When one thinks of millionaires and billionaires, the countries USA, China and UK usually come to mind. And while in terms of absolute numbers of millionaires and ultra high net worth individuals (those with more than $100 million in assets) this would be correct (and since these countries also have the greatest number of poor people too, it merely confirms the record gap between the rich and poor), a very different view emerges when observing the world's uber wealthy not on an absolute but relative basis. In that case, when ranked by millionaires as a proportion of the population, the top three nations are Qatar, Switzerland and Singapore where millionaires account for more than 10% of all households, while a ranking of the most UHNW individuals per 100,000 households gives Hong Kong, Switzerland and Austria in the top three spots.
The biggest news in the sage surrounding Chinese evaporated collateral troubles at Qingdao, which as noted is merely the 3rd largest Chinese port, is that this scandal has now spread to a second Chinese port: Penglai, which is also located in the Shandong province. Putting some size numbers for context: Qingdao's copper inventory is about 50,000 tons, compared to 800,000 tons in Shanghai, analysts say. There's "little evidence" for now that traders in Shanghai fraudulently have pledged collateral to banks, said Sijin Cheng, an analyst with Barclays Research in Singapore. Little evidence will become "lots" in the coming days when we expect more "discoveries" at all other bonded warehouses as the relentless inflow of commodities finally reverses and the beneficiaries finally demand possession. As everyone who has followed even the simplest Ponzi schemes knows, this is the part of the lifecycle when many tears are shed by most.
As we have been reporting (and forecasting for the past several years), the Eurasian anti-US Dollar axis is rapidly taking shape, with recent events catalyzed and certainly accelerated by US foreign policy in Ukraine, which has merely succeeded in pushing Russia that much closer, and faster, to China. The latest proof of this came overnight when the FT reported that Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers. Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now," ... "It looks like this is not just a blip, this is a trend,” said Mr Teplukhin of Deutsche Bank.
- Attorneys Known for Large Civil Settlements Line Up to Sue GM Over Company's Handling of Defective Ignition Switches (WSJ)
- Pakistani Taliban attack airport in Karachi, 27 dead (Reuters)
- U.S. Official: Sgt. Bowe Bergdahl Has Declined to Speak to His Family (WSJ)
- Ukraine Gas Talks Resume in Brussels to Avoid Cut-off This Week (BBG)
- China's Central Bank Flexes Muscle (WSJ)
- China says Vietnam, Philippines' mingling on disputed isle a 'farce' (Reuters)
- World Needs Record Saudi Oil Supply as OPEC Convenes (BBG)
- Kraft Raises Prices on Maxwell House, Yuban U.S. Coffee Products (BBG)
- United Continental: One Sick Bird (WSJ)
Two years ago, stories of fake tungsten-filled gold coins and bars began to spread; it appears, between the shortage of physical gold (after Asian central bank buying) and the increase in smuggling (courtesy of India's controls among others) that gold fraud is back on the rise. As SCMP reports, a mainland China businessman, Zhao Jingjun, discovered that HK$270 million of 998kg of gold bars he bought in Ghana had been swapped for non-precious metal bars. What is perhaps even more worrisome, given the probe into commodity-financing deals and the rehypothecation evaporation; these gold bars were shipped to a Chinese warehouse before Zhao was able to confirm the fraud.
Considering that both key overnight news reports: the Chinese HSBC PMI (printing at 49.4, vs 49.7 expected) and the Eurozone CPI print from a few hours ago (print of 0.5%, down from 0.7% and below the 0.6% expected), we find it odd that futures are red: after all this is precisely that kind of negative data that has pushed the market to record highs over the past five years. And speaking of odd, considering the ongoing non-dis-deflation in Europe, the fact that Bunds and TSYs are being sold off today makes perfect sense in a New Normal bizarro world.
