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More Devaluation On The Way

by coldwarrior ( 87 Comments › )
Filed under China, Economy, Open thread at November 24th, 2015 - 6:00 am

Hot money is leaving China, a devaluation is coming, again, and fast.


Masters of the Finance Universe Are Worried About China

David Tepper says a yuan devaluation may be coming in China. John Burbank warns that a hard landing there could spark a global recession.

Tepper, the billionaire owner of Appaloosa Management, said last week at the Robin Hood Investor’s Conference that the Chinese yuan is massively overvalued and needs to fall further. His comments follow similar forecasts from some of the biggest hedge fund managers, including Crispin Odey, founder of the $12 billion Odey Asset Management, who predicts China will devalue the yuan by at least 30 percent.

The money managers are losing faith in China’s ability to revive its economy, which suffers from rising nonperforming loans and falling exports, after the surprise 1.9 percent currency devaluation in August and global market rout that followed. The investors made their dire forecasts after shares of U.S.-traded Chinese companies, which their funds sold in the third quarter, began to rebound in October.

“The downside scenario for China seems more intimidating than ever before,” billionaire Dan Loeb wrote on Oct. 30 to investors at Third Point, which manages $18 billion. “The new question is not whether but how severe the slowdown of the world’s foremost growth machine will be.”

Goldman Sachs Group Inc. on Thursday echoed the managers’ concerns, saying the biggest risk to a rebound in emerging-market assets next year is a “significant depreciation” of the yuan. Policy makers, facing a stronger dollar and slower growth, may let the currency decline, which would ripple through emerging markets, strategists led by Kamakshya Trivedi wrote.

“In our view, the fallout from such a shift is the primary risk,” the analysts said.

Hedge Fund Selloff

Hedge fund holdings of some of the largest U.S.-listed Chinese companies have dropped in the past six months. The funds owned about 8 percent of reported U.S.-traded shares of Baidu Inc. at the end of the third quarter, according to regulatory filings. That’s down from about 13 percent in the first quarter. Fund ownership of Ctrip.com International Ltd. sunk to roughly 16 percent from 25 percent in the period, and it declined to approximately 22 percent from 44 percent at JD.com Inc.

Appaloosa, Philippe Laffont’s Coatue Management and Burbank’s Passport Capital were among firms that axed holdings of these companies during the third quarter, filings with the Securities and Exchange Commission show. Appaloosa sold its entire stake in Alibaba Group Holding Ltd., Coatue shed seven positions, including 58.com Inc. and Bitauto Holdings Ltd., and Passport dumped nine stakes.

Shares of all of these companies except Bitauto Holdings have rallied this quarter, with Ctrip and Baidu jumping more than 50 percent. That hasn’t softened Burbank’s outlook, which has grown more pessimistic since the first half of the year.

Basket of Reserves

The People’s Bank of China forced the devaluation on Aug. 11, and said that it was shifting to a more market-driven system of setting the currency’s rate as it tries to meet the requirements for the currency to join the International Monetary Fund’s basket of reserves. Since then, the central bank commitment to a freer market approach has been questioned.

A gauge of the yuan’s strength is almost back to where it was prior to August’s devaluation. The real effective exchange rate is within 1 percent of a record high and has risen almost 20 percent over two years, according to a Westpac Banking Corp. index.

China’s economic growth goal of 6.5 percent for the next five years won’t be met unless the yuan falls at least 8 percent versus the dollar by the end of 2016, Royal Bank of Canada and Rabobank Groep said.

Burbank, the founder of $4.4 billion Passport, told investors in an Oct. 30 letter to beware of a China-led shakeout. The world may be heading into “a global downturn that leaves no region safe, including the United States,” he wrote. If economic conditions worsen in China, particularly with nonperforming loans, it could mean the end of the dollar peg for the yuan, lower interest rates and the liquidation of risk assets around the world, he said.

‘Central Bank Panic’

Burbank’s main macro fund has beaten most rivals this year, returning 13 percent through last month, according to a person with knowledge of the matter.

Elliott Management’s Paul Singer also warned about global contagion from China’s decline. Singer told investors in an October letter that emerging market countries are “choking” on U.S. dollar-denominated debt that was extended due to low interest rates and monetary stimulus. He said many emerging economies, which are in recession, are “scared to death” about even a 25 basis-point increase in U.S. interest rates.

While “muddling along” is still an option, Singer wrote that the world could face a more severe scenario like a “global central bank panic.” He said that policy makers will probably “double down on monetary extremism” in response to deteriorating economies in emerging markets and China.

