Posts Tagged ‘Chinese’

Dollar Hegemony and the Rise of China

Michael Hudson writes a letter. 

Dollar Hegemony and the Rise of China

Courtesy of Michael Hudson 

Hudson to Premier Wen Jaibao, March 15, 2010

Dear Premier Wen Jiabao,

I write this letter to counteract some of the solutions that Western politicians are recommending for China to cope with its buildup of excess foreign-exchange reserves. Raising the renminbi’s exchange rate against the dollar will not cure the China-US payments imbalance. The dollar glut will continue, and so will the currency fluctuation among the dollar, euro and sterling, leaving no stable store of value. The cause of this instability is that each of these three currency areas has grown top-heavy with by debts in excess of the ability to pay.

What then should China should it do with its buildup of excess reserves, if not recycle its inflows into their bonds? Four possibilities have been suggested: (1) to revalue the renminbi, (2) to flood China’s economy with credit (as Japan did after the Plaza Accord of 1985), (3) to buy foreign resources and assets, and (4) to use excess dollars to buy back foreign investments in China, given US reluctance to permit Chinese investment in America’s own most promising economic sectors.

I explain below why China’s best course is to avoid accumulating further foreign exchange reserves. The most workable solution is to use its official reserves to buy back US and other foreign investments in China’s financial system and other key sectors. This policy will seem more natural as a response to an escalation of US protectionist moves to block Chinese imports or block China’s sovereign wealth funds from buying key US assets.

China’s excess reserves will impose a foreign-exchange loss (as valued in renminbi)

Every nation needs foreign currency reserves to ward off currency raids, as the Asia Crisis showed in 1997. The usual kind of raid forces currencies down. Speculators see a central bank with large foreign currency holdings, and seek to empty them out by borrowing even larger sums, selling the target currency short to drive down its price. This is the tactic that George Soros pioneered against the British pound when he broke the Bank of England.

Malaysia’s counter-tactic was not to let speculators cover their bets by buying the target currency. Its Malaysia’s success in resisting that crisis showed that currency controls prevent speculators from “cashing out” on their exchange-rate bets, blocking their attempt to…
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Ugly 2010 for China’s Stock Market

Collective effort, Ugly 2010 by Rom at Bondsquawk, with introduction by Pragcap:

We’ve often noted the fact that China’s equity market has served as a very reliable leading indicator over the last few years.  They led the way with a dramatic market crash that started in 2007 and they bottomed several months in advance of the 2009 bottom in the S&P.  We recently highlighted the bearish action in Chinese stocks while U.S. investors continued to pile into the S&P (one of three primary reasons we built short positions for the first time in 2 years prior to the recent stock collapse).  Ultimately the market faltered and China’s equity market is once again looking prescient. China is displaying classic post-bubble market action.  Our friends at Bondsquawk ask the important question that should be on everyone’s mind:

"Could the Chinese markets lead the rest of the world back down?"

[BEWARE THE BIG RED LEADING INDICATOR, The Pragmatic Capitalist]

Ugly 2010 for China’s Stock Market

Courtesy of Rom at Bondsquawk

China’s Shanghai Composite Index has led the rally in the global markets after sinking in late October 2008, almost 5 month ahead of the lows seen in the US markets. However, the rally has stalled as China’s equity markets have declined by 20.9 percent in 2010. Could the Chinese markets lead the rest of the world back down?

China’s Shanghai Composite Index 2-Year Historical Chart

The New York Times reported the following:

After a spectacular rise last year, China’s stock market has plummeted on growing concerns about Europe’s debt crisis and expectations that Beijing is about to take strong action to slow the nation’s booming economy and prevent it from overheating, analysts say.

Investors are worried that Chinese exports to Europe will slow in the coming months and that government efforts to tame this country’s economy by tightening credit will hamper a wide array of industries, including the nation’s fast-growing real estate market.

