A lesson from corporate America ... that may come hard for China.
We yesterday received an email from someone responding
to our general perspective on China. While the email addressed most of
factors we already recognized, it did so with a different spin â€“ one
much more supportive of China and much more fearsome of the future of
Yes â€“ there are plenty of commentators with a
message, but likely few that are as well-reasoned and thoroughly
one item stood out; that is the fact that America must recognize what
the great nation it became ... and then get back to that. That that was â€śhard work and thrift.â€ť
There are notable signs that weâ€™re working on the
thrift part of the equation ... and while thereâ€™s plenty of hard work
still, itâ€™s unfortunately hard to find work right now. An article in The Wall Street Journal today reveals
new data on business cash piling:
pouring their money into building plants or hiring workers, nonfinancial
companies in the U.S. were sitting on $1.93 trillion in cash and other
assets at the end of September, up from $1.8 trillion at the end of
Federal Reserve said Thursday. Cash accounted for 7.4% of the companies'
assetsâ€”the largest share since 1959.
Among the biggest reasons for sitting on cash: the
consumer is still not in a place where he can spend much. The
Wall Street Journal has also put together a very nice
series of charts explaining the financial situation in the US. To
summarize: households are working to pay down debt, government debt is
quickly, household net worth is still trying to fight back from its 2008
plunge, asset markets have helped compensate for the negative wealth
flat-lined home values, consumer credit (while improving) remains
We keep hearing the same argument for fiscal
in a recession; here is the latest version:
â€ś ... our
â€śfiscal spaceâ€ť is limited â€“ we cannot afford to blithely increase our
debt. It can be done â€“ and should be done given the parlous state of our
economy and our disastrously high unemployment levels. But it must be
carefully, so we get as much stimulative effect on jobs as possible for
But what is interesting to us is that even going
to growth times in 2004 and 2005 the trajectory of government debt
has not changed. It begs the question: how long do we wait before making
meaningful slashes at public debt? Here is one of the charts as can be
the above link from The Wall Street
So our corporations have become thrifty, our
are working on it (the attitude change appears to be there), but our
is not (or cannot yet become, if youâ€™d prefer) more thrifty. What many
agree on, though, is that growth, domestically and globally, still very
hinges on the US consumer and, of course, China.
The latest trade data between the US and China was
reported today. The US deficit narrowed by 13% from September to
Chinaâ€™s surplus shrank by 16% from the October to November. On a
basis, US exports to China grew while Chinese exports to the US fell.
So letâ€™s revisit the Chinese yuan revaluation theme
The media has seized on the undervalued yuan as a
piece of the recently popularized â€ścurrency wars.â€ť A yuan that is
lower gives competitive advantages to Chinese producers, pricing out
producers/exporters. Make sense? Good.
We recently read an argument that a yuan revaluation
would be a negative for the US. This goes against common knowledge and
political posturing in the US that is inching nearer the need for
trade restrictions on China if they donâ€™t change their tune.
31 U.S. senators sent a letter to Wang Qishan, China's vice premier,
to solve several trade issues at the upcoming meeting.The
senators said they want to discuss
intellectual property disputes, "discriminatory innovation practices"
and barriers to U.S. beef exports, reaching solutions ahead of an
visit from Chinese President Hu Jintao in January. (CNNMoney.com)
Indeed, it is our belief that a stronger yuan can
to alleviate some imbalances in Chinaâ€™s economy and in those of its
There were several assumptions made in the argument.
One was that China would need to simultaneously strengthen its domestic
Yes. Another was that a stronger yuan would mean US imports from China
more costly for US consumers. Likely true.
But it was an assumption that it seems was not made,
and one other that was, that could make the difference.
First, the un-assumed part, US consumer attitudes
changed ... or may even still be changing. The nature of this recession,
begun with major erosion in net worth and culminated in lofty
been a wake-up call for many Americans.
Second, perhaps incorrectly assumed: US consumers
depend on Chinese imports, i.e. much of what the US imports from China
non-discretionary. Here is the breakdown of US imports from China in
3: Top US Imports from China 2009 ($ billion)
Source: US International Trade Commission
% change over 2008
Electrical machinery and equipment
Power generation equipment
Toys and games
Iron and steel
Footwear and parts thereof
Plastics and articles thereof
Leather and travel goods
Optics and medical equipment
Indeed, the top two items make up nearly 60% of
Chinese import volume to the US. And on the face of it, those two items
appear too discretionary. Meaning: businesses dependent upon these
goods and equipment might have little choice but to suffer through
stemming from a stronger yuan. But here are some things to keep in mind:
1) As the
cost of imports from China grows, production of the same items in the US
more feasible and the benefits of domestic production are felt
in the US are responding to the consumer and are sitting on cash,
to invest in capital goods until improvement on the consumer front.
3) We will
likely see further declines in volumes of the more discretionary imports
China until the US consumer recovers.
The way the aforementioned argument was presented
China would be forcing a painful adjustment on the US via a yuan
But does the US consumer not still hold the key? If Americans donâ€™t
buying again, and businesses donâ€™t start investing in capital goods
China), then who is really forced to accept painful adjustment?
Current account surplus countries must accept
domestic adjustment in a world of slower demand and global
Hard work and thrift is a gratifying goal for the
China has paid
lip-service to growing its domestic
demand; though some statistics show real progress has been made. Instead
using their banks as conduits to funnel consumer savings to state owned
enterprises, banks could start paying a more realistic rate on Chinese
deposits; that would be a good start. But
something China is extremely reluctant to
do given the composition of Chinese GDP is still heavy on the side of
and investment.This is part of that
domestic adjustment they must makeâ€”someday.They had better get cracking on empowering the Chinese consumer
the yuan issue gets nasty.
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Actionable trading levels delivered to YOUR charts in real-time.
Tue 17 July 2018 AA 08:30 GB- Employment A 13:15 US- Industrial Production AA 14:00 US-Powell Testimony Wed 18 July 2018 AA 08:30 GB- CPI A 12:30 US- Housing Starts/Permits AA 14:00 US-Powell Testimony Thu 19 July 2018 AA 1:30 AU- Employment AA 08:30 GB- Retail Sales A 14:30 US- EIA Crude A 12:30 US- Weekly Jobless Fri 20 Jun 2018 A 12:30 CA- CPI/Retail Sales
John M. Bland, MBA co-founding Partner, Global-View.com
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.