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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Zero Hedge

Watch: SpaceX's Starship Prototype Dramatically Explodes On Launch Platform

Courtesy of ZeroHedge View original post here.

The first beta test of Elon Musk's "Starship" Mark 1 prototype didn't quite go exactly as planned unless, of course, the plan was for it to explode on the launch pad. The prototype, which was built as a "pathfinder for SpaceX's planned human-rated Starship rocket" literally saw its top explode during a pressurization test on Wednesday, according to CBS and - well, video that shows exactly that. 

Th...



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Phil's Favorites

More than 1,000 cryptocurrencies have already failed - here's what will affect successes in future

 

More than 1,000 cryptocurrencies have already failed – here's what will affect successes in future

Gaining currency? Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

Many cryptocurrencies have been launched in the past few yea...



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Digital Currencies

More than 1,000 cryptocurrencies have already failed - here's what will affect successes in future

 

More than 1,000 cryptocurrencies have already failed – here's what will affect successes in future

Gaining currency? Wit Olszewski

Courtesy of Gavin Brown, Manchester Metropolitan University and Richard Whittle, Manchester Metropolitan University

Many cryptocurrencies have been launched in the past few yea...



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Kimble Charting Solutions

Junk Bonds About To Send Stocks A Bearish Message?

Courtesy of Chris Kimble

Are junk bonds about to send stocks an important message? It looks like it from this chart!

Junk Bond ETF (JNK) has created a series of lower highs and lower lows over the past couple of years, inside of falling channel (1). When it broke support in early 2018 at (2), stocks struggled to make much upward progress for the next few months.

The rally off support last year saw JNK hit falling resistance a few months ago and some softness has set in. The small decline of late has it testing a series of higher lows at (3).

What JNK does at (3), looks to sen...



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Insider Scoop

PayPal Will Buy Honey Science For $4B

Courtesy of Benzinga

PayPal Holdings Inc. (NASDAQ: PYPL) is acquiring Honey Science Corp for $4 billion.

Honey Science Corp was founded in 2012 and is headquartered in Los Angeles. Honey helps people automatically find online coupons and discounts while ...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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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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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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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.

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