The Chinese Yuan ends 2016 at 6.9432, lower by -8.3% against the US dollar. This is the third straight annual decline and largest since the 2005 reform.
The Yuan ended 2015 lower by -4.7% against the US dollar. The Yuan ended 2014 lower by -2.4% against the US dollar.
Chinese bond yields exploded higher causing the Chinese government to halt trading in some futures contracts.
As the Chinese devalue the Yuan while the US Federal Reserve hikes rates, the move in China is to sell Chinese bonds and replace them with higher yielding US bonds.
Over the weekend, the PBOC extended emergency loans (Read More….)
On the GuerillaStockTrading.com blog, we’ve never pussyfooted around about China like mainstream media publications do. For years I’ve warned American investors and traders not to invest in Chinese stocks because of their fake “ghost” economy and I’ve exposed the influence of the Chinese in US elections through groups like the US Chamber of Commerce. More (Read More….)
China’s unabated currency devaluation is setting up for a showdown with the incoming Trump Administration. Tonight, the PBOC set the Yuan mid-point at 6.9289 for the weakest Yuan setting since 2008.
US President elect Trump tweets: “Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete)” “…heavily tax our products going into..their country (the U.S. doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think (Read More….)
Italian Prime Minister Matteo Renzi has resigned after suffering a defeat in a referendum over his plan to reform the constitution.
Opposition leader Matteo Salvini, of the anti-immigrant Northern League, said the referendum is a “victory of the people against the strong powers of three-quarters of the world”.
The euro fell against the dollar immediately (Read More….)
Let’s use microeconomics to examine subsidies and why I recommend everyone stay away from investing in China.
Let’s start off with a perfectly competitive market where equilibrium is set at P and Q on our supply and demand graph.
A subsidy is an amount of money given directly to firms by the government to (Read More….)
China has threatened to cut off the sales of US goods in China if Trump follows through with his campaign promise to declare China a currency manipulator on day one of his presidency and to place 45% tariffs on goods imported from China.
The Chinese government responded to Trump’s win with an editorial in a (Read More….)
The PBoC set the yuan midpoint at its lowest level since late 2008. A huge round of currency devaluation by the Chinese continues unabated.
A two-month chart comparing the currencies of our largest trading partners shows the rapid devaluation of not only the yuan but the Japanese yen and euro.
You would think that (Read More….)
The Chinese continue to devalue the Yuan against the US dollar to gain a competitive advantage in international trade.
The PBOC set the Yuan midpoint at 6.7098 which is the lowest level since September 2010.
Check out the massive currency manipulation on the Yuan/USD chart.
International trade and comparative advantage was never supposed (Read More….)
Saudi stocks have plunged as a result of new austerity measures aimed at cutting costs due to the lower price of oil.
The BBC writes…
A royal decree said ministers’ salaries would be reduced by 20%, and housing and car allowances for members of the advisory Shura Council cut by 15%… About two-thirds of (Read More….)
Japan PM Abe’s Economic adviser Hamada said today that strength in the yen is damaging confidence in the Japanese economy and may hurt the BOJ. The mainstream financial media is reporting that Hamada said, “Unless the speculative forces in the foreign-exchange market that block the regular transmissions of monetary policy are corrected by the MOF, (Read More….)
Foreign countries are dumping US debt at an alarming pace. Foreigners dumped $54.2 billion in US Treasury bonds in just the last four weeks.
Since the start of 2016, foreign countries have sold more than $177.7 billion in US Treasury bonds, bringing the total to $2.827 trillion, the lowest amount of Treasuries held by (Read More….)
The world’s largest funds are sovereign wealth funds used by countries to run an entire government and to provide social welfare programs for the people. Back in January of 2015, I wrote about the drop in the price of oil impacting sovereign wealth funds here.
It was inevitable that if oil did not recover quickly, (Read More….)
China could be coming back into play by year end and be a catalyst for pulling U.S. markets lower.
The China Shanghai Composite Index is very close to breaking back below the 200 day MA. The money flow on the Shanghai Index is dropping rapidly which is bearish for Chinese markets.
A weaker China (Read More….)
The BOE restarted its QE bond purchases last week, or at least it tried to. The BOE could not find enough bonds to buy.
The first auction on Monday went fine but on Tuesday, the BOE fell £52 million short of its target to buy £1.17 billion in long-dated government debt.
What happened (Read More….)
The mainstream financial media first reported that Brexit was not going to happen. After Brexit had happened, the mainstream media said that the people of the UK didn’t know what they were doing and were experiencing remorse.
When the market dropped after the Brexit vote, the mainstream media was all about doom and gloom regarding (Read More….)
The BOE’s Weale has dropped his opposition to stimulus and has completely reversed his position after the UK PMI report. The BOE needs to get ahead of the stagflation tsunami that has hit its economy in the wake of Brexit. I wrote about the UK stagflation threat here.
Weale’s reversal came because of the bad (Read More….)
The Markit PMI report on the UK shows manufacturing in the UK falling below the 50 mark.
Factory input prices have spiked higher as a result of the pound devaluation.
Folks this is a textbook definition of stagflation which is persistent high inflation combined with high unemployment and stagnant demand in (Read More….)
The AFP reports they saw a letter from the EU Commission that calls on the EU to suspend structural funds to Spain and Portugal after both have failed to reduce their debt.
Structural funds are used to deal with regional economic disparities within the bloc.
European Commission vice president Jyrki Katainen said, “We remain at (Read More….)
The Chinese government suspended the China Minxin PMI. It was suspended in December of 2015. The Chinese government allowed it to resume in March of 2016.
Folks this is what communist countries do, they control the flow of news and information. Looking at the last chart of the China Minxin PMI, it’s clear why China (Read More….)