Read the Full Article>>


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Obama Selling Military Secrets To China For Debt Forgiveness?

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Obama Selling Military Secrets To China For Debt Forgiveness?

Courtesy of Zero Hedge
 
Ran across this article posted in Jumping In Pools. Not sure how credible it is, but allegedly Barack Obama will provide the blueprints for the B-2 stealth bomber to China in exchange for $50 billion in debt relief. According to author Richard Hogarty:

According to the Administration, this proposal will help the United States resolve its debt issues. They point out their belief that the B-2 bomber is "strategically obsolete", according to a source in the White House Press Office. In addition, the source claims that the Chinese would be unable to create their own functioning stealth bomber fleet for "at least eight years."

American allies Taiwan, Japan, and South Korea are very wary of the proposal. Koo Syi, a geopolitical analyst from South Korea, points out that this technology could be passed to China’s allies. This was the case when Chinese nuclear technology was transferred to Pakistan and North Korea. According to Koo, Obama has rendered US allies’ opinions as "irrelevant."

While this proposal is controversial, it is not being presented to Congress, where it could meet with stern opposition. Instead, the State Department has been informed to assisted the Defense Department with the transfer of materials.

A little skeptical here as frankly $50 billion is less than a drop in the bucket of Chinese Treasury holdings which are easily well over $1 trillion. The economic impact of this transaction would be negligible to zero. On the other hand, if this ends up being true, it is quite frightening, as it merely demonstrates, aside from all the scary geo-political considerations, just how bad of a dealmaker our President is.

In other China-related news, Reuters reporting that Tim Geithner’s soothing words from his Beijing whirlwind tour that "Chinese assets are very safe," drew loud laughter from the audience.

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country


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Former Chinese Central Bank Advisor Questions Geithner’s Math, Calls Federal Reserve Assets “Rubbish”

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Former Chinese Central Bank Advisor Questions Geithner’s Math, Calls Federal Reserve Assets "Rubbish"

Courtesy of Mish
 
A former Chinese central bank adviser says Global Crisis ‘Inevitable’ Unless U.S. Starts Saving.

Another global financial crisis triggered by a loss of confidence in the dollar may be inevitable unless the U.S. saves more, said Yu Yongding, a former Chinese central bank adviser.

It’s “very natural” for the world to be concerned about the U.S. government’s spending and planned record fiscal deficit, Yu said in e-mailed comments yesterday relating to a visit to Beijing by U.S. Treasury Secretary Timothy Geithner.

The Obama administration aims to reduce the fiscal deficit to “roughly” 3 percent of gross domestic product from a projected 12.9 percent this year, Geithner reaffirmed today. The treasury secretary added that China’s investments in U.S. financial assets are very safe, and that the Obama administration is committed to a strong dollar.

It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”

The deficit is projected to reach $1.75 trillion in the year ending Sept. 30 from last year’s $455 billion shortfall, according to the Congressional Budget Office.

The U.S. needs a higher savings rate and a smaller deficit on the current account, which is the broadest measure of trade, or “another financial crisis triggered by a dollar crisis could be inevitable,” the Chinese academic said.

Referring to the Federal Reserve “as the world’s biggest junk investor,” and to Chairman Ben S. Bernanke as “helicopter Ben,” Yu said the Fed has dropped “tons of money from the sky since the subprime crisis.”

“The balance sheet of the Federal Reserve not only has expanded like mad but is also ridden with ‘rubbish’ assets,” he said

Yu Yongding is not the only one questioning Geithner’s math. How about it Tim, can we see your scribbles?

In related news Geithner tells China its dollar assets are safe. The crowd laughed…

U.S. Treasury Secretary Timothy Geithner on Monday reassured the Chinese government that its huge holdings of dollar assets are safe and reaffirmed his faith in a strong U.S. currency.

China is the biggest foreign owner of


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Zero Hedge

Elemetal Gold Tries to Cover its Tracks, and Why Isn't Gold higher - Update 1

Courtesy of ZeroHedge. View original post here.

