Let the WAR (Currency) GAMES Begin? & More Top Insights

Central Banks Hold Nerve After China Devaluation

Global policymakers, including those at some of Asia's most intervention-minded central banks, are holding the line on their currency policies after China's surprise devaluation of the yuan.

China's central bank said Tuesday's 1.9 percent devaluation was a one-off move. It also switched to a more market-determined benchmark for the currency's daily trading band.

A weaker yuan makes Chinese exports cheaper and competing exports more expensive. Countries that see themselves at a competitive disadvantage might be tempted to devalue their own currencies in retaliation. But so far policymakers from South Korea, India, Indonesia and Japan see no reason for tit-for-tat trade-war policies.

"I don't think the move would trigger a global currency war," a Japanese policymaker said.

The devaluation is unlikely to perturb the Bank of Japan, whose money-printing programme to stimulate the economy has weakened the yen by 50 percent against the dollar since 2012.

Yuan Slide Slams Emerging Nations as Stocks Head 

for Bear Market

The selloff took the MSCI Emerging Markets Index’s decline from a peak last September to 20 percent, the threshold for a bear market on a closing basis. Shares in Indonesia slumped to a 17-month low. Russia’s ruble weakened 2 percent against the dollar while currencies from Brazil to Chile fell at least 1.1 percent.

World Markets Shudder,

Expect More Trouble GoingForward

China's currency devaluation ripped global risk markets, but the real fear is that what's behind the move could be a bigger problem for the world economy.

Global stock markets fell and commodities were crushed. Emerging market equities were casualties, and currencies from the Mexican peso to the Australian dollar were smacked. The U.S. dollar was higher against a basket of currencies, and buyers moved into the safety of bunds and Treasurys, driving yields sharply lower. The U.S. 10-year was yielding 2.13 percent.

"It's a little bit of damage to the global growth psychology. If the country that's been growing the fastest and been one of the mainstays of global growth momentum ... is allowing their currency to sink a little bit, if they're resorting to that, how bad are things around the world?" said Robert Sinche, chief global strategist at Amherst Pierpont Securities.

China the Ultimate Crony Capitalist State devalues its currency 

 

 In case you haven’t noticed things aren’t so hot in China. In fact the country, the Ultimate Crony Capitalist State is in serious trouble. Today it devalued the yuan, its currency.

We have been sounding the alarm on China for a very long time. Not that we’ve been the only ones. That China has been headed for real trouble has been obvious to many for quite a while, years. Regardless, trouble is here now. The world’s second largest economy is pretty much in crisis mode, or very near it and this state of affairs will have an impact (it already has) globally.

What should also be understood is that this is not a separate episode from the initial financial crisis which hit much of the world in 2008. China, Greece, Japan, it’s a continuation of the Great Recession. We’re not out of it. Indeed, some believe that we likely have not seen the worst of it.

Mexico central bank sells $107 mln to support peso

Mexico's central bank on Tuesday said it sold $107 million of $200 million offered in an auction to support the peso currency at an average price of 16.3274 pesos per dollar. (Reporting by Mexico Newsroom)

Russian firms, banks shrink as they face fresh peak debt payment

Russian state companies and banks are cutting staff and scrapping projects as they prepare for another surge of foreign debt repayments of at least $35 billion before the end of the year amid falling energy export revenues and a weaker rouble.

Analysts sharply cut Japan growth forecasts, cloud BOJ optimism

apanese analysts are sharply cutting their economic growth forecasts for the year amid expectations that activity shrank in the second quarter, a survey showed, piling pressure on the central bank to trim its own rosy projections.

Japan’s government debt hits record high ¥1.057 quadrillion

The central government’s debt hit a record high of ¥1.057 quadrillion at the end of June, up by some ¥3.87 trillion from the end of March, according to the Finance Ministry. The national debts, or the combined balance of outstanding Japanese government bonds, financing bills to cover temporary funding shortfalls and borrowings, increased due to rising social security costs, including on medical care and pensions, amid the aging of society.

Ruble Leads Currency Slide as Yuan 

Risks Denting Russian Exports

The ruble slid the most in emerging markets as the biggest drop in China’s yuan in two decades drove down oil prices and sparked concern Russia’s exports to its largest trading partner will be curtailed.

Eurozone 

Industrial Production Falls 

In June

Industrial production across the eurozone declined more than expected in June, rounding off a weak second quarter and indicating that lackluster investment continues to restrain economic activity.

The European Union's statistics agency said Wednesday that production at factories, mines and utilities fell for the second straight month in June, down 0.4% from May. Economists polled by The Wall Street Journal had forecast a monthly decline of 0.1%.

The data, coming ahead of Friday's publication of gross domestic product estimates, "shed a concerning light on the manufacturing recovery in 2015" as some of the region's main trading partners are going through a weak growth spell, said Bert Colijn, an economist at ING Bank.

A cooling Chinese economy prompted Beijing on Tuesday to devalue its currency, while data on Monday showed that Russia's economy moved further into recession in the second quarter.

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Indra Nooyi,  

PepsiCo, another of 100 Most Powerful Women - Forbes, has not only led her company to record financial results but is making strides to move PepsiCo in a healthier direction, leading the courageous charge to shed traditional fast food properties and to replace them with initiatives to supply healthier foods. She is deeply caring and committed as a senior executive. She is a fun-loving executive as well—she played lead guitar for an all-woman rock band in college, loved to play cricket, and is known to sing karaoke and perform at corporate gatherings to this day. Yes, I have been known to relate to her fun-loving spirit as a senior executive as well.

