Five Hundred Words 11/14/2018

Wednesday, November 14, 2018

Daily Writing

9:44 AM

We are looking into key economic indicators for China.  What are the key things we should be looking for?  We believe the current economic situation in China is dire.

Our concern is that China’s situation runs far deeper than the trade war.  The core issues in China center around internal policy.  Chinese elites are losing confidence in President Xi.  There’s evidence of that when you see Xi making statements directly critical of Trump[1], and then the next day vice president Wang Qishan had to mop things up[2].  Also, Premier Li Keqiang has to reaffirm China’s commitment to liberalization[3]

Trump did something previous administrations were too afraid to do: he called China out (most notably on the $1-2 trillion in intellectual property theft over the past 10 years).  That’s not an endorsement of Trump, but the reality is China is now scrambling to figure out an internal solution to keep the renminbi afloat while dealing with their $40 trillion debt exposure (not including shadow banking).  China continues to tap into its foreign exchange reserves just to keep its head above water.[4]

If China fails to enact meaningful economic reform by the end of the year, things will deteriorate rapidly in the first quarter of next year.  It all depends on confidence.  Global confidence in China, China’s confidence in Xi.

[1] https://www.ft.com/content/34e388ee-e0af-11e8-a6e5-792428919cee

[2] https://www.ft.com/content/13b34914-e165-11e8-a6e5-792428919cee

[3] https://www.fxstreet.com/news/chinas-li-keqiang-country-is-committed-to-opening-up-economy-201811120128

[4] https://www.wsj.com/articles/strong-dollar-hits-chinas-foreign-exchange-reserves-1541592015

Market Data

Resource Commodities

 

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

Gold spot

1201.90

1199.98

1209.40

1223.50

1226.10

Silver

13.985

13.990

14.040

14.420

14.540

Platinum

837.00

838.00

852.00

861.00

871.00

Copper

2.76

2.72

2.69

2.78

2.72

Crude (WTI)

56.43

57.13

60.74

60.19

61.60

Global government bond yields (10 year)

 

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

U.S. 10 year

3.15%

3.15%

3.18%

3.19%

3.22%

Germany

0.40%

0.39%

0.38%

0.40%

0.45%

Brazil

10.44%

10.54%

10.49%

10.37%

10.31%

Italy

3.48%

3.44%

3.43%

3.40%

3.41%

Japan

0.10%

0.10%

0.11%

0.11%

0.11%

 

Major U.S. Indexes

 

November 14, 2018

November 13, 2018

November 12, 2018

November 9, 2018

November 8, 2018

VIX

20.52

19.45

17.26

16.87

16.18

DOW

253.88

253.21

259.59

261.49

261.80

S&P 500

274.18

273.06

277.24

277.76

281.01

Nasdaq

7271.83

7259.66

7309.29

7406.90

7570.75

 

Currency Cross Rates

 

November 14, 2018

November 13, 2018

November 12, 2018

November 8, 2018

November 8, 2018

USD/JPY

113.9600

113.8200

113.800

113.7800

113.6800

EUR/USD

1.1303

1.1292

1.1268

1.1315

1.1426

AUD/USD

0.7224

0.7219

0.7209

0.7213

0.792

CHF/USD

0.992

0.9929

0.996

1.00590

0.9971

USD/CNY

6.9509

6.9545

6.9631

6.9552

6.9366

USD Index

97.12

97.16

97.33

96.90

96.23

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