Why It's Important If The Secular Bull Market In Vancouver Real Estate Is Over [View article]
For Mainlanders who have sufficient funds, there are ways of getting money out of the country. For example, if you have a business, just incorporate an offshore entity that your Mainland business sells and keep the profits offshore. Apple does it, why can't the Chinese?
The stock market in China is relatively undeveloped compared to Western economies and regarded as speculative (think Pink Sheet or junior NASDAQ listings and you get the idea).
China's miracle growth was powered by 1) low labor costs; and 2) CNY-USD peg, which gave rise to an inappropriate monetary policy for China. This meant that when their inflation rose, they couldn't raise interest rates because of the currency peg. Thus real interest rates went negative.
Since their bond market was also relatively underdeveloped, stock market highly speculative and banking interest rates had negative real rates, the household sector had nowhere to put their savings - except real estate. This has created an enormous property bubble, which is an unintended consequence of the currency peg.
Now that the Chinese authorities have painted themselve into a corner, how they manage the situation will be of great importance not only to China but the rest of the world.
1) "Good" austerity in the form of tax cuts and government cutbacks 2) Structural reform, defined as union busting and the elimination of the Europe social model
Part 2 creates sufficient labor flexibility to address the structural imbalances between northern and southern Europe.
It's not the beat rate that's significant, but the recent direction of change that's intereresting. What's more significant is the progress in forward guidance, which has been negative but getting negative - which indicates improvement.
The DJ Transports and Industrials negative divergence is another concern for the market. However, I prefer to look at foreign markets and non-equity markets, e.g. commodities, in my inter-market analysis as they tend to give us a broader picture of what's going on in the world. Remember that we are still in a binary risk on/risk off environment and those indicators are better measures of risk appetite.
Why It's Important If The Secular Bull Market In Vancouver Real Estate Is Over [View article]
More Signs Of Global Healing [View article]
Is This 2011 All Over Again? [View article]
See http://bit.ly/13CVqv9
Why My Inner Investor Is Worried [View article]
Bulls 2, Bears 0 [View article]
http://bit.ly/QWQVFS
Can China Hold Things Together? [View article]
China's miracle growth was powered by 1) low labor costs; and 2) CNY-USD peg, which gave rise to an inappropriate monetary policy for China. This meant that when their inflation rose, they couldn't raise interest rates because of the currency peg. Thus real interest rates went negative.
Since their bond market was also relatively underdeveloped, stock market highly speculative and banking interest rates had negative real rates, the household sector had nowhere to put their savings - except real estate. This has created an enormous property bubble, which is an unintended consequence of the currency peg.
Now that the Chinese authorities have painted themselve into a corner, how they manage the situation will be of great importance not only to China but the rest of the world.
Green Shoots In China? [View article]
The jury is still out on the longer term trajectory.
Why I Am Buying The Pain In Spain [View article]
All Of Europe's A Stage [View article]
I was (incorrectly) bearish late last year, but to paraphrase John Maynard Keynes: When the circumstances change, so does my view.
All Of Europe's A Stage [View article]
1) "Good" austerity in the form of tax cuts and government cutbacks
2) Structural reform, defined as union busting and the elimination of the Europe social model
Part 2 creates sufficient labor flexibility to address the structural imbalances between northern and southern Europe.
We Are All QEers Now [View article]
Preliminary Verdict: Consolidation And Correction [View article]
Breakout Or Consolidation? [View article]
http://bit.ly/AlVgzQ
Breakout Or Consolidation? [View article]
Breakout Or Consolidation? [View article]