Global Macro

As the falling Chinese yuan shakes up global markets, it is worth considering some of the slower burn implications for asset markets.

The perversity of the Chimerican unwind is on display again today as an excellent US jobs report is only more fuel tossed upon the Mining GFC bonfire.

From Nomura’s Bob Janjuah: Instead of writing in my normal narrative style, with each new note a direct follow-on from each previous one (my last note was published in October), I wanted to do something a little different.

2016 is looking more like the Year of the Bear than the Year of the Monkey.

Cross-posted from Investing in Chinese Stocks: FT: China markets stabilise on state intervention “At this point everyone expects (renminbi) depreciation, but the central bank doesn’t want to let things get out of control.

Sabre rattling North Korea is making sure no one forgets about them as all eyes remain on the Middle East and unfortunately, Donald Trump.

An interesting speech from Federal Reserve Member John Williams, of the San Francisco branch, overnight.

The Mining GFC is ending the year with a bear market rally driven by some better news for oil and steel, pretty ordinary economic data out of the US reaffirming slow rate hikes and rumblings of more Chinese stimulus.

From the FT: A surge of deals in the pharmaceuticals, energy and consumer sectors has pushed merger and acquisition activity to an all-time high, surpassing 2007’s peak — but dealmakers have admitted that bond market turmoil and geopolitical instability are their biggest worries for 2016.

The Mining GFC had a mixed night.

The Mining GFC warmed up again on Friday night though has not broken to new lows.

The Mining GFC took the night off last night as shorts were covered and everything reversed.

The Mining GFC threw up an interesting mix last night with commodities diverging with other indicators.

It may have been the yuan devaluation, the collapsing oil price, or something else, but the Mining GFC took a sharp turn for the worse on Friday night.

From the BIS today comes more profiling of the mining GFC: Since 2008, dollar credit has grown more rapidly outside the United States than inside.

From UBS: The fallacies of this approach are that ratings competition actually favors issuers as it results in more aggressive credit ratings2, and deterioration in credit ratings is glacial and lagged versus prior cycles.

From Reuters: The outlook for the global economy next year is darkening, with a U.S.

From Macquarie: A plunge in the US manufacturing PMI in November has taken our global manufacturing PMI measure to its lowest in over two years and on the brink of recession.  In November our aggregate manufacturing PMI for the leading industrial powers1 50.5 in October (fig 1).

From Citi: Emerging economies’ growth prospects look damaged in several respects.

The mining GFC has claimed another hefty scalp as it marches down the cost curve.

From Fairfax: Energy consultant Dr Fereidun Fesharaki expects oil prices to slide to $US35 a barrel by the June quarter of 2016, in contrast to consensus forecasts which point to a gradual recovery from this quarter.

Cross-posted from The Conversation: If you’ve been following the news about the Australian economy, you could be forgiven for thinking the country is in dire straits.