China Moves Forward with Its De-Dollarization Strategy

The world monetary order is changing. Slowly but steadily, global trade and currency markets are becoming less dollar-centric. Formerly marginal currencies such as the Chinese yuan now stand to become serious competitors to U. S. dollar dominance.
Could gold also begin to emerge as a leading currency in world trade? Over time, it certainly could. But the more immediate implications for gold’s monetary role center on its increasing accumulation by central banks such as China’s.
As of October 1st, the Chinese yuan has entered the International Monetary Fund’s Special Drawing Right (SDR) basket of top-tier currencies. It now shares SDR status with the U. S. dollar, euro, British pound, and Japanese yen.
Before the yuan officially becomes an SDR currency, the World Bank intends to sell $2.8 billion in SDR bonds in Chinese markets. The rollout of SDR bonds in China began August 31st. According to Reuters, China’s promotion of SDR bonds ‘is part of a wider push in China to… boost demand for Chinese yuan and diminish reliance on the U. S. dollar in global reserves.’
King Dollar won’t be dethroned overnight. But the place of prominence the U. S. dollar enjoys as the world’s reserve currency will indeed diminish over time.

This post was published at Ludwig von Mises Institute on 10/21/2016.

Why All The Yawning Over The Yuan?

When it comes to China all the main stream media will ever cover is something in regards to a ‘hot topic of the day’ brought about by either a political discourse, or some celebratory exhibition being observed within its boundaries. When it comes to trade, or business topics, they’ve pretty much abandoned them in total, leaving that realm for the ‘business/financial’ outlets.
So it’s no wonder that when it comes to trade, or monetary issues most haven’t a clue. However, one would think when it came to the #1 financial headline generator that had the ability to send markets plunging reminiscent of a ‘Black Monday’ causing global financial panic worldwide, and triggering (the first time in history) a tripping of all three circuit breakers on the U. S.’s major futures markets, while simultaneously causing the Federal Reserve for the first time in its history to openly state ‘international developments’ as a root cause and catalyst to postpone a monetary decision that is supposedly U. S. centric only. The business/financial media would be all over it. Yet? (insert crickets here)

This post was published at Zero Hedge on Oct 23, 2016.

The Chinese Buyers Are Back: China Oceanwide Acquires Genworth For $2.7 Billion

For more than half a year after China’s Anbang “insurance” conglomerate mysteriously emerged out of nowhere, announcing its intentions to acquire US hotel chain Starwood, shortly before it even more mysteriously pulled its bid once questions about its source of funds emerged, Chinese M&A activity in the US was put in cryogenic sleep, with not even a peep out of Chinese companies desperate to launder their money in the US using legal methods, most notably mega mergers and acquisitions.
Today that changed when just as unexpectedly, China Oceanwide Holdings Group agreed to buy troubled US insurer Genworth Financial Inc. for $2.7 billion in cash, pledging to help the U. S. firm manage its debt and strengthen life insurance units after it was hurt by higher-than-expected losses tied to long-term care coverage. A China Oceanwide investment platform will pay $5.43 per share, the companies said Sunday in a statement. That’s 4.2% more than Genworth’s closing price of $5.21 Friday. The buyer also promised to provide $600 million to Genworth to address debt maturing in 2018, as well as $525 million to strengthen the life insurance businesses.
‘Genworth is an established leader in both mortgage insurance and long-term care insurance, which are markets that present significant long-term growth opportunities,’ China Oceanwide Chairman Lu Zhiqiang said in the statement. ‘We are providing crucial financial support to Genworth’s efforts to restructure its U. S. life insurance businesses.’

This post was published at Zero Hedge on Oct 23, 2016.

Did AT&T Just Signal The Top?

The last time Time-Warner was involved in a mega merger was January 2000, when AOL acquired the company for $182 billion in what was the mega deal of the last tech bubble, creating a $350 billion behemoth… which nearly dragged down both companies a few years later. The timing could not have been more perfect as it marked the tech bubble top…

This post was published at Zero Hedge on Oct 23, 2016.

Losses Hurt More Than Gains

In an op-ed posted by Paul Volcker and Peter Peterson in the NYT, the two financial titans start off by pointing out just how “strange” the current presidential campaign is in its historical context…
Together, the two of us have 179 years of life experience and 13 grandchildren. We have served presidents of both parties. We have seen more campaign seasons than we care to count – but none as strange as this one. Insults, invective and pandering have been poor substitutes for serious debate about the direction in which this country is going – or should be going. And a sound and sustainable fiscal structure is a key ingredient of any viable economic policy.
… but the main issue that troubles the two financial titans, is the lack of any practical discussion of the soaring US debt during the entire bizarre campaign – the one issue both agree is the biggest challenge facing the US economy today:

This post was published at Zero Hedge on Oct 23, 2016.

