Friday, July 24, 2015

Some Friday news

Here's a bit of Friday newsreading:

New Deal Demoncrat - initial claims, adjusted for population, set a new all-time low. And since it seems monetary policy has permanently slain the inflation beast in the West, the only reason to raise rates now would be to smash the working class. Again.

Calculated Risk - on June existing home sales. He takes pains to remind us that resale of existing homes has only an insignificant effect on the economy. Inventory and distressed sales are the significant data points in this report.

New Deal Demoncrat - sub-$2 gas this winter? That will be a positive for the US economy.

FT Alphaville - the real bubble is in "China bust" articles. Here's the opinion of two actual Chinese analysts from Citi:
While the A share market declined by 24% off the peak, it is still worth remembering that China is still up for the year. The CSI 300 is up 18% in US$ terms, Shanghai A shares are up 23%: sure, both markets were up a lot more a few weeks ago but those performance numbers are still enviable compared to many other markets (see Figure 3). The SPX is up 3.4%, NASDAQ 10.2%, the Euro Stoxx is up 6.9% in US$ terms and the N225 is up 14.2%, again in US$ terms. In percentage terms in EM, only Russia and Hungary, up 22% and 27% in US$, have outperformed the CSI 300, while many markets in EM are down double digits: take Columbia off by 25%, Peru off by 12%, Turkey down by 19, Indonesia off by 15% and Brazil off 15%. So, for all the talk of an imminent blow-up, the Chinese markets have actually done rather well. Our most likely scenario for the Chinese economy, should reforms fail, is the Japanisation of the economy with growth slowing progressively until there is none. Given that China borrows from itself and runs a CA surplus, a progressive ossification of the economy and financial system is still a more likely outcome than the sharp sudden crisis so often seen in EM, the latter being mostly CA deficit-driven adjustments. China remains a net creditor to the world.
And I'd rather hear the opinions of Chinese analysts than some idiot honky who doesn't understand the country or its long history. - GLD dumps 23 tonnes. Well, let's just clean that fund out and maybe we'll see a bottom. - George Gero on gold. He points out the obvious:
"With all the bears in the woods, everybody [being] bearish is probably the most enticing reason to start to pick at the market."

Gero said Monday's 2.2 percent selloff in gold was sparked by one large trade, rather than any sea change in the fundamentals.

"Somebody had to make the decision to be out of the market with that size trade, which distorted the markets," he said. "We will be going back in the next few months to basics."
People forget it was one big Shanghai Chaos smash that hit gold, and it hasn't been dropping all that hard since. When does Chaos have to close?

der Spiegel - interview with Julian Assange. I find it interesting that academia instantly rejects all papers that use Wikileaks as a source. That's something to remember come Ph.D. time.

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