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Tag Archives: $CNY

Animal Spirits Lick Wounds

Overview:  It took some time for investors to recognize that the scaling back of US tariff plans was not part of a de-escalation agreement. There was an explicit acknowledgment by US Commerce Secretary Ross that there was no quid pro quo. The US tariff split was more about the US than an overture to China.  In fact, as China did in September when the US sanctioned it for buying weapons from Russia, this week it refused a request from the US for a port call in Hong Kong. This, coupled...

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Why Go After Hong Kong?

There may yet be bitter irony in the fact that China’s nascent embrace of capitalism in the late eighties allowed it to survive the wave of failed socialist states which fell all throughout the world at the time. While the Berlin Wall came down, the Eastern bloc nearly disappeared, and even the Soviet Union dissolved, the Chinese would stand almost alone as whatever was left of the Communist dream. But while Beijing had come through in the nineties and transformed China into a modern...

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Markets Paring Exaggerated Response to US Blink

Overview:  The US cut its list of Chinese goods that will be hit with a 10% tariff at the start of next month by a little roe than half, delaying the others until the mid-December.  This spurred a near-euphoric response by market participants throughout the capital markets.  However, as the news was digested, it did not seem as much of a game-changer as it may have initially.  Disappointing Chinese data also seemed to encourage risk-off.   Asia Pacific equities had a muted response to...

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Why You Should Care Argentina More and More Looks Like Argentina

Why don’t you fight the Fed? Sure, central banks and governments give off the impression that they are in control. The idea is repeated as if a fact. We are led to believe they let markets play around in their contained spheres but should anyone get out of hand authorities are there like referees to make sure everything remains inbounds. Whenever a price or an asset class approaches the boundary, woe be it to whomever might challenge the almighty holder of the printing press. Yet, we see all...

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China Repo: Vulnerability or Bottleneck, Risk Aversion and Collateral

Toward the end of June, Chinese RMB money markets seemed like they had weathered the worst of it. One month earlier, in late May, regulators had seized Baoshang Bank Co. sending waves of uncertainty rippling through markets in China and around the world. Authorities were quick to declare “nothing to see here”, blaming the bank’s close relationship with absentee billionaire Xiao Jianhua; seemingly an idiosyncratic problem rather than the first inkling of a systemic one. The overnight SHIBOR...

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Making Sense of the Dollar: Ten Years Later

My first book, Making Sense of the Dollar, was published by Bloomberg Press ten years ago this week.  It was named a Bronze medal winner by Independent Publishers.  It sought to counter the declinists of the period who, understandably, if even mistakenly, thought the dollar was on an exorable path that had been carved by sterling as it lost numeraire status a century earlier.   In 2008, as the book was being written, the euro reached a record high near $1.60, and sterling was still...

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Yen Remains Bid, While Macri’s Loss in Argentina Weighs on Struggling Mexican Peso

Overview:  China again tried to temper the downside pressure on the yuan, and this appears to be helping the risk-taking attitude.  Many centers in Asia were closed today, including Japan and India, though most of the other equity markets advanced modestly, including China, Korea, and Australia.  Europe's Dow Jones Stoxx 600 opened firmer but is staddling little changed levels unable to stain any upside momentum.  Italian equities, including bank shares, are struggling to stabilize after...

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Every Currency is a Snowflake

The dollar was mostly weaker against the major currencies last week.  The Swiss franc and Japanese yen were joined by the seemingly unlikely candidate, the Swedish krona, to have gained about 1% against the US dollar last week to the lead the majors.  The yen and franc's gains extended moves already underway and perhaps, accentuated by the sell-off in stocks and the rally in bonds in response to the heightened trade tensions. The krona has the appeal of a high beta euro, and as the...

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PBOC Continues to Check CNY Fall While Euro has Shrugged Off Italy’s Political Turmoil

Overview:  The S&P 500 gapped higher yesterday and posted its largest gain in two months.  Most of Asia Pacific but China and Hong Kong advanced. The three-day recovery in the MSCI Asia Pacific was insufficient to offset the losses at the start of the week, and the benchmark finished lower for the third consecutive week.  Europe's Dow Jones Stoxx 600 is paring yesterday's 1.6% gain, which was the largest in almost two months. US shares are trading with a heavier bias in Europe.   ...

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The Myth of CNY DOWN = STIMULUS Won’t Die

On the one hand, it’s a small silver lining in how many even in the mainstream are beginning to realize that there really is something wrong. Then again, they are using “trade wars” to make sense of how that could be. For the one, at least they’ve stopped saying China’s economy is strong and always looks resilient no matter what data comes out. Even after all that supposed “stimulus” starting in the middle of last year it’s time to acknowledge how ineffective it has been. But in doing so, the...

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