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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • BRICS BUILDING WITHOUT THE WEST - By Charles Payne 0 comments
    Jul 15, 2014 10:49 AM

    Watch my show: Making Money With Charles Payne Fox Business 6PM

    Today, BRICS nations (Brazil, Russia, India, China, and South Africa) will formally announce the creation of a special reserve fund that will rival the International Monetary Fund (NYSE:IMF).

    BRICS Fund Country IMF
    $41 China $9.5
    $18 Russia $5.9
    $18 Brazil $4.3
    $18 India $5.8
    $5.5 S. Africa $1.9

    In addition, a $50 billion Development Bank (each nation contributing $10 billion) will be created to help non-member nations build out their infrastructure. Who knows, maybe America could dip into the fund to help bridge the gap in the financing needed to improve highways and bridges by 2020. According to the America Society of Civil Engineers, governments (state and federal) will fall $1.6 trillion short of the $3.6 trillion needed.

    Of course, that is not going to happen. In fact, BRICS and other nations in developed countries believe that the IMF, which made draconian resources involving the decolonized nations, have been overly generous to European borrowers.

    IMF

    The IMF was created in July 1944, at the Bretton Woods Conference. IMF Special Drawing Rights (SDRs) are issued through the General Resource Account (NYSE:GRA) to borrowers:
     

    • 117 Members
    • $302 Billion Total Assets
    • $3.2 Billion Gold
    • $142.7 Billion Currenciesral Resource Account

      SDR % Outstanding GRA
    Africa 856 0.9
    Asia/Pacific 1,640 1.8
    Europe 80,373 89.2
    ME/CA 5,931 6.6
    Western Hemisphere 1,382 1.5

    Today's move by BRICS is an extension of the financial deals between them and other non-western nations. It illustrates a determination to eventually move away from the US dollar and further mitigate America's influence. Part of the issue is President Obama's waning popularity; according to Pew, only South Korea has a higher favorable opinion than in 2009. The other part of the equation is the growing economic clout of the emerging nations and sleights felt through the large international organizations like the World Bank and the IMF.

    Brazil, Russia, India and China % World GDP % IMF Voting
    24.5 10.3

    Germany, France, UK, Italy % World GDP % IMF Voting
    13.4 10.6

    Brazil, Russia, India and China

    It's a good wake-up call for the United States, which has to decide if it wants to bow out (somewhat) gracefully or continue to be the economy that stirs the global economic drink.

    Economic Date and Corporate Earnings

    Earnings beats from huge names turned equity futures around, although there is a cautious aura about them.

    > Goldman Sachs $4.10, Street was looking $3.05
    > JP Morgan $1.46, Street was looking for $1.30
    > Johnson & Johnson $1.66, Street was looking for $1.55

    Retail Sales came in +0.2 against consensus of +0.6, but April and May were both revised higher. Out of the 13 total categories, 9 categories came in higher and the ex-auto was +0.4, in-line with the Street consensus.

    Retail sales might be stronger than government data, in terms of moving the market, as chain store sales are climbing higher each week with strong year over year changes.

    Empire State

    In the Empire State region, manufacturing activity has increased sharply. The headline of 25.6 is far better than consensus of 17.1 and the highest level in four years. New orders proved to be strong at 18.77, up from 18.36 in June, and shipments are at 23.64. Employment also improved, coming in at 17.05 compared to the 10.75 observed in June.

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