Some managers have a more sanguine view of China.

No Doomsday

“We are not in the doomsday camp as it relates to China,” Taconic Capital Advisors, a $7.4 billion firm that seeks to profit from corporate events such as mergers, bankruptcies or spinoffs, wrote to investors on Oct. 28. “Growth has slowed, but not as much as some feared, and the Chinese government continues to have a number of levers to pull to support its economy.”

Whether China has the means to spur growth is a question for Burbank, who says that will be “enormously difficult” to pull off.

“We don’t think a trillion dollar stimulus like the one initiated in 2009 is likely in the cards again for China,” he wrote. “Investors should prepare for a worsening global economic environment and the potential for recessions in both the U.S. and globally.”



On The Border.

by Bunk X ( 129 Comments › )
Filed under America, Crime, Elections 2016, immigration, Immigration, Mexico, Politics at November 12th, 2015 - 8:07 am


A section of the controversial US-Mexico border fence expansion project crosses previously pristine desert sands at sunrise on March 14, 2009, between Yuma, Arizona and Calexico, California. The barrier stands 15 feet tall and sits on top of the sand so it can lifted by a machine and repositioned whenever the migrating desert dunes begin to bury it. The almost seven miles of floating fence cost about $6 million per mile to build.

[Image found in here. Caption from here.]

[soapbox ap enabled]

I love the choices of phrase: “controversial… fence” and “previously pristine desert,” and the words “almost” and “about.” There’s nothing controversial about a sovereign nation protecting her borders with a fence or otherwise, and the desert is so pristine that it’s relatively devoid of flora and fauna. It’s pure pristine desolation.

Reports vary as to the the border fence height (15-20 feet), the length and the cost; however, local law enforcement says that it works, and that arrests of drug smugglers and “coyotes” along the Yuma border have dropped from 800 per day down to only 15 – a reduction of over 98 per cent in illegal traffic since 2005.

It also translates to a huge reduction in the related costs of apprehending illegals, detaining and housing them, conducting legal hearings and deportations, and it cripples the Mexican drug cartels as a bonus.

Border fences through accessible regions makes simple economical sense, especially in the long term. How do we pay for it? Reduce the annual budget for the NSA by only 1.5 percent each year for the next 10 years.

Then, if a low skilled workforce is still needed, we revive the successful Bracero Program and ensure that the workers don’t get chumped.

[soapbox ap deactivated]

I like the photo. It looks like the work of Christo, only more functional.

Free Trade? Not in this World!

by coldwarrior ( 63 Comments › )
Filed under Economy, Open thread at November 9th, 2015 - 7:00 am

For some idiotic reason there is a school of thought that Free Trade is a conservative pillar. I have no clue where this came from. Seriously, there is no such thing a s Free Trade. Governments cheat on these deals all the time and for some reason A<erica gets the shaft. Is it conservative to get thousands of tons of steel gas pipe dumped on your shores while the Korean govt HEAVILY subsidizes the steel and tube mills ? Is it conservative to be a Sucker on free trade? Is it conservative to be a patsy? Is it conservative to actively ship American jobs overseas?

If it is, leave me out of it. We would win in real free trade. But it does not exist.

Carson and Rubio think its conservative to be a Sucker.

Exclusive — Donald Trump: Obama’s Trans-Pacific Free-Trade Deal Is ‘Insanity’


GOP frontrunner Donald Trump lambasted the permanent political class for supporting the Trans-Pacific Partnership free-trade deal, in an exclusive interview with Breitbart News ahead of the next debate.

“The deal is insanity,” he said. “That deal should not be supported and it should not be allowed to happen.”

The 5,544-page deal is far too long to be understood, said Trump. “Nobody understands it,” he said. The “Obamatrade” deal is longer than Obamacare plus the 2013 amnesty bill, authored by 2016 candidate

Sen. Marco Rubio (R-FL)


and Democratic leader Sen. Chuck Schumer (D-NY).

“The deal is so bad because of the fact they don’t cover currency manipulation,” Trump added. “It’s the number-one weapon used by foreign countries to hurt the United States and take away jobs.”

He also hit the deal as a giveaway to China. “We are giving away what ultimately is going to be a back door for China,” he said. “China will take advantage of it—all the weak points in it, more than anybody else,” said Trump, who has previously criticized China’s manipulation of currency prices. China is not part of the TPP deal, but is widely expected to join in the next few years.

Rubio, Trump’s chief rival from the Washington establishment, has publicly backed the TPP deal multiple times throughout the year—in the Wall Street Journal and in a speech to the Council on Foreign Relations, where he called it a “pillar” of his desired presidency.

