China

China

Monetary Bazookas Or Not, "Global Crisis Is Inevitable"

Until recently, the consensus assumed a strengthening of the global economy in 2016. It won’t happen. If the global economic growth manages to reach 3.1% next year, as forecast by the IMF, it will be a miracle. We are close to the end of the current economic cycle. The outbreak of a new global crisis in the coming years is inevitable.  The Fed and other central banks are in a dead-end having fallen in the same trap as the Bank of Japan. If they increase rates too much, they will precipitate another financial crisis. It is impossible to stop the accommodative monetary policy.

How China Broke The World's "Bubble Machine"

China can’t allow its industrial economy to sink without a fight. It will have to devalue the renminbi to try to get more market share for its exports. It still has 80% of its workers earning less than $10 a day. A lower renminbi will reduce real wages further and make China’s exports cheaper than ever. And then, what about the rest of the world? As the renminbi goes down, the dollar, yen, and euro will have to go up. Commodities – priced in dollars – will stay down. U.S. corporate profits will fall. The stock market “tape” will go down. Consumer prices, too, will remain low... or go negative. Deflation. Deflation. Deflation.

ObamaTrade Details Unveiled, Officials Warn "It's Worse Than We Thought"

"The Trans-Pacific Partnership means that America will write the rules for 21st century trade," according to President Obama, but as Reuters reports, U.S. unions, lawmakers and interest groups questioned the long-awaited text of a landmark U.S.-backed Pacific trade deal on Thursday. "It's worse than we thought,” Lori Wallach, director of Public Citizen’s Global Trade Watch, told members and U.S. labor representatives said the agreement contained weak, poorly worded or unenforceable provisions, concluding "we do not believe those improvements are significant or meaningful for workers." It appears, that ObamaTrade may be a boon for factory and export economies like Malaysia and Vietnam, but - as expected - will achieve little for the average joe in America.

Volatility Traders Aren't Buying The Rally

This is the fifth time in the past three years that the VIX rose 2% of more on a day the S&P 500 also rose, and short-term volatility expectations were at least 10% below longer-term volatility expectations. Those dates were: September 14, 2012, January 21, 2014, August 25, 2014, and May 18, 2015. Over the next month, the S&P 500 was not able to gain more than +1% at its best point, and suffered a loss averaging -3.2% at its worst point. Quite a negative reward-to-risk ratio.

Saudis Bring Oil War To Europe With Largest Price Discount Since 2009

With oil exports to Europe having slipped from 13% of Saudi's total to just 10% in the last six months, The FT reports, the de facto leader of OPEC has slashed its Official Selling Price (OSP) to Europe in an effort to regain market share. Saudi lowered its OSP for its Arab light crude grade in Europe by $1.30 a barrel for December, taking its discount to the weighted average of the North Sea Brent benchmark to $4.75 a barrel - the largest discount since February 2009... directly going after Russia's customer base.

France Deploys Its Only Aircraft Carrier To Fight ISIS

Just as one US carrier was leaving the middle east, another widely feared and respected geopolitical superpower was set to replace US carrier presence in the Middle East in the ongoing war against "ISIS" - France.

Frontrunning: November 5

  • BOE Stays Cautious on Rate-Hike Timing as Inflation Outlook Cut (BBG)
  • China Enters Bull Market (WSJ)
  • Britain says Islamic State likely brought down Russian plane (Reuters)
  • Dollar jumps as markets fix on December rate expectations (Reuters)
  • Activist Investor Bill Ackman Plays Defense (WSJ)
  • BOJ Survey Data Reveals Signs of Growing Inequality in Japan (BBG)
  • UAW Warns of General Motors Strike If Workers Fail to Approve Contract (WSJ)