What Does Elemetal Imply for Precious Metals?
  • Gold smuggling accounts for up to 75% of all LATAM Gold imported in the US
  • Disruption of this augmented Gold supply is Bullish for Gold
  • Elemetal is running for corporate cover
  • No-one cares

UPDATE 1 - DGSE a publicly traded retailer, just signed an LOI to buy Elemetal, LLC. It gets better. DGSE is #2 on the S&P list of likely retailers to default. Wait, there's more.  Elemetal is actually majority shareholder in DGSE.  Essentially, Elemetal, which controls DGSE would rather ...



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Phil's Favorites

World Bank Maintains Oil Price Forecast At $55

 

World Bank Maintains Oil Price Forecast At $55

Courtesy of Irina Slav, OilPrice.com

In its latest Commodity Markets Outlook, the World Bank maintained its Q1 forecast for oil prices at $55 a barrel, saying, however, that overall energy prices will increase 26 percent in 2017.

The WB is overall optimistic for oil, expecting supply to tighten in the current quarter as OPEC and non-OPEC production cuts start to affect global supply. In that, the institution differs from some energy analysts who are markedly bearish on oil prices. ...



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ValueWalk

Charlie Munger On The "Thrift" Crisis

By Rupert Hargreaves. Originally published at ValueWalk.

Charlie Munger is known for speaking the truth. Indeed, some might say he has built his reputation on it. By speaking the truth and trusting his instincts, Munger has not only built a reputation for himself, but he has also helped Warren Buffett and Berkshire Hathaway avoid a number of disasters, which they may have otherwise been dragged into. One such disaster was the mutual savings and loan association crisis of the 1980s and 1990s, which Berkshire Hathaway and Wesco Financial managed to avoid with Munger and Buffett at the helm.

]]> Get The Full Series i...

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Digital Currencies

Bitcoin Spikes To Record Highs

Courtesy of ZeroHedge. View original post here.

US dollar prices for virtual currencies are soaring. Both Bitcoin ($1343 highs) and Ethereum (as we described previously) are at new record highs as China regulators/exchanges appear to have 'stabilized', fears over the so-called 'hard fork' have abated, and hopes for an ETF have been revived by an SEC review.

Back above the price of gold and at record highs, Bitcoin rallied notably overnight after China's largest bitcoin exchanges introduced a flat 0.2% fee on eac...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Euro-Area Economic Confidence Surges to Highest in a Decade (Bloomberg)

Euro-area economic confidence jumped to the highest in almost a decade this month, a testament to a continued improvement that may soon prompt a policy shift at the European Central Bank.

European Bank Bulls Seek ECB Tapering Hints as France Risk Fades (Bloomberg)

Investors are waiting to see whether Mario Draghi joins in the optimism that has engulfed the region&r...



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Chart School

Markets Consolidate

Courtesy of Declan.

After two days of gains it was time for consolidation in markets. The Russell 2000 didn't get this memo and added a third day of gains managing a new closing high.


The S&P finished with a doji which tagged all-time high resistance. Technicals haven't changed from yesterday and relative performance has continued to weaken. The index just has to survive profit-taking and perhaps aggressive shorts looking to take advantage of the resistance tag.

...

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Kimble Charting Solutions

S&P 500; Dangerous place to run out of gas!

Courtesy of Chris Kimble.

Could the “Weekly Closing Highs and Lows” of last year, be impacting stock prices in 2017? The Power of the Pattern thinks so! Below looks at the S&P 500 over the past couple of years. where we applied Fibonacci to the “Weekly Closing Highs and Lows” of last year.

CLICK ON CHART TO ENLARGE

The S&P 500 ran into the 161% extension level at (2) and it stopped on a dime, at the end of February. Following a small decline the rally the past two weeks has it testi...



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OpTrader

Swing trading portfolio - week of April 24th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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