Money Trends / Liquidity
Highlights China and Brazil are two extremes in regard to investment and savings - the former saves and invests a lot, the latter very little. The key difference between Brazil and China is neither the existing amount of deposits nor their propensity to save. Rather, it is their real economies…
Highlights Several economic and financial market indicators point to a budding downtrend in Chinese capital spending and its industrial sector. The recent underperformance of global mining, chemicals and machinery/industrials corroborate that capital spending in China is starting to slump.…
Feature The existence of 'mini-cycles' in economic and financial variables is an empirical fact. We encourage readers to plot for themselves the change in global bank credit flows, the global bond yield, global inflation, and metal price inflation. The very clear and regular mini-cycles should…
Highlights The financial system / banks cannot and do not lend out or intermediate national or households "savings". In any economy, new money/new purchasing power is originated by commercial banks "out of thin air". The term "savings" in macroeconomics denotes an increase in the economy's…
Highlights China stands out as the most likely candidate to send negative shock waves through EM and commodities in 2018. Granted the ongoing policy tightening in China will likely dampen money growth further, the only way mainland nominal GDP growth can hold up is if the velocity of money…
Highlights The current mini-upswing in the global mini-cycle started in May and is likely to end around January. On a 6-month horizon, lean against the rally in industrial metals. Equity investors should underweight Basic Resources, and especially Industrial Metals and Mining. The…
Highlights The private sectors in Brazil, Russia and India have indeed experienced some deleveraging. Yet in China, deleveraging has not even begun. In fact, the money and credit excesses have become ever larger in the past two years. China's broad money (M3) is as large as the entire…
Highlights Three factors point to stable or narrower USD cross-currency basis swap spreads: the improving health of global banks, the end of the adjustment to the regulatory change affecting prime-money market funds, and the relaxation to the Supplementary Leverage Ratio rules by the U.S.…
Highlights Three factors point to stable or narrower USD cross-currency basis swap spreads: the improving health of global banks, the end of the adjustment to the regulatory change affecting prime-money market funds, and the relaxation to the Supplementary Leverage Ratio rules by the U.S.…
Please note that in addition to today's abbreviated Weekly Bulletin, we are also publishing a Special Report on Argentina. Feature Regarding recent financial market dynamics, it appears that the high-yielding EM currencies are breaking down as U.S. bond yields march higher. Several EM exchange…