Posts Tagged ‘Chinese yuan’

The Forgotten Peg: Chinese Yuan and U.S. Dollar

The Forgotten Peg: Chinese Yuan and U.S. Dollar

Courtesy of Charles Hugh Smith, Of Two Minds

Many observers seem to have forgotten a weak dollar benefits Chinese exports due to the yuan-dollar peg.

china yuanFor those readers who tire of charts: enjoy!

As the "news" continues to trumpet the decline/collapse of the U.S. dollar, many observers seem to have forgotten that the U.S. dollar is the defacto "shared currency" of the world’s largest economy and its biggest rising-star economy. Yes, the U.S. and the PRC--China. China’s currency (officially the renminbi, a.k.a. yuan) is transparently pegged to the U.S. dollar at about 6.8 yuan to the dollar, down from 8+ a few years ago.

Given that Japan is the world’s second-largest economy by most measures, and that the yen is informally pegged to the U.S. dollar (trading in a band of 90-110 yen for years on end), then it could be argued that the world’s three largest economies all "share" the U.S. dollar.

Before we explore the consequences of this, let’s look at a standard-issue "the dollar is weakening" piece: Dollar’s Slide Poised to Continue U.S. Quietly Tolerates Drop, While Trade Partners Fret; a Long List of Negatives for the Currency.

Here’s one which actually mentions the trade benefits to China of a weak dollar: Dollar weakness sends ripples across Asia: Scramble to preserve capital and the Hong Kong carry-trade redux

And just to remind everyone that China’s leaders don’t sit around tolerating circumstances which are negative for their economy: China Targets Commodity Prices by Stepping Into Futures Markets

And lastly, let’s establish the primary context of China’s leadership: 1 billion poor citizens seeking a better job/wage/life. Here is a puff piece by former U.K. prime Minister Tony Blair which makes one key point: most of China’s citizens are still very poor, and thus the leadership is obsessed with "growth" and jobs above all else: China’s New Cultural Revolution: The world’s largest country has a long way to go, but there’s no question it’s changing for the better. (WSJ.com)

Superficial stories about China are accompanied by glitzy photos of Shanghai skyscrapers and other scenes from the wealthy urban coastal cities, but the fact is that the consumer buying power of China is roughly equivalent to that of England (51 million residents).

Thus those who believe the vast Chinese manufacturing-export…
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China Admonishes US Monetization, Sees a Hard Fall for the Dollar Over Time

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Jesse elaborates on the Telegraph’s article on China and US money printing. – Ilene

China Admonishes US Monetization, Sees a Hard Fall for the Dollar Over Time

Courtesy of Jesse’s Café Américain

China is saying many things which are true.

They are also omitting many things that are key to the cause of our financial problems. They bought the silence of a succession of US political administrations over their blatant currency manipulation in support of trade subsidies, including the outright contributions to Clinton and Gore, and the cronyism with Bush.

China is a significant part of the problem, and like so many dogs that Wall Street helps to set up to further their gains, this one refuses to wag its tail on command.

The blowback on the US dollar will be significant.

Telegraph UK
China alarmed by US money printing
By Ambrose Evans-Pritchard
Cernobbio, Italy
9:06PM BST 06 Sep 2009

The US Federal Reserve’s policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, said Beijing was dismayed by the Fed’s recourse to "credit easing".

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said. (China is already a strong buyer in the precious metals markets, and is encouraging its citizens to buy gold and silver as well – Jesse)

China’s reserves are more than – $2 trillion, the world’s largest.

"Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets," he added. (The short interest being held by three or


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Phil's Favorites

The War on All Fact People

 

David Brin shares an excerpt from his new book on the GOP's relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: ...



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Chart School

SP500 Kitchin Cycle Review

Courtesy of Read the Ticker

The biggest known news date in the next 18 months is the US Election. The biggest unknown news date is when the US believes it is in a economic recession.

The Kitchin Cycle is still working.

We must conclude the major 900 period low is now in, and we are now in a up swing, which may top out ate 2020 or late 2021. Any future top out may only generate a 10% to 20% correction, of course this can be deemed very mild. This is expected, but the expected does always play out. 

Rolling the dice to get '7' does not always work. Post US elections seasonal's aligned with a poor start of the decade seasonal trends, add on high global recession risk, add on a stock market slump tends to occur in the years ending 9,1,2,3,4 (like 1973, 1...



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Zero Hedge

Haftar Blocks All Libyan Oil Exports Day Before Berlin Peace Conference

Courtesy of ZeroHedge View original post here.

Given Libyan commander Khalifa Haftar has over the past two years captured the majority of the oil and gas rich country's energy producing regions, he's now playing his biggest card yet to leverage international peace talks in his favor amid a final push for his Libyan National Army (LNA) forces to take Tripoli. 

Bloomberg reports Saturday that the Benghazi-based 'rebel' general has now "blocked oil exports at ports under his contr...



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The Technical Traders

Energy Continues Basing Setup - Breakout Expected Near January 24th

Courtesy of Technical Traders

After watching Crude Oil fall from the $65
ppb level to the $58 ppb level (-10.7%) over the past few weeks, we still
believe the energy sector is setting up for another great trade for skilled
investors/traders.

We are all keenly aware that Winter is still
here and that heating oil demands may continue to push certain energy prices
higher.  Yet Winter is also a time when
people don’t travel as much and, overall, energy prices tend to weaken
throughout Winter.

Over the past 37 years, the historical monthly breakdown for Crude Oil is as follows:

December: Generally l...



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Insider Scoop

10 Biggest Price Target Changes For Friday

Courtesy of Benzinga

  • Citigroup lifted Caterpillar Inc. (NYSE: CAT) price target from $145 to $170. Caterpillar closed at $147.87 on Thursday.
  • UBS cut Twitter Inc (NYSE: TWTR) price target from $37 to $35. Twitter shares closed at $34.19 on Thursday.
  • Morgan Stanley boosted the price target for Yum! Brands, Inc. (NYSE: YUM) from $113 to $118. Yum! Brands closed at $102.16 on Thursday.
  • Jefferies lifted the price target on Ventas, Inc. (NYSE: ...


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Kimble Charting Solutions

Tesla About To Run Out Of Energy Here? Short-Term Peak Possible?

Courtesy of Chris Kimble

Tesla (TSLA) has been screaming higher of late, as very impressive gains have taken place.

Is Tesla about to run out of energy/take a break/experience some selling pressure? A unique price setup is in play, that bulls might want want to be aware of.

This chart applies Fibonacci to the 2016 lows and 2017 highs at each (1). The impressive rally of late has it testing its 161% extension level, based upon those price points.

At the same time, it is hitting its 161% extension level, it finds itself at the top of a 7-year rising channel, with momentum hitting the highest ...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Members' Corner

Tobin Smith: Foxocracy, the 2020 Election, and the Stock Market

 

Fox News has been spreading false information and hooking its audience into an angry, xenophobic and paranoid worldview for decades. It's no mystery that Fox was instrumental in the 2016 election -- but how did it do it? Tobin Smith, CEO of Transformity Research, Inc. and former Fox News contributor and talk show host, explores this phenomenon and discusses Fox News’ emotionally predatory and partisan propaganda media strategies and tactics in his new book, Foxocracy: Inside the Network&...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

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

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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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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