Tag Archive: dollar

Not Political Risk For China, But Unwelcome Reality

China’s Communist Party concluded the Third Plenum of its 18th Congress in November 2013. It was the much-discussed reform mandate that many in the West took to mean another positive step toward neo-liberal reform. At its center was supposed to be a greater role for markets particularly in the central task of resource allocation. In some places, the Party’s General Secretary Xi Jinping was hailed as the great Chinese reformer.

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Location Transformation or HIBORMania

The Communist Chinese established their independence on September 21, 1949. The grand ceremony commemorating the political change was held in Tiananmen Square on October 1 that year. The following day, October 2, the Resolution on the National Day of the People’s Republic of China was passed making October 1to be China’s National holiday. It typically kicks off the second of China’s Golden Week holidays. The first relates to the Chinese New Year...

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Little Behind CNY

The framing is a bit clumsy, but the latest data in favor of the artificial CNY surge comes to us from Bloomberg. The mainstream views currency flows as, well, flows of currency. That’s what makes their description so maladroit, and it can often lead to serious confusion. A little translation into the wholesale eurodollar reality, however, clears it up nicely.

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PBOC RMB Restraint Derives From Experience Plus ‘Dollar’ Constraint

Given that today started with a review of the “dollar” globally as represented by TIC figures and how that is playing into China’s circumstances, it would only be fitting to end it with a more complete examination of those. We know that the eurodollar system is constraining Chinese monetary conditions, but all through this year the PBOC has approached that constraint very differently than last year.

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Swimming The ‘Dollar’ Current (And Getting Nowhere)

The People’s Bank of China reported this week that its holdings of foreign assets fell slightly again in August 2017. Down about RMB 21 billion, almost identical to the RMB 22 billion decline in July, the pace of forex withdrawals is clearly much preferable to what China’s central bank experienced (intentionally or not) late last year at ten and even twenty times the rate of July and August.

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Global Asset Allocation Update: Step Away From The Portfolio

There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. There are no changes to the portfolios this month. The post Fed meeting market reaction was a bit surprising in its intensity. The actions of the Fed were, to my mind anyway, pretty much as expected but apparently the algorithms that move markets today were singing from a different hymnal.

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When You Are Prevented From Connecting The Dots That You See

In its first run, the Federal Reserve was actually two distinct parts. There were the twelve bank branches scattered throughout the country, each headed by almost always a banker of local character. Often opposed to them was the Board in DC. In those early days the policy establishment in Washington had little active role. Monetary policy was itself a product of the branches, the Discount Rate, for example, often being different in each and every...

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The Two Parts of Bubbles

What makes a stock bubble is really two parts. Most people might think those two parts are money and mania, but actually money supply plays no direct role. Perceptions about money do, even if mistaken as to what really takes place monetarily from time to time. In fact, for a bubble that would make sense; people are betting in stocks on one monetary view that isn’t real, and therefore prices don’t match what’s really going on.

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Moscow Rules (for ‘dollars’)

In Ian Fleming’s 1959 spy novel Goldfinger, he makes mention of the Moscow Rules. These were rules-of-thumb for clandestine agents working during the Cold War in the Soviet capital, a notoriously difficult assignment. Among the quips included in the catalog were, “everyone is potentially under opposition control” and “do not harass the opposition.” Fleming’s book added another, “Once is an accident. Twice is coincidence. Three times is an enemy...

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Bi-Weekly Economic Review: Extending The Cycle

This economic cycle is one of the longest on record for the US, eight years and counting since the end of the last recession. It has also been, as almost everyone knows, a fairly weak expansion, one that has managed to disappoint both bull and bear.

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Weird Obsessions

People often ask why I care so much about China. In some ways the answer is obvious, meaning that China is the world’s second largest economy (the largest under certain methods of measurement). Therefore, marginal changes in the Chinese economy are important to understanding our own global situation.

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Brazil’s Reasons

Brazil is another one of those topics which doesn’t seem to merit much scrutiny apart from morbid curiosity. Like swap spreads or Japanese bank currency redistribution tendencies, it is sometimes hard to see the connection for US-based or just generically DM investors. Unless you set out to buy an emerging market ETF heavily weighted in the direction of South America, Brazil’s problems can seem a world away.

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Fading Further and Further Back Toward 2016

Earlier this month, the BEA estimated that Disposable Personal Income in the US was $14.4 trillion (SAAR) for April 2017. If the unemployment rate were truly 4.3% as the BLS says, there is no way DPI would be anywhere near to that low level. It would instead total closer to the pre-crisis baseline which in April would have been $19.0 trillion. Even if we factor retiring Baby Boomers in a realistic manner, say $18 trillion instead, what does the...

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Chinese Basis For Anti-Reflation?

Yesterday was something of a data deluge. In the US, we had the predictable CPI dropping again, lackluster US Retail Sales, and then the FOMC’s embarrassing performance. Across the Pacific, the Chinese also reported Retail Sales as well as Industrial Production and growth of investments in Fixed Assets (FAI). When deciding which topics to cover yesterday, it was easy to leave off the Chinese portion simply because much of it didn’t change.

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The ‘Dollar’ Devil Shows Itself Again In China

Some economic and financial conditions leave a yield curve as a more complex affair.Then there are others that are incredibly simple.The UST yield curve is the former, while right now the Chinese Treasury curve is the latter.

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Questions Persist About China Trade

Chinese trade statistics were for May 2017 better than expected by economists, but on the export side questions remain as to their accuracy. Earlier this year discrepancies between estimates first published by the General Administration of Customs (GAC), those you find reported in the media, and what is captured by the National Bureau of Statistics (NBS), backed up by data from the Ministry of Commerce, became noticeable.

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All About Inventory

Andy Hall has been called the God of Oil. As chief of Astenbeck Capital, he has proven at times that even gods can be mortal. In the “rising dollar” period, for example, after making money on the way down Mr. Hall went bullish.

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Bi-Weekly Economic Review: The Return of Economic Ennui

The economic reports released since the last of these updates was generally not all that bad but the reports considered more important were disappointing. And it should be noted that economic reports lately have generally been worse than expected which, if you believe the market to be fairly efficient, is what really matters.

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Not Do We Need One, But Do We Need A Different One

On March 24, 2009, then US President Barack Obama gave a prime time televised press conference whose subject was quite obviously the economy and markets. The US and global economy was at that moment trying to work through the worst conditions since the 1930’s and nobody really had any idea what that would mean.

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Suddenly Impatient Sentiment

Two more manufacturing surveys suggest sharp deceleration in momentum, or, more specifically, the momentum of sentiment (if there is such a thing). The Federal Reserve’s 5th District Survey of Manufacturing (Richmond branch) dropped to barely positive, calculated to be just 1.0 in May following 20.0 in April and 22.0 in March.

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