This week's busy calendar starts off with today’s global PMIs and ISMs. On Tuesday, President Obama begins a four day European trip ahead of the G7 meeting which starts on Wednesday. This G7 meeting is replacing the G8 meeting that was originally scheduled in Sochi but was cancelled after Russia’s annexation of Crimea. Tuesday’s data docket is important with Euroarea data releases including inflation and unemployment expected to further cement the ECB’s resolve in easing policy come Thursday. Wednesday features the global services ISMs and PMIs. Other data releases scheduled for that day includes the ADP employment report, which will provide an important preview to Friday’s NFP, and US trade. The Fed releases its Beige Book on Wednesday too and the second estimates of Euroarea GDP will be published on Wednesday as well. Apart from the ECB on Thursday, we also have the BoE policy meeting.
It took a precisely 0.1 beat in the Chinese Manufacturing PMI over the weekend (50.8 vs Exp. 50.7) for the USDJPY and the Nikkei to forget all about last week's abysmal Japanese economic data and to send the Nikkei soaring by 2.1% to its highest print in 5 months. Subsequent overnight weakness from Europe, where the Eurozone Final May Manufacturing PMI dropped again from 52.5 to 52.2, below the 52.5 expected, served simply to push bunds higher back over 147.00, if not do much to US equities which as usual continue their low volume "the music is still playing" melt-up completely dislocated from all newsflow and fundamentals (because just like over the past 5 years, "there is hope").
“I don’t know what to say. I’ve been investing since January and I’ve never seen anything like it.” – Unnamed Hong Kong housewife during the Asian financial crisis of 1997/8.
What follows is a continued personal perspective on some of the challenges facing today’s investor...
A week ago, in retaliation to the inane charges lobbed by the US accusing 5 Chinese army officials of spying on US companies (when the NSA spying scandal on, well, everyone refuses to leave the front pages), China announced it would ban the use of Windows 8 on government computers (considering the quality of Windows 8, this is likely a decision government computers would have taken on their own regardless). Today, China has expanded its list of sanctioned companies from Microsoft to include IBM as well, following a Bloomberg report that the Chinese government is pushing domestic banks to "remove high-end servers made by International Business Machines Corp. and replace them with a local brand."
- The Fed can't print trade? World Trade Flows Fall in First Quarter (WSJ)
- PBOC’s Zhou Says China May Have Housing Bubble in ‘Some Cities’ (BBG)
- ECB's Weidmann - Reviving ABS market not task for central bank (Reuters)
- LOL: Fitch upgrades Greece by a notch to 'B'; outlook stable (Reuters)
- LOL x2: Spain Sovereign Debt Rating Upgraded by S&P (BBG)
- China Will Vet Tech Firms After Threatening U.S. Retaliation (BBG)
- US to claim victory over China in WTO car dispute (BBG)
- Obama urges Democrats to vote in midterms, attacks Republicans (Reuters)
- U.S. Military Pushes for More Disclosure on Drone Strikes (WSJ)
- McDonald’s Workers Arrested at Protest Near Headquarters (BBG)
- U.S. Sends Troops to Chad to Hunt for Abducted Nigeria Girls (BBG)
- BofA Scrapping Market-Making Unit Amid Trading Scrutiny (BBG)
- Biggest attack in years kills 31 in China's troubled Xinjiang (Reuters)
- Intense Fighting Flares in Eastern Ukraine (WSJ)
- Fed Officials Tussle Over Labor Market Slack (Hilsenrath)
- Ikea Economics Lure Central Bankers Seeking New Tools (BBG)
- When Putin ordered up new hospitals, his associates botched the operation (Reuters)
- Norway’s $33 Billion Man Steps Up Search in Asia Real Estate Bet (BBG)
Just one day after the FBI issues arrest warrants for 5 Chinese military officials, Caixin reports that Fang Fang - the former CEO of JPMorgan Asia - has been arrested in Hong Kong by the Independent Commission Against Corruption (or anti-graft agency). Coincidental timing we are sure; and while details are sparse, the arrest appears linked to the hiring of the children of Chinese officials. Bloomberg reports that Fang declined to comment after being released on bail (under restrictions not to leave Hong Kong).
A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.