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Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today's release of the Fed's December minutes.

Few Chinese Sell Yuan On First Day Of New Year After Barrage Of New Capital Controls

Whether due to the spate of new measures or for some other reason, despite concerns of a flood of FX conversions from Yuan to Dollars on the first day following the Yuan reset, there was little evidence at Beijing and Shanghai banks on Tuesday that Chinese individuals were rushing to lock in 2017 quotas to buy foreign exchange.

China Hits A Fork In The Road

There’s simply too much debt all throughout the system, and it’s due for a behemoth restructuring. You look at some of the numbers and graphs, and you wonder: what were they thinking?

China Cuts Dollar Weight In FX Basket In Desperate Attempt To "Project Image Of Yuan Stability"

With the Yuan's relentless plunge to all time lows clearly bothering China and threatening to breach  the symbolic level of 7 Yuan to the dollar, overnight Beijing decided to do something about it. Only, instead of actually implementing much needed, and long overdue economic reforms, banking sector deleveraging or financial liberalization, China again took the easy way out.

Global Stocks Rise, Dow Flirts With 20,000 As London Reopens; Oil In Longest Winning Streak In 7 Years

Global markets continued their levitation with the UK returning from vacation, pushing the MSCI Asia Pacific Index higher for the first time in seven days, while oil headed for the longest winning streak in almost seven years ahead of the promised OPEC production cut which is set to begin in just days. The USDJPY rose for a second day, pushing US equity futures higher and the DJIA is once again teasing with the 20,000 mark.

Global Stocks, US Futures Rise In Thin Trading As Volumes Plunge

Most world markets have reopened following the holiday weekend, but trading volumes remain significantly muted. Asian and European shares advance modestly amid low volumes with U.K. and Ireland closed; S&P futures are little changed while the dollar rose and oil extended its longest winning streak in four months.

How To Invest In The New World Order

The boom turns to bust as the Eurodollar market breaks. If the cycle gets out of hand, as it did from 2008 onwards, banking solvency is not only limited to local emerging market banks, but to the international banking community at large. This is exactly where we are at now and if history repeats itself, which we believe it will, a new financial crisis is brewing just under the surface as the dollar moves into its second leg.

Futures Unchanged In Thin Pre-Holiday Tape; Italian Bank Bailout Lifts European Shares

European stocks halted two days of declines, with the Stoxx 600 fractionally in the green and Italy’s bonds climbing after Monte Paschi requested a bailout and Italy pledged to provide support for its other ailing lenders. S&P futures were little changed among extremely thin volumes while Chinese stocks dropped amid concerns on higher borrowing costs.