54b Trigger Warning? China’s Yuan and PMI Turn Bad?

———Part 2 Summary———
The appreciation of the Chinese yuan against the American dollar has paused. A survey of the Chinese services sector scored a historic low. Are these the first indications of an economic slowdown? A slowdown that is not only Chinese but global?

———Episode 54 Intro———

“The pen is mightier than the sword.” “The great unwashed.” “Pursuit of the almighty dollar.” These are phrases we have all heard and they come from a single source: 19th century English writer and politician Edward George Earle Lytton Bulwer-Lytton.  Bulwer-Lytton was a successful novelist, poet and playwright.  His political accomplishments included nine years in Parliament, serving as the British Colonial Secretary, and being offered – AND TURNING DOWN – both a lordship of the Admiralty AND the Crownship of Greece (i.e. king)!  Today he is remembered for writing… the worst opening sentence in the history of the English-speaking peoples:

“It was a dark and stormy night; the rain fell in torrents — except at occasional intervals, when it was checked by a violent gust of wind which swept up the streets (for it is in London that our scene lies), rattling along the housetops, and fiercely agitating the scanty flame of the lamps that struggled against the darkness.”

Episode 54 reviews articles by Jeff Snider covering: the Treasury inflation-protected securities curve inverting, the life span of a post-2008 reflation, the curious appreciation of the Chinese currency, as well as how Fed officials in 1937 convinced themselves of an impending inflationary storm (in the middle of an economic depression).  None of those articles open in the Bulwer-Lytton style — precisely the opposite!  And yet many – some, a few… someone… And yet this podcaster wonders, how might a Eurodollar University educated author open their novel?

It was a dark and stormy depression; bank reserves fell in torrents — except at occasional intervals, when they were checked by a breath of reflation which swept up economists (for it is in the Eccles Building that our scene lies), rousing along the academics, and fiercely inflating the faith in a recovery that struggled against the darkness.

———See It———

AlhambraTube: https://bit.ly/2Xp3roy
Twitter: https://twitter.com/JeffSnider_AIP
Twitter: https://twitter.com/EmilKalinowski
Art: https://davidparkins.com/

———Hear It———

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———Ep 54b Topics———

01:05 The Chinese yuan has been appreciating strongly in value against the dollar… and yet…
02:51 An infographic that maps how offshore dollars turn into onshore yuan
05:00 How is internal currency affected by external dollar tightness?
08:29 When the PBOC shrinks its assets (foreign exchange) what happens to internal currency?
10:44 An appreciating yuan should increase the PBOC’s foreign exchange reserves… and yet
14:24 The appreciation of the Chinese yuan has paused, what does it mean for the global economy?
18:00 China’s PMI scores are weakening as US PMI scores are surging, good news for the USA? No!
21:45 China’s Service PMI score for February is one of the very worst ever recorded
22:55 China’s GDP 6% 2021 target is to be delivered by consumption but can households deliver?

———Ep 54b References———

What If CNY’s Backdoor Still Isn’t A Big Enough Exit?: https://bit.ly/3uT06Nw
There’s Two Sides To Synchronize: https://bit.ly/3cm1j7R
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7

———Who———

Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, taking the backdoor. Art by Master Quillsman, David Parkins. Podcast intro/outro is “Nocturne” by Trevor Kowalski at Epidemic Sound.