But now Rubio’s team says he’s undecided about the unpopular deal.

However, Rubio also provided the critical 60th vote for Obamatrade’s Trade Promotion Authority (TPA), which greases the skids for an congressional approval of the trade deal. TPA makes it impossible to amend the deal–or any other trade deal brought before Congress–and eliminates the ability for a Senate filibuster, essentially sealing final passage of TPP before the deal’s text even became public last week.

Questions have arisen about whether Rubio read the text of the TPP deal–which was available in the basement of the U.S. Capitol for lawmakers to read in person –before he voted for the TPA which would fast-track it. Rubio’s team refuses to answer which days he supposedly spent in the classified reading room reading the text. It would have required multiple days in the room to read the deal before he voted on it.

During the interview, Trump asked how many pages are in the deal. When told by this reporter that the deal is 5,544 pages long, Trump responded by saying “Wow.”

He said that he thinks the only reason why politicians like Rubio are backing the TPP deal is because they are “controlled” by Washington lobbyists.

“The only people that are supporting it politically are people that are controlled by the lobbyists for certain companies that want this to happen because it’s to their advantage, not to the country’s advantage. So the lobbyists and the special interests are supporting it, and certain politicians are supporting it because they’re totally controlled by the lobbyists and the special interests.”

Trump said he is not controlled by the lobbyists. “People are so happy that I’m putting up my own money,” Trump told Breitbart News. “People are so happy that I’m self-funding.”

If he’s elected president, Trump told Breitbart News that he would negotiate trade deals with individual countries, rather than giant multinational deals like TPP. He would also stop currency manipulation, he said.

“I would make individual deals with individual countries and currency manipulation would be a preeminent part of every deal because that’s the chief weapon that other countries—particularly China and Japan—use to take away our businesses and our jobs,” Trump said.

GOP Debate #3, 2016 Election Cycle Open

by coldwarrior ( 99 Comments › )
Filed under Economy, Elections 2016, Open thread, Politics at October 28th, 2015 - 6:55 pm

Debate #3. 2 hours of what is supposed to be focused on ECONOMICS and POLICY (and most likely 90minutes of Trump bashing and baiting).


The underlings are doing a good job for the GOP by splitting the anti-establishment vote yet again, just as planned. They will get their reward later. We have a white female who ran one of the best companies in the world straight into the ground and a black man who has never had any employees or had to make a payroll who are going to be on the stage telling us about how they will fix America. My thoughts on Fiorina have been quite clear.She is without a doubt, the worst candidate the GOP could run. She would get destroyed in the general election for the destruction of jobs and ruination of HP. She won’t get the nomination. Her job is stated as above.


As for Carson, wow, I have to be honest here. I know a lot of surgeons. BRILLIANT and DARING people. None of them would I want anywhere near the levers of power. They just don’t have that kind of experience or temperament. If Carson were a Dem, we would be beating him senseless about being completely unqualified and an Obama redux. That said, I would vote for him  tick the box by his name. I will not vote if its Fiorina or Bush. I’d tick Bush if I had to chose between those two on threat of death.

Political outsiders Ben Carson and Donald Trump will be under pressure to prove their economic expertise at Wednesday’s presidential debate, with eight struggling rivals eager to expose what they see as policy weaknesses in the two front-runners.

The nationally televised debate comes at a crucial time in the race for the 2016 Republican presidential nomination, as Carson has moved ahead of Trump in some national and local polls just three months before the first nominating contest in Iowa.

Lagging contenders such as former Florida Governor Jeb Bush and U.S. Senator Marco Rubio of Florida are running out of time to turn the tide in a campaign dominated by provocative rhetoric that has played to the strengths of Trump, a bombastic reality television star and developer, and Carson, a soft-spoken neurosurgeon.

The two-hour debate in Boulder, Colorado, which is expected to focus heavily on economic issues, will begin at 8 p.m. EDT/0000 GMT and will air on the CNBC business TV network.

The other candidates sharing the stage will be U.S. Senator Rand Paul of Kentucky, former Hewlett-Packard Chief Exective Carly Fiorina, Ohio Governor John Kasich, U.S. Senator Ted Cruz of Texas, former Arkansas Governor Mike Huckabee and New Jersey Governor Chris Christie.

Read Latest Breaking News from Newsmax.com http://www.newsmax.com/Headline/debate-carson-trump-cnbc/2015/10/28/id/699491/#ixzz3puFK889s


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