201807.16
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Pay Attention To Nominal Not Real China GDP

For the second half of 2015, how dicey did it really get in China? It’s difficult to assess going by something like real GDP given how notorious the Chinese have become for hitting their growth targets no matter what. But for those two quarters we can infer a whole bunch of nasty problems by the…

201807.10
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China’s Seven Years Disinflation

In early 2011, Chinese consumer prices were soaring. Despite an official government mandate for 3% CPI growth, the country’s main price measure started out the year close to 5% and by June was moving toward 7%. It seemed fitting for the time, no matter how uncomfortable it made PBOC officials. China was going to be…

201807.03 9

The Dreaded Vote of Confidence

Chinese officials are getting nervous. Everyone knows that whenever your favorite sports team struggles and fans are calling for the head coach’s head, any owner or general manager who then issues the dreaded (from the coach’s perspective) vote of confidence is essentially sealing his fate. PBOC Governor Yi Gang issued a similar sort of statement…

201806.27
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Big Mama Leaves Huge Footprints Stepping All Over ‘Devaluation’

Not a good day to be a global central bank. Competitive devaluations all around? Kidding aside, it’s getting serious in China. CNY DOWN = BAD, so says Big Mama. “The kind of dollar selling from that bank was so aggressive that we knew instantly that it must be from the Big Mama,” said a Shanghai-based…

201806.25 9

Revisiting China and ‘Devaluation’ As China Revisits ‘Devaluation’

When the Chinese yuan suddenly plummeted in mid-August 2015, the world looked on in stunned confusion. It didn’t make sense. The global economy was about to take off, they thought, and it wouldn’t be doing that without China’s vast anticipated contributions. Such a large move in such a short time frame for a major currency…

201806.22 7

Further Early Confirmation on PBOC Intentions

The level of Chinese bank reserves fell again in May 2018. Year-over-year, what is technically classified as Deposits of Other Depository Corporations on the PBOC’s liability (money) side of its balance sheet contracted by 1%. This advances a very different trend for reserves, breaking what had been a more continuous and determined effort toward at…

201806.12
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Chinese Inflation And Money Contributions To EM’s

The People’s Bank of China won’t update its balance sheet numbers for May until later this month. Last month, as expected, the Chinese central bank allowed bank reserves to contract for the first time in nearly two years. It is, I believe, all part of the reprioritization of monetary policy goals toward CNY. How well…

201805.21
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China’s Monetary Shell Game (Confirmed for Step 2)

Chinese bank reserves contracted in April 2018 for the first time in almost two years. The decline was small, just 0.2%, but it is still represents a significant deviation from the limited growth since the turmoil in 2015 and early 2016. The decline in reserves further corroborates our theory of events. To briefly review, China…

201805.11
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Chart of the Week: PBOC Clumsily Stumbles Into Step 1

A few weeks ago, the PBOC stunned many mainstream observers by reducing the RRR. It cut against the preferred narrative that the central bank was “tightening” in anticipation of an economic and therefore inflationary breakout (labor shortages, don’t you know). It didn’t seem to make sense. From the perspective of globally synchronized growth, it wouldn’t….

201804.25
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It’s The Track Record That Is Unaccounted-for Risk

No one seems able to account for the rise in LIBOR-OIS. I think it’s a vain effort, and focuses on the wrong segments, but nonetheless there is considerable uncertainty which always casts suspicions into the shadows. That is important.  A few weeks ago, all the big bank analysts were alight with their theories. They couldn’t…