Tag Archive: China

The Dollar-driven Cage Match: Xi vs Li in China With Nowhere Else To Go

2019-10-22

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2019-10-22

China Industrial Production, 1998-2019
China’s growing troubles go way back long before trade wars ever showed up. It was Euro$ #2 that set this course in motion, and then Euro$ #3 which proved the country’s helplessness. It proved it not just to anyone willing to honestly evaluate the situation, it also established the danger to one key faction of Chinese officials.

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FX Weekly Preview: The Week Ahead Excluding Brexit

2019-10-21

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2019-10-21

I feel a bit like the proverbial guy that asks, "Besides that, Mrs. Lincoln, how did you like the play?" in trying to discuss the week ahead without knowing the results of the UK Parliament's decision on the new deal negotiated between Prime Minister Johnson and the EU.   I will write a separate note about Brexit before the Asian open. However, there are several other developments next week that will help shape the investment climate.

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China’s Dollar Problem Puts the Sync In Globally Synchronized Downturn

2019-10-18

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2019-10-18

China Exports, 2006-2019
Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics.

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FX Daily, October 15: Non-Disruptive Brexit Hopes Remain Elevated

2019-10-15

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2019-10-15

Overview: Ideas that a Brexit deal may be close is helping to firm sterling, while soft Chinese PPI offset the spike in food prices to show the weakness of the world's second-largest economy. Minutes from the meeting of the Reserve Bank of Australia earlier this month kept a door open to a rate cut before the end of the year.  Japan returned from holiday, and the Nikkei gapped higher, and its nearly 1.9% advance led the MSCI Asia Pacific Index...

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FX Daily, October 14: Optimism Took the Weekend Off

2019-10-14

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2019-10-14

Overview: Japanese and Canadian markets are on holiday today. While the US bond market is closed, equities maintain their regular hours today. Asia Pacific equities rallied, led by 1% of more gains in China, Taiwan, South Korea, and Thailand. The buying did not continue in Europe, and after a 2.3% rally before the weekend, the Dow Jones Stoxx 600 is about 0.75% lower in the European morning.

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FX Weekly Preview: Same Three Drivers in the Week Ahead but Changing Tones

2019-10-14

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2019-10-14

Three themes have dominated the investment climate:  US-China tensions, Brexit, and the policy response to the disinflationary forces.  None have been resolved, which contributes to the uncertainty for businesses, households, and investors.  However, the negativity that has prevailed is receding a little. 

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EM Preview for the Week Ahead

2019-10-14

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2019-10-14

EM benefited greatly from the improvement in US-China trade relations and quite possibly Brexit.  The dollar is likely to remain under some pressure near-term as a result. Yet we must caution investors against getting too optimistic.  The details of the partial trade deal still need to be worked out, while existing tariffs will still remain in place if the deal is signed next month as most expect.

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FX Daily, October 10: Setback for the Greenback

2019-10-10

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2019-10-10

Conflicting headlines about US-China trade whipsawed the markets in Asia, but when things settled down, perhaps, like the partial deal that has been hinted, net-net little has changed. Asian equities were mixed, with the Nikkei, China's indices, and HK gaining, while most of the others slipped lower. The 0.9% gain in the S&P 500 yesterday failed to lift European stocks, and the Dow Jones Stoxx 600 is near the week's lows.

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FX Daily, October 9: Hope is Trying to Supplant Pessimism Today

2019-10-09

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2019-10-09

Overview: The 1.5% drop in the S&P 500 and the deterioration of US-China relations and the prospects of a no-deal Brexit failed did not carry over much into today's activity. Asia Pacific equities were mostly a little lower, though China and India bucked the regional trend, while Korea was closed for a national holiday. Taiwan led the losses amid a sell-off in semiconductor stocks.

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FX Daily, October 7: Markets Unsettled to Start the Week

2019-10-07

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2019-10-07

Overview: The global capital markets are uneasy as the risks that have dominated investors' concerns--trade and Brexit--remain front and center today. Expectations are low that this week's talks between the US and China will lead to a breakthrough or will be sufficient to postpone further the next round of tariff increases set for next week. 

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FX Weekly Preview: China Returns, ECB Record, Fed Minutes and the Week Ahead

2019-10-07

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2019-10-07

Many high-income countries experienced little growth but strong price pressures in the 1970s. Since the mainstream economics said the two were mutually exclusive, a new term had to be created, hence stagflation.  Fast forward almost half a century later, and mainstream economists are still having a problem deciphering the linkages between prices and economic activity, such as inflation and employment.

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FX Daily, October 2: Greenback Shows Resiliency, Stocks Don’t

2019-10-02

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2019-10-02

Shockingly poor ISM data sent shivers through the market on Tuesday and hand the S&P 500 its biggest loss in five weeks and took the shine off the greenback. The S&P 500 reached a five-day high before reversing course and cast a pall over today's activity.  All the markets were lower in Asia Pacific, with China and India closed for holidays.

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FX Weekly Preview: Forces of Movement at the Start of Q4 19

2019-09-30

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2019-09-30

The world's largest economy appears to have grown by about 2% in Q3 at an annualized pace, the same as in Q2, and in line with what many Fed officials understand to be trend growth.  The strength of the US labor market underpins consumption, the powerful engine of the US economy.  The latest readings of both the labor market and consumption will highlight the economic data in the week ahead. 

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FX Daily, September 27: Markets Limp into the Weekend with the Euro Languishing at New Lows and Sterling under Pressure

2019-09-27

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2019-09-27

Overview: Equities remain under pressures. The MSCI Asia Pacific Index lower today, though Chinese and Australian shares were firmer. It is the second consecutive week the benchmark has fallen. European equities are firmer, but not enough to offset the losses earlier this week and are set to snap a five-week advance.

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FX Daily, September 25: Risk Appetite Stymied: Dollar Recovers while Stocks Slide

2019-09-25

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2019-09-25

Overview:  Global equities and fixed income reacted to the large moves yesterday in the US when the 10-year note yield fell eight basis points, and the S&P 500 fell by 0.85%.  Investors have focused on three separate developments and two of which came from President Trump's speech at the UN.  He dismissed the likelihood of a short-term trade deal with China and was critical of the large social media platforms.

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FX Daily, September 24: UK Supreme Court Deals another Defeat to Johnson

2019-09-24

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2019-09-24

Overview: A fragile calm hangs over the capital markets today.  Equities in Asia Pacific were narrowly mixed.  Japan, China, and HK advanced. India saw some profit-taking after a two-day surge in response to the unexpected corporate tax cuts but recovered in late dealings. European shares are recovering after posting its largest loss in a month yesterday (-0.8%). US shares are trading firmer in Europe.

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Where The Global Squeeze Is Unmasked

2019-09-17

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2019-09-17

US Exports of Goods, NSA 1989-2019
Trade between Asia and Europe has dimmed considerably. We know that from the fact Germany and China are the two countries out of the majors struggling the most right now. As a consequence of the slowing, shipping companies have had to make adjustments to their fleet schedules over and above normal seasonal variances.

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Dollar (In) Demand

2019-09-12

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2019-09-12

All China's Dollars, 2016-2019
The last time was bad, no getting around it. From the end of 2014 until the first months of 2016, the Chinese economy was in a perilous state. Dramatic weakness had emerged which had seemed impossible to reconcile with conventions about the country. Committed to growth over everything, and I mean everything, China was the one country the world thought it could count on for being immune to the widespread economic sickness.

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