Italy’s Banking Crisis Gets Addressed: How to Conceal a Problem that Threatens to Engulf the Entire Eurozone

Markets can move in mysterious ways. Such was the case in Italy last week when the stock of the country’s third biggest and most beleaguered bank, Monte dei Paschi, surged 59%, from 0.17 a share to a totally whopping 0.27 a share, pairing its losses for this year to just 78%. But why?
After all, nothing of real import happened over the last week, apart from anannouncement from MPS’s board that it intends to forge ahead with its original plan to bolster capital and sell soured loans. None of which qualifies as new news. Moreover, the announcement did absolutely nothing to dispel the huge doubts that continue to loom over the plan’s chances of success.
The board is expected to announce its latest intentions in a meeting on Monday. Its plan appears to already enjoy the full support of Italy’s government. ‘I am confident of the business plan that the bank’s management has presented,’ Economy Minister Pier Carlo Padoan told Repubblica, adding (tongue presumably lodged firmly in cheek): ‘Of course with full autonomy.’

This post was published at Wolf Street by Don Quijones ‘ October 23, 2016.

Trump “Truthers” Versus Hillary’s “Hysterically Hyperventilating Hypocrites”

Submitted by Robert Gore via,
One truth the best and the brightest of our founding fathers knew in their bones: government would always be the preeminent threat to individual security, prosperity, liberty, and happiness. Strip away the irrelevant dross and history boiled down to one theme: the individual versus the state. Government, an institution gestated in fear of violence, inevitably uses the violent power that it has either wrested for itself or has been granted against its supposed beneficiaries.
The founders knew that human nature never changes, that those in control of a government would inevitably be corrupted by their power and employ it to their own design and advantage. Their solution was enumerated powers, an overlapping separation of those powers, a myriad of procedural encumbrances, the Bill of Rights, federalism, and limits on the government’s abilities to tax, raise armies, and wage war. The idea was to make it harder for this new government to do what governments had done throughout history. They had to have realized that any effort to constrain a government ultimately depended on the wisdom and virtue of those in power. Wisdom and virtue in perpetually short supply, they also had to have realized that their effort would eventually fail.

This post was published at Zero Hedge on Oct 23, 2016.

Leaked Soros Memo Exposes Obama’s Secret TPP Negotiations; Hillary “Flip-Flopping”

In addition to providing a glimpse into the internal, and often confrontational, dialogue that took place within the Clinton campaign on topics ranging from Hillary’s email server, to coordination and collusion with the media, to the planning how to attack Bernie Sanders, to the fascinating strife and conflicts of interest within the Clinton Foundation and the Clinton Global Initiative, the Podesta leaks have also been instrumental in providing the public with insight into Hillary’s flip-flopping views on the TPP. Indeed, as the WSJ put it recently, a running question through the presidential race has been whether Hillary Clinton is sincere in saying she opposes the 12-nation Asian trade deal that is one of the Obama administration’s top overseas priorities.
As secretary of state, Mrs. Clinton praised the proposed Trans-Pacific Partnership, calling it the ‘gold standard’ of trade deals. But that was before she jumped into the presidential race. Organized labor, liberal activists and others want to scuttle TPP, so if Mrs. Clinton remained supportive, she risked a political backlash.
This is what the Podesta files have revealed so far: on Oct. 8, 2015, Hillary Clinton said she opposed the trade pact, a position that proved helpful in keeping her coalition intact and beating back a primary challenge from Vermont’s liberal senator, Bernie Sanders. That wasn’t an easy call. A new batch of hacked emails illustrates divisions within her staff about how to handle one of the most delicate issues of the race.

This post was published at Zero Hedge on Oct 23, 2016.

New Podesta Email Exposes Dem Playbook For Rigging Polls Through “Oversamples”

Earlier this morning we wrote about the obvious sampling bias in the latest ABC / Washington Post poll that showed a 12-point national advantage for Hillary. Like many of the recent polls from Reuters, ABC and The Washington Post, this latest poll included a 9-point sampling bias toward registered democrats.
“METHODOLOGY – This ABC News poll was conducted by landline and cellular telephone Oct. 20-22, 2016, in English and Spanish, among a random national sample of 874 likely voters. Results have a margin of sampling error of 3.5 points, including the design effect. Partisan divisions are 36-27-31 percent, Democrats – Republicans – Independents.”
Of course, while democrats may enjoy a slight registration advantage of a couple of points, it is no where near the 9 points reflected in this latest poll.
Meanwhile, we also pointed out that with huge variances in preference across demographics one can easily “rig” a poll by over indexing to one group vs. another. As a quick example, the ABC / WaPo poll found that Hillary enjoys a 79-point advantage over Trump with black voters. Therefore, even a small “oversample” of black voters of 5% could swing the overall poll by 3 full points. Moreover, the pollsters don’t provide data on the demographic mix of their polls which makes it impossible to “fact check” the bias…convenient.

This post was published at Zero Hedge on Oct 23, 2016.

Yuan Downside Breakout Is On And What It Means (Spoiler Alert: Nothing Good)

Submitted by Eric Bush via Gavekal Capital blog,
The onshore yuan exchange rate (CNY) against the USD has eclipsed 6.74 today while offshore exchange rate (CNH) was pushing 6.75 as the week drew to a close. Current levels are at 6-year lows against the dollar and it will be interesting to see what happens as we approach 6.80-6.85 as this was the line in the sand for about two years from 2008 to 2010. All in all, however, it seems that the continuation of the devaluation that we have been waiting for is officially back on. So assuming that many of the strong relationships that have been in place the last several years hold, what should investors be mindful of?
Starting off with commodities, copper could be ready to take another leg lower and take out 2016 lows. Also, the current price of oil looks high.

