Closing the Loop on Japan & China

Closing the Loop on Japan & China

In the past few days I’ve detailed important inflection points in both Japan & China, at least as I perceived them. The only thing I didn’t do was throw up a ratio chart b/t the two region’s equity markets –…...

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Sina Review (Out-sized Moves Nearing in USDCNY & SHCOMP)

Sina Review (Out-sized Moves Nearing in USDCNY & SHCOMP)

China’s equity market has been dead for the past year and it’s 9 mo hi/lo range now < 12%, about tied for lowest on record with similar prints in Mar-01 and Jul-14. Both of the above dates preceded robust expansions…...

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Break-Out in TED Spread Implies further CNY Depreciation, ECB Balance Sheet Expansion and EU Financials Weakness

Break-Out in TED Spread Implies further CNY Depreciation, ECB Balance Sheet Expansion and EU Financials Weakness

Dating back to the beginning of the GFC the TED spread – what amounts to cross-border, inter-bank borrowing/lending rates vs. risk free t-bills – has been an excellent proxy for rising financial system contagion and counter-party aversion, which, ultimately has manifested itself in…...

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SHCOMP & CNY: 1993-1994 = 2015-2016?

SHCOMP & CNY: 1993-1994 = 2015-2016?

Much has been made about China’s need to devalue its currency vs. USD over the past year since the country abruptly nudged it immaterially lower in Aug-15. I honestly have no strong opinion or edge  re: likelihood that this does or…

Y(EN)-TERVENTION Imminent?

Y(EN)-TERVENTION Imminent?

When one thinks about the world’s largest exporters of “widgets”, China and Japan come to mind first. Which, in turn, should lead one to a consideration of the JPYCNY cross. Now, given the CNY peg to USD, the JPYCNY cross…...

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This Has Only Happened Prior to the Plaza Accord & the Global Real Estate Bubble

This Has Only Happened Prior to the Plaza Accord & the Global Real Estate Bubble

As of Dec-15 the spread between the trailing 56 month (an objective reference point: gold peaked 56 months ago on a monthly closing basis in Aug-11) rates of change in the USD and gold reached in excess of 67% (i.e.,…...

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CNY Cross vs. Gold Highly Informative, Signals Beginning of New Global Macro Regime

CNY Cross vs. Gold Highly Informative, Signals Beginning of New Global Macro Regime

In the chart below I plot CNY vs. gold. The cross has been in a downward sloping channel b/t lines (1) and (2) dating back to 1996. Further, via the vertical blue lines, note that every major pivot in the prevailing…...

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Encino Man

Encino Man

Here’s a blast from the past for you. On 1/15/14, or over two years ago, we had this highly compelling and very prescient post that emphatically stated in its title: “GREATER THAN 90% PROBABILITY SPX HIGHER IN 2014 WITH A…...

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USDCNH Likely to Reach Low $7s Before Any Abatement in Chinese Currency Depreciation

USDCNH Likely to Reach Low $7s Before Any Abatement in Chinese Currency Depreciation

I have talked at length on the site about the deflationary forces behind CNH depreciation vs. the USD. My contention is that so long as a regime of CNH depreciation vs. USD is in place, global risk assets will remain…...

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CNH Weakness Regime = Inexorable March Toward Greater Global Financial Stress

CNH Weakness Regime = Inexorable March Toward Greater Global Financial Stress

In the chart below I plot the following over the past year: USDCNH (inverted to show Yuan weakening; white) JNK (pink) Deutsche Bank (DB) 5 Yr CDS (inverted, so decline = CDS climbing; orange) SPX (red) TED spread (inverted, so decline…...

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