PBoC Injection Shows China Worries About Outflows- WSJ
It's human nature for us to want to keep our wealth close at hand. Trouble is, you have all your wealth in one jurisdiction, and should that jurisdiction find itself in an economic crisis, all that “diversification” will be seriously at risk. If we’re being really truthful with ourselves, governments pose a greater threat than the average thief, as they can steal legally. Much of the world has gone on a massive spending spree and has, in effect, used a credit card to do so. Soon, that bill will need to be paid and the jurisdictions that are in debt will unquestionably be revealed to be insolvent. The economic crisis, when it hits, will be sudden and will be devastating.
- Oil moves nearer six-year low on Japan data, oversupply (Reuters)
- Commodity Slide Spurs Treasuries as Emerging Markets Extend Drop (BBG)
- Because 7 years is "just right" - BOE Official Says Don’t Wait Too Long on Rates (WSJ)
- How Medicare Rewards Copious Nursing-Home Therapy (WSJ)
- Millennials Are Developing Parents’ Taste for Jaguars, Cadillacs (BBG) ... and even more debt
- Mexican Billionaire’s Firms Swept Up in U.S. Probe of Citigroup (BBG)
"It's A Warzone": Images Of Devastation After Chinese Explosion; Toxic Chemicals Feared; Port Ops DisruptedSubmitted by Tyler Durden on 08/13/2015 03:50 -0400
Overnight the world realized that there is much more devaluation to come, which in turn led to a tidal move higher in the EURUSD as the European banks who had been short the EURCNH (probably the same ones that were long the EURCHF in January ahead of the SNB shocker) continued covering their exposure, and in turn pushed the EURUSD well above 1.11, while the CHF continued to tumble alongside the USD at least when it comes to Europe. In Asia, and local emergin markets, however, it was a different FX story enitrely.
To help remind readers of what happens when the entire world engages in wholesale currency war, here is a complete list of all the recent FX interventions, courtesy of Stone McCarthy.
- China Rattles Markets With Yuan Devaluation (BBG)
- China Move Sparks Wave of Yuan Selling (WSJ)
- China's devaluation raises currency war fear as Greece strikes deal (Reuters)
- Protests return to Ferguson streets, state of emergency declared (Reuters)
- Heavily armed 'Oath Keepers' inject new unease to riot-hit Ferguson (Reuters)
- Greece Secures Bailout Deal After All-Night Talks in Athens (BBG)
- U.S. Identifies Insider Trading Ring With Ukraine Hackers (BBG)
When China's tinderbox economy implodes, who will be left to bid up the world's surplus commodities and real estate?
- Grim China data keeps stimulus hopes alive (Reuters)
- Berkshire Hathaway to Buy Precision Castparts for About $37 Billion (BBG)
- Greece, lenders in final push to seal new bailout (Reuters)
- Quantitative Easing With Chinese Characteristics Takes Shape (BBG)
- Greece nears €86bn accord with creditors (FT)
- Oil Futures Signal Weak Prices Could Last Years (WSJ)
- Drop in long-term investment hinders eurozone recovery (FT)
- Two shot in Ferguson amid standoff between police, protesters (Reuters)
"They'll Blame Physical Gold Holders For The Failure Of Monetary Policies" Marc Faber Explains EverythingSubmitted by Tyler Durden on 08/09/2015 19:00 -0400
"The future is unknown and we are not dealing with markets that are free markets anymore...now we have government interventions everywhere. [But] in the last say twelve months, I have observed an increasing number of academics who are questioning monetary policies. That's why I think they will take the gold away and go back to some gold standard by revaluing the gold say from now $1000/oz to say $10,000 dollars. An individual should definitely own some physical gold. The bigger question is where should he store it? because... the failure of monetary policies will not be admitted by the professors that are at central banks, they will then go and blame someone else for it and then an easy target would be to blame it on people that own physical gold because - they can argue - well these are the ones that do take money out of circulation and then the velocity of money goes down - we have to take it away from them... That has happened in 1933 in the US."
A decline in the desire to own products conferring and announcing one’s high social status happens close to, or hand in hand with fairly severe economic downturns. People no longer want to stand out as rich when times are getting tough. This effect can be observed in numerous areas, even in the colors and shapes people choose when buying cars.
"The risk could be that brokers may not be able to execute forced liquidations in case of sharp declines in the overall stock market. It can be positive if they are using the funds to develop new businesses but negative for China’s financial market if they keep lending out for margin financing."
After 30 years of torrid expansion, perhaps the single most consequential factor in China’s economy is how much of it is a “black box”: a system with visible inputs and outputs whose internal workings are opaque. China’s recorded history stretches back thousands of years, but in terms of applicable financial and economic parallels to the current economy, there is no precedent. China’s leadership is truly in uncharted waters. This in itself heightens the risk of miscalculation and basing policies on faulty premises.
Overnight we got another acute reminder of just who is lying hunched over, comatose in the driver's seat of global commerce: the country whose July exports just crashed by 8.3% Y/Y (and down 3.6% from the month before) far greater than the consensus estimate of only a 1.5% drop, and the biggest drop in four months following the modest June rebound by 2.8%: China.