  Benchmark 10-year yields are mostly 4-6 bp higher.  A larger than expected jump...

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The Dramatic Rise in Energy Prices is Ultimately Deflationary

The Swiss had imposed negative rates on foreign currency deposits in the 1970s to counter the upward pressure on the franc, but Denmark became the first central bank to put its policy rate below zero in 2012.  There are now around $11.8 trillion of negative-yielding bonds, the least, incidentally, since mid-2020.  At the end of 2019, the value of bonds with a negative yield was slightly below $11.3 trillion. Nevertheless, the meaning and implications of negative-yielding interest rates...

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CAD Extends Gains, While Yen Slumps Further

Overview:  The S&P 500 and NASDAQ gapped higher yesterday and closed strong, helped by robust earnings reports.  This, coupled with TSCM earnings and Beijing easing mortgage lending, helped lift the MSCI Asia Pacific Index for the third consecutive session.  The returning Hong Kong market, Tokyo, and Taipei advanced more than 1% to lead the region.  The Dow Jones Stoxx 600 gapped higher for the second consecutive session, and if it can sustain its gains, it will be the best week in six...

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Greenback’s Pullback is Extended, but Getting Stretched

Overview:  Investors seem undeterred by the firm oil and gas prices and have taken stocks and bonds higher today.  Stronger risk appetites are also evident in the foreign exchange market, where the dollar is weaker against most currencies. The JP Morgan Emerging Market Currency Index is higher for a third day after falling for the previous six.  The strong recovery in US equities yesterday encouraged the MSCI Asia Pacific Index to extend its advance.  It has now risen in five of the past six...

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The Dollar Slips Ahead of CPI

Overview:  The US dollar is trading with a lower bias ahead of the September CPI report due early in the North American session.  Long-term yields softened yesterday and slipped further today, leaving the US 10-year yield near 1.56%.  European benchmark yields are 3-4 bp lower.  The shorter-end of the US coupon curve, the two-year yield is firmer. Equities are enjoying a slightly better tone, though Japan, Taiwan, and Australia's markets traded heavily in the Asia Pacific region. Hong Kong's...

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If Dollar History Is A Guide, More Than A Growth Scare

Forgotten now, overridden by the arrival of the coronavirus, Germany’s economy was already well into recession before COVID. Quite a long time before. It wasn’t an earth-shattering collapse reaching downward to an incredible depth, that became the later effect of overreacting to the pandemic. We will simply never know what that prior contraction would have looked like, and how bad it would’ve gone, had SARS never escaped China.Oddly enough, it was the Chinese economy which had much to do...

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