Hungary becomes the first European country to sign on for China's ambitious Silk Road initiative. Beijing hopes the program will serve to relieve the country's industrial overcapacity problem while facilitating a tough transition to a consumer-led economic model. Given the growing number of headwinds China faces, "One Belt, One Road" may represent the counrty's 'one chance' to rescue the flagging economy.
"A surprise move by Vanguard to include onshore Chinese A-shares in its flagship emerging market fund will “put pressure” on other asset managers to follow suit," FT reports.
“The US Congress is largely at fault for all that’s happening,” the former chairman of the Federal Reserve said in Hong Kong on Tuesday. What’s interesting here is the tendency for Americans to view the AIIB as something that was ultimately created by the US — even if only inadvertently.
Albert Edwards: Yen Collapse Will Lead To "New Round Of Currency Turmoil", Deflation In US And EurozoneSubmitted by Tyler Durden on 06/02/2015 09:55 -0500
One look at FX trading this morning and all one can see is surging volatility and, for lack of a better word, turmoil. Which is precisely what Albert Edwards said would happen in his latest note overnight (released just as the USDJPY briefly breached 125) in which he observes that the Yen has now fully broken its 30-year support and predicts that "a new round of currency turmoil" is beginning.
History has not been kind to major trade blunders. Just as the Smoot-Hawley Tariff Act of 1930 sparked a global trade war that may well have put the “great” in the Great Depression, Congressional enactment of enforceable currency rules today could spark retaliatory actions that might devastate the free flow of trade that a sluggish global economy desperately needs.
Crude oil prices are tumbling as the USDollar pushes on to new highs driven by the continued stretch of renewed weakness in the Euro. As Bloomberg's Richard Breslow notes, however, "it’s not all about Greece. Not even close."
The Shanghai Composite is on the verge of 5,000 and has more than doubled in the past year but this may just be the beginning. The reason: if the Chinese stock bubble bursts, that will be the beginning of the end of the greatest con game in history.
We have all read the latest crop of media articles challenging gold’s investment relevance. The typical approach to bearish gold analysis is to attribute hypothetical fears to gold investors, and then point out these concerns have failed to materialize. Sprott believes the investment thesis for gold is a bit more complex than simplistic motivations commonly cited in financial press. We would suggest gold’s relatively methodical advance since the turn of the millennium has had less to do with investor fears of hyperinflation or U.S. dollar collapse than it has with persistent desire to allocate a small portion of global wealth away from traditional financial assets and the fiat currencies in which they are priced.
As tipped over a month ago, China witnessed a fourth straight quarter of capital outflows in Q1, exacerbating Beijing's currency conundrum and making it more likely that, should policy rate cuts continue to prove ineffective, Chinese QE is inevitable.
After months of speculation and confusion, on Friday we finally got if not direct, then certainly indirect, evidence from this month's TIC data that "Belgium" was merely a front for China.
Central bank liquidity lines like those the Fed used to bailout the world seven years ago have become a fixture of the post crisis financial system. Since 2009, China has essentially blanketed the globe with yuan liquidity lines, inking swap agreements with nearly three dozen countries with the primary goal of increasing the degree to which the renminbi is used in international trade.
Even as the establishment of new supranational lenders suggests the US-dominated multilateral institutions that have characterized the post-war world are proving unable to meet the needs of modernity, both Congress and the President have stymied IMF reform measures, sending a message to China and others that US hegemony will not die without a fight.
Just days after Japanese PM Shinzo Abe leaves Washington (having stepped up his nation's military assertiveness), The Wall Street Journal reports that the US Secretary of Defense has asked staff for military options in the South China Sea (as we have detailed China's land reclamation efforts): U.S. MAY USE MILITARY TO CONFRONT CHINA IN SPRATLY ISLANDS DISPUTE: WSJ Having ironically commented on China's "bullying," it appears Nobel-Peace-Prize winner President Obama is preparing for an even bigger objective, amid China's rising threat to USD dominance (with Yuan liberalization and AIIB success).
For the first time in more than ten years, the IMF believes the yuan is close to fairly valued. This comes as the fund considers the yuan for SDR inclusion later this year and as China attempts to promote the currency to a more prominent role in the global economy. Meanwhile, Bill Gates says that although he "loves the dollar" he'd "put his bet on yuan."
It would appear the era of the dollar's global domination as a reserve currency is coming to an end, and the stage is now being set for gold to be officially accepted as the ultimate reserve money once again, this time by the next generation of advanced nations.