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Tag Archives: rebalancing

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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China’s Big Risk(s): Running Out of Room To Tackle

The Chinese simply did what every Economics textbook currently in print says you are supposed to do. When confronted with a downturn, no matter its size you borrow your way through it. In fact, it says the greater the contraction the more you need to lean on finance. The neo-Keynesian model is unyielding on the matter. Using debt to boost aggregate demand in the short run is already tempting fate. But let’s set that aside for a moment. There’s a more basic and bigger problem to consider, one...

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Global Doves Expire: China’s Big 3 Stats Put To Rest RRR Myths

The Fed has its pause. The ECB is going to conduct another T-LTRO. But of all the central bank responses to the “unexpected” global weakness of late 2018, the Chinese’s was supposed to be the leader. The most forceful pushback against a worldwide downturn was reported to have been the PBOC’s “powerful” RRR cuts. China’s central bank conducted two of them in January alone. China’s economic data in 2019, however, is putting to rest more than just the myth of RRR “stimulus.” There’s rebalancing....

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It’s Not A Bad Time To Rebalance

Maybe you don’t like a lot of fuss as an investor, and you want to buy-and-hold a simple portfolio for the long term. That’s fine, but you do have to rebalance periodically. And people who favor simplicity may do that rebalancing on a pre-set schedule – quarterly, semi-annually, or annually. But if you want to be a little more active regarding your rebalancing, now’s not a bad time to consider doing it. Here are some asset class returns for the year through January 30, 2019: You can...

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Gundlach’s Remarks Mean It’s Time To Check Your Allocation

“This is a capital preservation market.” So says Jeffrey Gundlach who can’t argue with anyone who wants to invest in the 2-Year U.S. Treasury, currently yielding around 2.7%. If you choose the 10-year, by contrast, and saddle yourself with 8 more years, you get less than 20 basis points of extra yield. Gundlach is one of the world’s best investors, especially when it comes to bonds, And that means investors can’t always follow him literally because they’re not paying attention to global...

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China’s Global Slump Draws Closer

By the time things got really bad, China’s economy had already been slowing for a long time. The currency spun out of control in August 2015, and then by November the Chinese central bank was in desperation mode. The PBOC had begun to peg SHIBOR because despite so much monetary “stimulus” in rate cuts and a lower RRR banks were hoarding RMB liquidity. Late 2015 was not a fun time in China. The idea of economic rebalancing had been introduced years before largely to try and suggest the...

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China’s Nineties Fears, Not Just Japan

The year 2012 was a turning point, there can be no doubts about that. At least not when objectively and honestly reviewing the data. Up until the worldwide slowdown that hit that year, starting the year before, 2011, in an “unexpected” flareup of global monetary crisis, the Great “Recession” was viewed as harsh, even prolonged. But in the end everyone knew it was just a recession. As Bernanke said in 2009, fix the financial system fix the economy. With everything that central bankers and...

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China’s Hatches Further Battened

The problem with global growth, synchronized or not, is that it isn’t really a thing. It is a made-up concept that accompanies confusion. Why is the economy about to pick up when there is no evidence for that expectation? Global growth. It’s a nonspecific bogeyman that anyone can point to and expect little or often no pushback. It’s nothing more than a distraction, a way to pass the buck when there aren’t enough bucks to go around. The downside to such bland sloganeering is thus obvious. At...

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Losing Economic ‘Reflation’

If “reflation” was born last year in Japan, and I think it was, it was surely given its most tangible dimensions in China. The idea that the Bank of Japan was going to do something magnificent was perhaps always a longshot, but enough given the times for people to hope (sentiment) they might try (helicopter). The Chinese, however, have been relatively more pragmatic. Authorities began 2016 with an actual rather than imagined “stimulus” injection that by around mid-year appeared to be paying...

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No Luck China, Either

Former IMF chief economist Ken Rogoff warned today on CNBC that he was concerned about China. Specifically, he worried that country might “export a recession” to the rest of Asia if not the rest of the world. I’m not sure if he has been paying attention or not, but the Chinese economy since 2012 has been doing just that to varying degrees often just shy of that level. If there’s a country in the world which is really going to affect everyone else and which is vulnerable, it’s got...

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