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An Inconvenient Truth

"Eurasia BIG Bang" 

What Happens When Geo-Political Shifts Occur?

EXISTENTIAL REALITY 

"Humanity's Coming of Age"

 - Last Days: Hegemony or Survival -

"QE 1 China" Lowers Bond Rates, The 7 Big Issues, & More Top Insights

China’s One-Year Bonds Decline as Stimulus Seen Boosting Supply

State-owned policy banks will issue at least 1 trillion yuan ($161 billion) of special bonds to help raise funds for infrastructure construction, according to people familiar with the matter. That will add to about 2.8 trillion yuan of municipal debt sold this year.

Seven problems that deserve investors’

 attention

The national debt. It's well over $18 trillion, and that's only the current value and growing exponentially. The Congressional Budget Office has calculated the present value of our unfunded obligations — such as commitments to Social Security, Medicare, Medicaid, SNAP, CHIP, government pensions, etc. — total somewhere between $47 trillion and $205 trillion. These are patiently waiting their turn to show up in the national debt.

Eurozone Retail Sales Fall Sharply In June

Retail sales in the eurozone fell more sharply than expected in June, a fresh sign that the currency area's economic recovery remains too weak to quickly bring down very high rates of unemployment, or raise inflation to the European Central Bank's target.

Separately, the final results of surveys of purchasing managers at businesses around the eurozone recorded a slowdown in activity during July, although it was less marked than first estimated.

The European Union's statistics agency said Wednesday retail sales in the 19 countries that use the euro fell 0.6% in June from May, but were up 1.2% from the same month last year. It was the largest month-to-month fall since September 2014. Economists surveyed by The Wall Street Journal had estimated sales fell 0.2%, having seen figures from Germany that recorded a large drop.

Italy's industrial output falls more than expected

ROME--Italy's industrial production fell more than expected in June, as it contracted in almost all sectors, reversing the rise seen in the previous month, in a sign that the recovery from the country's worst postwar recession is still fragile.

Industrial output in the euro zone's third-largest economy fell 1.1% on the month in seasonally adjusted terms, national statistics institute Istat said Wednesday.

A more modest fall of 0.2% had been the average forecast of 11 economists polled earlier by The Wall Street Journal.

The monthly fall was led by a 1.7% monthly contraction in the production of intermediate goods, while consumer goods fell 0.8% and energy goods' output contracted 1.0% over the period, Istat said.

Italian industrial production fell 0.3% on the year in June in workday-adjusted terms, Istat said.

OECD: Global inflation still stubbornly 

low

The OECD's figures indicate that a wave of fresh stimulus measures enacted by central banks around the world since late last year has yet to achieve its main goal--minimizing the risk of a slide into deflation. Very low inflation rates make economies vulnerable to a slide into deflation, an outcome that policy makers regard as unlikely, but highly damaging should it occur.

China state margin lender injects $32 

billion

  New Mutual Funds - China Securities Journal

China Securities Finance Corp, the state margin lender tasked with stabilizing the stock market, has injected 200 billion yuan ($32.21 billion) since July into five newly-launched mutual funds, the official China Securities Journal reported on Tuesday.

Swiss housing 

bubble risk highest

 since 1991, says

 UBS

Negative interest rates have created excess demand for property as an investment, the Zurich-based bank said, which brings the housing market back into focus for the Swiss National Bank (SNB).

New world of work: political cost of 

Spain’s recovery

The numbers of those in temporary employment — whose numbers fell during the crisis partly because of their vulnerability — is on the rise again. In July, the Spanish unemployment roll dropped by 74,000, the best July since 1998. But of the 1.8 million labour contracts that were signed during the month, only 6.9 per cent of the contracts were for permanent positions

Indian consumer sentiment lowest 

since March: MNI Indicator

Indian consumer sentiment lowest since March: MNI Indicator

Japan’s Monetary Base Stands at 

Record High

Japan’s monetary base stood at a record-high 325.74 trillion yen ($2.63 trillion) at the end of July, up 33.9 percent from a year earlier, as the Bank of Japan continued to provide more liquidity to raise the inflation rate to its targeted 2 percent, BOJ data showed Tuesday. The monetary base reached an all-time high for the 12th straight month. The central bank took additional monetary easing steps last October to raise the pace of supplying funds.

The Oil Crash Has Caused  A $1.3 Trillion Wipe-out

The California Public Employees Retirement System, a $303 billion fund that provides benefits to 1.72 million people, owned a $91.8 million slice of Pioneer Natural Resources Co. in June 2014. At the time, Pioneer was a $33 billion company and one of the biggest shale producers in Texas. Today, Pioneer is worth $19 billion and Calpers’ stake has lost about $40 million in market value.

Learning Success: 

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Warren Buffett, Berkshire Hathaway – He is a deeply conservative trader during the times that everyone around him is moving from one extreme to the other to the tune of huge losses and gains. Warren Buffett is a perfect example of patience, proving that slow and steady generally wins the business race. (Although I continue to press my own desire to spur Fishbowl’s inventory software business to race!)

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