Submitted by Jeffrey Snider via Alhambra Investment Partners,
The focus on China as if their problems were only Chinese is highly misplaced, though you can understand the appeal of the excuse. This sentiment was expressed over and over today (just as it was in August):
“China Finds $3 Trillion Just Doesn't Pack the Punch It Used To,” a Bloomberg headline from Friday morning reads.
“China’s $3 trillion-plus in foreign currency reserves, the biggest such stockpile in the world, would seem to be a gold-plate insurance policy against the country’s current market chaos, a depreciating currency and torrent of capital leaving the country,” Bloomberg writes, before citing a number of sources who say that in reality, $3 trillion aint what it used to be.
On Friday, the PBoC said it would seek to keep the yuan’s exchange rate “basically stable” at reasonable and equilibrium levels and work to further promote RMB internationalization.
As we noted earlier today, the more China moves to “liberalize” exchange rates and financial markets, the worse things will be for global risk assets. After all, when something that has been perpetually manipulated is suddenly subjected to a semi-honest price discovery process, the “adjustment” is usually violent. China is a case in point.
Back in June 2013, when Deutsche Bank opened a gold vault in Singapore which could hold up to 200 metric tons, the German bank was euphoric about the prospects for storing physical gold: "Gold has traditionally been stored in London, Zurich and New York, but there is a serious shift in dynamics going on as the global financial crisis continues to evolve," Mark Smallwood, Deutsche Asset & Wealth Management's head of wealth planning in the Asia-Pacific region, told The Wall Street Journal.
Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,
I'm a China bull, let's get that out of the way first. But like anything connected with the global industrial and commodity complex today, from Emerging Markets to MLPs to oil prices, it doesn't matter what the Truth with a capital T might be regarding the real world economic or business fundamentals. The story is broken. The stocks are broken. I've written a lot here in Epsilon Theory about what's happening in China and what it means for the China growth story to break.