Chinese bank reserves contracted in April 2018 for the first time in almost two years. The decline was small, just 0.2%, but it is still represents a significant deviation from the limited growth since the turmoil in 2015 and early 2016. The decline in reserves further corroborates our theory of events. To briefly review, China has a currency problem first [...]
When we last left off with the TIC data, the figures showed pretty clearly Japan’s retreat from “dollar” dealing during January and February. Global liquidations occurred during January and February. Therefore, it was reasonable to speculate upon Japanese origins of those liquidations. That wasn’t the only interesting development revealed by TIC. Over in Hong Kong, there was a surge in [...]
The sweeping tide of populist election victories has not been limited to just the US and Europe. There have been torrents in Asia, too. Though there is some disagreement whether he counts among them or not, India’s Narendra Modi swept to a historic electoral triumph in May 2014 sure sounding a lot like one, maybe even one of the first. [...]
January was the last month in which China’s National Bureau of Statistics (NBS) specifically mentioned Fixed Asset Investment (FAI) of state holding enterprises (or SOE’s). For the month of December 2017, the NBS reported accumulated growth (meaning for all of 2017) in this channel of 10.1%. Through FAI of SOE’s, Chinese authorities in early 2016 had panicked themselves into unleashing [...]
A few weeks ago, the PBOC stunned many mainstream observers by reducing the RRR. It cut against the preferred narrative that the central bank was “tightening” in anticipation of an economic and therefore inflationary breakout (labor shortages, don’t you know). It didn’t seem to make sense. From the perspective of globally synchronized growth, it wouldn’t. Coming at it instead from [...]
Early last month, Deutsche Bank replaced one CEO pledged to paring back the bank’s ailing franchise with another committed to doing the same thing only more quickly. As I wrote at the time, “Cryan isn’t being ousted because he was wrong, but because he was right.” In comes Christian Sewing whose plans are starting to come into focus. It’s not [...]
There’s one final step to our examination of QE and bank reserves (you’ll need to read through at least Part 1, though Part 2 is worth the time, too). It’s all well and good to try and map out complex subjects using very simple models. That can help illuminate concepts, but we should always strive for validation. The heart of the [...]
Chinese exports rose 12.9% year-over-year in April 2018. Imports were up 20.9%. As always, both numbers sound impressive but they are far short of rates consistent with a growing global economy. China’s participation in global growth, synchronized or not, is a must. The lack of acceleration on the export side tells us a lot about what to expect on the [...]
Despite last month’s substantial revisions that wiped out most of “residual seasonality” from the seasonally adjusted revolving consumer credit series, it still remains for this year. The Federal Reserve staff eliminated the large swings in credit card use pivoting around the Christmas holiday. Consumers buy up a lot of stuff in advance of it, and then spend some several months [...]
Since we’ve already cracked open the accounting, it makes some sense to take our example into an important corollary examination (if you haven’t yet, you’ll need to read through Part 1). In our prior examples, we’ve assumed that the swap of risk-free assets on Bank A’s asset side is a neutral trade. That is, there aren’t any costs or downside [...]
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