This post was published at Zero Hedge on Oct 23, 2016.

The Boredom Before The Storm

With all the surprising and disturbing things going on – Brexit, China’s soaring debt, US/Russia/China saber rattling, the, um, unique US presidential race, the cyber attack that shut down big parts of the US Internet – you’d think that an unsettled world would be reflected in skittish financial markets.
Instead we’re getting the opposite, with stock price movements becoming more and more placid as the year goes on. The following chart shows the volatility index (VIX) for the S&P 500 which, after some notable action in 2008 and 2011, has become ever-calmer, with recent readings comparable to the (in retrospect delusional) levels of 2006, just before the biggest financial crisis since the Great Depression.

This post was published at DollarCollapse on OCTOBER 23, 2016.

The Big Put

The S&P 500 is in a very precarious position and looks set to drop over the coming months. After the Brexit risk rally, where it appeared that central banks would once again step in with yet more stimulus and QE, the S&P 500 broke out to new highs, but since then it has dropped back to the top of its year long range and is acting in a manner that would suggest it is going to fall back through this support.
Technically if we break below 2100 on the SPX we should at least test 2000, and more than likely the bottom of this large range at 1800 over the following months. The recent price action is that of a tired market, a market with no impetus to rise and in addition, sentiment isn’t bearish at these levels for a change, hedge funds in particular are Net long and everyone is expecting the same yearly cycle of a year-end rally after the election.

This post was published at GoldSeek on Sunday, 23 October 2016.

Sovereign Debt Crisis is Percolating – Greece Asks for Debt Relief

Greek Prime Minister Alexis has come out today and bluntly warned that failure to agree on a debt restructuring for Greece would push it into a perpetual spiral of borrowing from Europe. But it is actually much worse. Greece is being persecuted because its old debt was converted to euros and that made the debt increase. These politicians are simply brain-dead and cannot comprehend currency.
The Sovereign Debt Crisis is indeed percolating. We are headed into a dark abyss for politicians cannot understand that there is no reason to borrow if you have no intention to every pay off the debt. We inevitably reach this conclusion that sovereign debt is the worst of all because there is no possible plan to ever pay it off. In the end, it is always just written off in debt relief. This is what caused the massive Great Depression as sovereign debt defaulted wiping out savings. That money was just gone! Welcome to the dark world of DEFLATION.

This post was published at Armstrong Economics on Oct 21, 2016.

How to Rebuild Healthcare Right

‘I reject the insurance model. I think we should have a free-market approach to healthcare.’
– Gary Johnson
‘The goal of real healthcare reform must be universal coverage in a cost-effective way.’
– Bernie Sanders
‘The fault, dear Brutus, is not in our stars, but in ourselves….’
– Julius Caesar (I.ii.140 – 141)
‘The numbers [referring to the growth in the aging population and its relationship to Alzheimer’s] point to a disaster that will be the real zombie apocalypse. Western societies simply won’t be able to bear the costs of Alzheimer’s as the incidence continues to rise. Faced with impossible financial, emotional and psychological costs, we would have to funnel so much of our resources into the care of Alzheimer’s patients that the quality of life for everyone would plummet.
‘Escape from the zombie apocalypse, on the other hand, is entirely simple: cure aging itself. To be more precise, the solution to Alzheimer’s is to stop accelerated aging. We need to slow the degeneration that leads to Alzheimer’s and other age-related disease.’
– Patrick Cox, from his new book, The Methuselah Effect.
Is inflation something to fear, or we should demand that our central bankers craft policy to nudge inflation upward? There are genuine arguments about this, and I have written about the problems we have even tracking inflation, much less guiding it toward a target.

This post was published at Mauldin Economics on October 21, 2016.

Trump May Be, Sadly, A Fraud

We’re about to find out.
First, read Donald Trump’s Contract With The American Voter, which he just released in a bid to convert undecided voters.
There’s a lot of good stuff in there. In fact, I can’t find anything in there I disagree with, and I bet you can’t either if you’re honest about actually improving the nation (leaving aside the red-meat pie-in-the sky stuff, such as “repeal and replace.” If you don’t understand why that’s a topic for another column.)
Nonetheless, one thing is missing, and it simply can’t be missing if we are going to ever have America be great, whether you believe it is now, will be again, or for that matter can ever be in the future.
That’s indictments and prison for the health care monopoly abusers violating 15 United States Code Chapter 1 — a class of individuals and firms that, in my opinion, include virtually the entire health-care industry in this nation. They have taken health care as a percentage of our economy from about 3% to nearly 20% in 30 years and if we do not only stop but reverse this now the federal government, state governments, pensions, all asset types and the American way of life will all collapse.

This post was published at Market-Ticker on 2016-10-22.