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HomeAsian Insights and Developments
Posted by Larry Doyle on June 29th, 2010 10:47 AM |
As markets are breaking down in America this morning, the waves of selling actually emanated in Asia. To that end, how do we get an unfiltered and unbiased perspective on economic and market related developments from that part of the world? Welcome to Sense on Cents.
A close personal relationship of mine works for Credit Suisse in China and provides the following commentary: (more…)
The China Syndrome circa 2010
Posted by Larry Doyle on June 17th, 2010 8:15 AM |
With ongoing issues here in the U.S. and more so in Europe, clearly global investors need to focus more on investing in Asia generally and China specifically, correct?
I do not disagree that investors need a global perspective, but as with any investment let’s open our eyes and assess risks before diving into the deep end of the pool. Remember, Wall Street analysts touting Asian investments are in the business of selling products. Let’s navigate further and find some independent analysis.
Today’s Financial Times provides just that from Michael Pettis, a Senior Associate at the Carnegie Endowment for International Peace and a finance professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets.
Chinese Inflation Does Not Mean Global Inflation
Posted by Larry Doyle on March 11th, 2010 8:10 AM |
News this morning that China’s inflation rate has hit a 16-month high is garnering significant attention.
China’s economy is only one-fifth the size of the U.S. economy while China’s population is more than four times that of the United States. In fact, China’s population is approximately one-fifth of the entire world’s population. Clearly, the People’s Republic of China represents a huge growth opportunity in this century.
Bloomberg highlights this inflation news this morning in writing, China Inflation Quickens as Industrial Output Climbs:
China’s inflation reached a 16- month high, industrial output climbed and new loans exceeded forecasts, adding to the case for the government to pare back stimulus measures. (more…)
China, Greece, and Germany Rattle Overnight Markets
Posted by Larry Doyle on February 12th, 2010 7:11 AM |
No rest for the weary.
If you thought yesterday’s nice 1% upward move in our equity markets was a precursor for calmer and stronger markets ahead, think again.
Overnight developments in China, Greece, and Germany are clear signs that our economic landscape remains challenging and our markets remain fragile. Let’s navigate:
1. Looking eastward, China’s central bank raised reserve requirements (interest rates) by 50 basis points (.50%). Why? (more…)
News and Midday Market Moves, Copper Selling Off Hard
Posted by Larry Doyle on January 27th, 2010 12:25 PM |
Many eyes are focused on the grilling of Treasury Secretary Geithner on the Hill. Have we learned anything new? Not really. Geithner is maintaining that he and others within the New York Fed and the Federal Reserve operated within the best interests of the American taxpayer because they were working to save the system. Numerous Congressmen are drilling Geithner on his actions to pay creditors 100 cents on the dollar.
Having watched this debate this morning, in my opinion we will not receive any real clarity or clear cut winners. I do find it laughable that Geithner asserts that the Treasury has promoted unprecedented levels of transparency under his leadership. Neil Barofsky, head of SIGTARP, and Elizabeth Warren, the TARP watchdog, have highlighted the extensive lack of transparency by Treasury under Geithner. (more…)
Think China, Think Commodities, Think U.S.
Posted by Larry Doyle on January 26th, 2010 12:11 PM |
China led the overall market higher in 2009. With China now restricting credit, will it lead to a global selloff in 2010? How do we monitor this situation and most effectively navigate the economic landscape? We can keep a close eye on the Chinese stock indexes, but I think we are better served monitoring the commodities markets. Given that China is still in the very early stages of an industrial revolution, the demand for commodities within the People’s Republic of China is extraordinary.
Trading commodities is a very challenging game. From oil to grains to precious metals, the fundamentals and technicals are impacted by an array of factors. How does one forecast weather patterns three months out and the impact they will have on prices? Trading commodities is certainly not easy - and definitely not recommended as a hobby.
If China is curtailing lending (and it is), then I believe the market segment which will be most immediately impacted is the commodities space. While our equity markets are marking time today, how are commodities doing?
Let’s look at the DJ-UBS Commodity Index. We see that the index is not only down 1% on the day, but down 8% from the 52 week high achieved on January 6, 2010.
When I think China, I think commodities . . . and then I think our markets will fall in line accordingly.
LD
Will China 2009 Repeat United States 1929?
Posted by Larry Doyle on December 7th, 2009 12:05 PM |
“Those who do not learn from history are doomed to repeat it.”
George Santayana (Spanish born American Philosopher, Poet and Humanist who made important contributions to aesthetics, speculative philosophy and literary criticism. 1863-1952)
The economic boom of The Roaring Twenties here in the United States was closely linked with the massive financing of debt provided to post WWI-Europe. The U.S. was the envy of the world given its economic engine and subsequent economic surplus. Economic historians are well aware that the excess capacity in the United States precipitated The Great Crash of 1929.
Fast forward 80 years. Is China 2009 the equivalent of the United States 1929? Is the United States 2009 the equivalent of Europe 1929? How will the relationship between the People’s Republic of China and the United States play out? I addressed this critically important dynamic this past January in writing, “Prisoner’s Dilemma.”
I recently read and reviewed a fabulous piece produced by Black Swan Trading addressing this topic. This short piece, entitled Currency Currents, is strongly recommended. I submit:
Therefore, I think the key macro event i.e. major sustained risk event, will likely flow from protectionism. Rebalancing is the trigger for protectionism in a world when the major player, China, suppresses its currency. (more…)
Chinese Presence Growing in Mexico
Posted by Larry Doyle on November 24th, 2009 12:57 PM |
It’s a big world out there.
While American investors can become consumed by the developments here at home, we need to be mindful that there is a LOT going on beyond our shores. To that end, I was thrilled to host Keith Fitz-Gerald on No Quarter Radio’s Sense on Cents with Larry Doyle on November 8th. Keith addressed a number of developments in Asia during the course of our interview.
Keith and I reviewed his book Fiscal Hangover: How to Profit from the New Global Economy, which was released the week after our interview. How is Fiscal Hangover doing? It is currently Amazon’s top-selling book for investing. Not bad.
What is Keith thinking currently? In a recent commentary, Is Mexico the “New” China?, Keith highlights:
When it comes to global manufacturing, Mexico is quickly emerging as the “new” China. (more…)
The China Syndrome 2009
Posted by Larry Doyle on November 17th, 2009 11:53 AM |
I am typically reluctant to merely link to articles which I find extremely compelling and newsworthy. I thoroughly enjoy referencing other’s works while adding my own thoughts and perspectives. That said, every once in a while an article comes along which truly deserves to be highlighted in its entirety for its depth of detail and global perspective. I find it interesting that the article I find so compelling is produced not here in the United States, but in the United Kingdom. I thank KD for bringing it to my attention.
From the Telegraph.co.uk, China Has Now Become the Biggest Risk to the World Economy:
President Obama said before going to China this week that Asia can no longer live by shipping goods to Americans already in debt to their ears Photo: AP
“The inherent problems of the international economic system have not been fully addressed,” said China’s president Hu Jintao. Indeed not. China is still exporting overcapacity to the rest of us on a grand scale, with deflationary consequences.
While some fret about liquidity-driven inflation, Justin Lin, World Bank chief economist, said the greater danger is that record levels of idle plant almost everywhere will feed a downward spiral of job cuts and corporate busts. “I’m more worried about deflation,” he said. (more…)
