The problem with exchange rates is that they don’t always tell us anything about what everyone seems to think. In fact, the more wholesale financial exhibitions in a particular currency, the less traditional interpretations conform. In many ways, this is very much like transitioning between classical physics in the Newtonian, deterministic paradigm into quantum physics’ often strange and seemingly incoherent [...]
China has exhibited the tendency of late toward political considerations of certain economic and financial factors rather than allow open interpretation. That point has been expressed about Chinese GDP but it also applies to Chinese markets, particularly those directly connect to the “dollar” – the CNY/USD exchange rate compressed to a straight, horizontal line from March until mid-August and now [...]
China’s trade estimates continue the trend of the global economy pushing closer to recession, assuming that it is not already there. We know that the lower part of the global supply chain below Chinese manufacturing and assembly, the resources and materials flow, has already been pushed beyond simple recession in some places, like Brazil, into defining a new disastrous economic [...]
While some are shocked that China may have “used” a huge amount of “reserves” in November, that is only because so many myths and anachronisms continue to abound in the mainstream and beyond. Any conversation about forex in the context of central banks and national government agencies is one that still views money from a traditional standpoint – as if [...]
Global Growth Recession risks are low and growth should improve in 2016. Excess supply is especially apparent in the raw materials/commodities sectors. This state of overcapacity/supply and a strong dollar combined from 2014-2015 to create an environment of falling prices and sluggish growth in global manufacturing. The services sector continues to perform well. Continued expansion in the US coupled with a recovering [...]
If the junk bond bubble was this week’s most visible inducement toward illiquidity, there have been more than enough indications that might corroborate and explain. With a few more days trading, the huge jump in BofAML’s CCC junk index rate has been confirmed – with another albeit smaller surge again yesterday. At now 16.74%, that is significantly above the prior [...]
The GDP statistics for Brazil as of Q3 2015 were worse than expected in every way imaginable. Real GDP fell 4.5% Y/Y, which is nearly double the worst quarter Brazil experienced during the Great Recession. Household spending fell 1.7%, the third consecutive quarter of contraction, while fixed investment declined an astounding 15%. That was the sixth straight reduction and the [...]
On November 9, the OECD issued its twice-yearly Economic Outlook statbook, updated for projections into Q3 for most national economic accounts. Despite past enthusiasm for global prospects in 2015, the narrative has not-so-subtly shifted, a major transformation coming from an orthodox bastion like the OECD. Global growth prospects have clouded this year. Global growth has eased to around 3%, well [...]
Chinese stocks “unexpectedly” plunged last week in a fit of stormed selling that reminded of August rather than the placidity that has been claimed of China since. By mainstream account, China has fixed its bout of “selling UST” and “outflows” while also providing two double doses of “stimulus.” The PBOC had even taken to a higher fix in the middle [...]
While the media remains fixed on supply, the rest of the financial complex is prepared elsewhere. On Monday, Saudi Arabia announced what the mainstream has been waiting for (and often blatantly demanding) since the summer “rebound” faded into August liquidations. Given the mythical status of Saudi supply, this was the one country thought to be the only possible savior. Crude [...]
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