Alex_G

New Economic World Order: U.S. No Longer On Top

Hmmm, ok, you write a blog dedicated to emerging markets and then produce this drivel. Cyclingscholar has far more insight than you do. Nothing relevent, nothing new and horrible analysis if the data. I only hope you don't run other peoples money.

What China's Stock Market Implosion Means for Oil

Joe L,

You said:
"Americans consume 30% of global oil production, china accounts for less than 5%. Oil prices would really feel the pain when US enters the second phase of the credit deleveraging."

Pardon me for saying so, but what the hell does that mean?? Does credit de-leveraging mean the USA will be using more oil? What? It's a bit the wrong question, a lot the wrong answer and basically the wrong dimension.

Sorry for being a bitch, but really...

What China's Stock Market Implosion Means for Oil

Eric,

Yes, China could immediately cut energy costs by letting the Yuan float higher, but that would also make their products less attractive on the world markets. A bit of a catch-22, I would say...

What China's Stock Market Implosion Means for Oil

China is very inefficient in converting energy use into GDP, the USA being 4x and Japan being 9x as efficient. Right now, their government is subsidizing energy costs, to what degree is anyones guess. The net effect of this is transferring a portion of their foreign reserves to energy exporters.

High energy prices will affect China far more than the US or Europe. Manufacturing based economies are more energy intensive. As long as oil and coal prices stay at sustained levels, I believe this stock market will face continued downward pressure.

Watch what happens to energy subsidies in China after the Olympics. There might well be energy price protests.

I don't have the time to delve into the hard numbers and quantify the exact effects to their economy with any accuracy, so if anyone else has done the work, please share!!

A Meltdown in Emerging Markets?

Hey Chen,

Not a wild guess. 4x as much energy to produce a dollar of GDP. Fact. subsidizing energy costs. Fact. Manufacturing based economies are more energy intensive. Fact. Why is Brazil down 10% and Shanghai down over 50%?

I've been following the emerging markets for over 15 years and made a lot of money in these markets. The only ones I've been in since late September are latin america, eastern europe and a very small India position.

Watch what happens to energy subsidies in China after the Olympics. There might well be energy price protests.

Alex

A Meltdown in Emerging Markets?

All you have to do is chart Brazil (net energy producer) Vs China to know that it is partially priced in. I also believe that China is hoarding oil (burning instead of coal near Beijing to cut down on pollution) ahead of the Olympic games and will reduce subsidies after the games.

The 50+ % drop in the Shanghai Composite is telling us something big.

A Meltdown in Emerging Markets?

Roger,

Both China and India are very inefficient in converting energy use into GDP, the USA being 4x and Japan being 9x as efficient. Right now, their governments are subsidizing energy costs, to what degree is anyones guess. The net effect of this is transferring a portion of their foreign reserves to energy exporters.

High energy prices will affect these 2 economies (China more than India) far more than the US or Europe. As long as oil and coal prices stay at sustained levels, I believe both of these stock markets will face continued downward pressure.

I don't have the time to delve into the hard numbers and quantify the exact effects to their economies with any accuracy, so if anyone else has done the work, please share!!

Alex