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Tag Archives: emerging markets

The Great Unwind

Over the decade long commodity boom made in China we have all been accustomed to the large and growing current account surpluses being recycled back into western financial security markets. Case in point, from 2000 to its peak in the fall of 2013 the Chinese added more than 2,000 per cent to their TSY holdings. China (plus Belgium), the Middle Eastern oil exporters, Brazil, India, Mexico, Turkey and Russia now hold a combined $2 trillion worth of TSYs. This has been nothing short...

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US Dollar – the modern day Bancor

According to Belgian-American economist, Robert Triffin the country whose currency have become the global reserve currency must be willing to supply enough liquidity to satisfy global needs. This obviously raises an interesting question for the Federal Reserve with regard to their monetary policy execution. On one hand, they need to consider the best course of action for the domestic economy, while on the other also take into account effects on global financial markets and corresponding...

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Now Credit Suisse

The capital and now loss projections for Deutsche Bank are, as much as they can be, more straight forward. In terms of Credit Suisse, the dubiousness of the implications is proportional to the “story.” Whereas Deutsche last week shocked Wall Street (and Europe) with a huge potential loss in FICC activities (their CB&S segment), any...

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“Problems Likely to Snowball from Here,” at World’s Second Largest VW Factory

By Don Quijones, Spain & Mexico, editor at WOLF STREET. Mexico, the biggest provider of VW vehicles to the U.S. market, is particularly exposed to the spreading fallout. As WOLF STREET warned in the immediate aftermath of the crisis: When Volkswagen struggles, so does the state of Puebla. The huge manufacturing plant built on the city’s outskirts 50 years ago provides roughly a quarter of local GDP. Its supply chain consists of 150 companies, generating 78,000 jobs – most of them...

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China, Russia, Norway, Brazil, Taiwan Dump US Treasuries

Five large purchasers of US Treasuries – China, Russia, Norway, Brazil, and Taiwan – have changed their minds. They’re dumping Treasuries, each for their own reasons that are now coinciding. And at the fastest rate on record. For the 12-month period ended July, sales of Treasuries by central banks around the world reached a net of $123 billion, “the biggest decline since data started to be collected in 1978,” the Wall Street Journal reported. China, the largest foreign owner of Treasuries –...

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On the Brink, Argentina Asks China for More Money

China is throwing its financial and economic weight around in the emerging markets. It’s funding and building all kinds of infrastructure projects, power plants, mines, dams, and what not, often under dubious conditions and with imported Chinese labor. This isn’t a free gift, but a combination of a resource grab, shrewd financial investment, export policy, and influence grab. China is becoming a world player. In Argentina, China plays an even larger role. Argentina can’t cheaply borrow...

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Last 2 Times this Happened, the US was Falling into Recession

But what’s different this time? Revenues of the companies in the S&P 500 have been declining all year. Companies and analysts blamed the strong dollar. They blamed China. They blamed oil, Greece, Japan, and a million other things. In the first quarter, revenues dropped 2.9% from a year earlier. In the second quarter they dropped 3.4%. And in the third quarter, according to FactSet, they’re expected to decline by 3.4%. The last time year-over-year revenues declined two quarters in a row...

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High Priests of Global Finance Stoke Emerging Market Fears

“Hot Money” gets cold feet: the 3 Steps to a Panic By Don Quijones, Spain & Mexico, editor at WOLF STREET. Two of the most important guardians of global finance, the IMF (International Monetary Fund) and the IIF (Institute of International Finance), gave their verdict on the current state of the global economy this week. And their message could not be clearer: beware the dreaded fate of emerging markets. The World According to A Prestigious Club of Global Banks The IIF warned this week...

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Why NIRP may trump QE4

The Fed unsurprisingly chickened out from the much touted September hike. International conditions and a disapproval from Mr. Market was enough to unnerve an increasingly bewildered FOMC board. Less well known is the fact that the FOMC gave a strong, and unexpected, signal to the Pavlovian world of central bank front runners. Dovish hold as the enlightend call it. It is all about managing expectations – see Goebbelnomics where we said As the Keynesian revolution was merged with...

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