The Mofaz meme

There were about five pieces of news on Friday that delivered such a massive upside kick to oil.
1) Chinese oil consumption numbers came in much higher than expected.
Wall Street is still being blindsided by the impact of the Sichuan earthquake, and apparently most of it is ignorant that ~30 percent of Chinese oil/ natgas/ heating [...]

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Chinese reserves

Setser on the PBOC:

What cann’t go on still hasn’t slowed, let alone stopped (Chinese reserve growth)
Posted on Thursday, May 29th, 2008 by bsetser
… Back in 2004, it was considered rather stunning when China added close to $100 billion to its reserves ($95 billion) in a single quarter, bring its total reserves up to around [...]

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A China inflation note

Apparently luck had it that every single Chinese ADR, and more than a few others, trooped to the United States to make their pitches to US investors. I got to listen to more than a few of them over the past four days (one reason why the post count has run low).
American institutional investors are [...]

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Japan hemorrhaging money for food

The Age (Aus.):
Justin Norrie, Tokyo
April 21, 2008
A 130% rise in the global cost of wheat in the past year, caused partly by surging demand from China and India and a huge injection of speculative funds into wheat futures, has forced the Government to hit flour millers with three rounds of stiff mark-ups. The latest — [...]

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China: Choking internet bandwidth to restrict information

Things started getting very difficult with the internet about six months ago as the great firewall got tighter, but in the past few weeks internet access has been far more frustrating than it has ever been during my over six years living in Beijing.  It takes me hours (literally) to post anything on my blog.  [...]

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Collapsing Chinese price controls

China’s chronic undervaluation of its currency implies that the country should have a rate of inflation approximately proportional to its persistent current account surplus. China’s current account surplus has been exploding recently, which means that China is in the throes of an inflationary monetary trap. It also means that you can look at China’s forex [...]

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Chinese resident holds ten Aussies hostage with bomb

March 5, 2008 | 1331 GMT
Analysis
Ten Australian tourists and their translator were taken hostage March 5 in the Chinese city of Xian, famous for its terra-cotta warriors.
A local Xian resident identified as Xia Tao boarded a tourist bus at around 9:52 a.m. local time, [...]

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Chinese wage-price spiral now fully underway

SAN FRANCISCO (MarketWatch) — In an effort to calm grousing consumers as prices rise to 11-year highs, China is raising minimum wages across the country, a move analysts fear could further stoke inflation.

Guangdong, China’s richest province, said it plans to raise minimum wages by as much as 18% in some cities starting April 1. [...]

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Morgan Stanley thrashed for joining China stampede

I have told anyone who will listen that China is a deflationary depression waiting to happen. Banks that neglected their cultural homework, ignored preposterous P/E valuations, and brushed off gaping macroeconomic inefficiencies, such as Morgan Stanley, are now paying the price of being too fashionable too late in the race.

Morgan Stanley’s Chinese prize loses some [...]

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Debunking decoupling

Satyajit Das:
Trompe L’oeil Markets
Emerging market equities, especially the Shanghai and Mumbai markets, have decoupled. Bizarrely, they “de-couple” only if the US markets fall but “re-couple” if the US market goes up!
Increases are driven by substantial short-term capital flows fleeing developed markets and the US dollar. The assumption is that valuations and earning growth are [...]

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Well-contained inflation risks, part II

According to JPMC’s Global Data Watch, the People’s Bank of China will ignore the latest “temporary” spike in inflation — because, naturally, it’s all the snowstorms’ fault.
PBoC to ignore January inflation spike
China’s exports jumped in January, echoing the results in Taiwan and Korea, and confirming that regional activity accelerated sharply in advance of the lunar [...]

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Savings glut acceleration continues

One thing that has especially confused me about the recent train of economic events is that in terms of macro aggregates, the “global savings glut” has accelerated, not slowed down. Similarly, any monetary indicator you use shows a massive acceleration in the money supply.
Longtime readers will remember the FRED graphs of MZM, bank credit, and [...]

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Chinese Q4 gold support

Mind you, this was before China commenced gold futures trading on the Shanghai stock exchange.
BEIJING, Feb. 15 — China surpassed the United States as the world’s second-biggest retail gold market after India in 2007 by volume despite rocketing prices of the metal.
Total consumer demand in China’s mainland, Hong Kong and [...]

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Client newsletter: Jan. 29, 2008

Ben’s helicopter, grounded by Fitch
Today demonstrated that the bond insurance agencies hold more near-term economic power than does the Federal Reserve. Implied volatility plunged from 28 to below 25 after the Fed’s 50 basis point rate cut (the higher end of the expected range), and then rose to nearly 28 again after Fitch downgraded [...]

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Required reading

I am a huge fan of Professor Michael Pettis’ “China financial blog“. He has two long but very worthy posts up for anyone interested in a less in-the-clouds, more realistic perspective on the Chinese economy:

“The new China-Europe-US world order” :: Prof. Pettis heaps scorn upon the latest outbreak of Sinosupremacism, a typically in-the-clouds piece by [...]

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“One billion customers” — Famous last words

Rupert Murdoch has not had a good run of late. “Fox Business News” is possibly the greatest fiasco in MSM memory, with the only Nielsen figures showing that FBN has about 8,000 daily viewers; at that level, I’m sure Fox gets more viewership out of laughter (see: “Shitigroup”) than out of genuine interest.
Then there have [...]

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Well …

This is pretty staggering.

^AORD
All Ordinaries
5,222.00 12:11AM ET
408.90 (7.26%)
 

^SSEC
Shanghai Composite
4,596.67 1:15AM ET
317.77 (6.47%)
 

^HSI
Hang Seng
21,709.63 1:30AM ET
2,109.23 (8.86%)
 

^BSESN
BSE 30
15,344.40 1:30AM ET
2,260.95 (12.84%)
 

^JKSE
Jakarta Composite
2,236.55 1:45AM ET
249.33 (10.03%)
 

^KLSE
KLSE Composite
1,439.49 Jan 18
21.22 (1.45%)
 

^N225
Nikkei 225
12,573.05 1:00AM ET
752.89 (5.65%)
 

^NZ50
NZSE 50
3,607.13 Jan 21
39.77 (1.09%)
 

^STI
Straits Times
2,764.57 Jan 21
152.58 (5.23%)
 

^KS11
Seoul Composite
1,609.02 1:02AM ET
74.54 (4.43%)
 

^TWII
Taiwan Weighted
7,581.96 [...]

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USD/JPY and US stocks

I can’t believe I’m saying this, but I think US equities are significantly undervalued right now, recessive realities notwithstanding.
I wonder if the market is paying too much heed to the yen-dollar relationship (now at its lowest in years, at 106.82), which has traditionally acted as the canary in the coal mine as far as major [...]

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A small serving of crow

Just as I loudly trumpet my correct calls in gold and sterling, I must also eat crow for my missed calls. I predicted a dollar rally that didn’t happen, and a fall in the euro which also didn’t happen.
I recently prematurely declared that the European Central Bank’s $500 billion repo “injection” amounted to unconditional [...]

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Citi: 20,000 layoffs, $24bn writedown

I’m not sure which piece of news is worse: the raw size of the writedown (nearly 20 percent of shareholder equity), or the fact that China balked at participating in a recapitalization of Citigroup. Historically, the Chinese have been far too hungry for Western banking assets (not to mention a place to put their USD) [...]

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