{"id":11250,"date":"2015-08-20T07:47:16","date_gmt":"2015-08-20T12:47:16","guid":{"rendered":"http:\/\/olduvai.ca\/?p=11250"},"modified":"2015-08-20T07:47:16","modified_gmt":"2015-08-20T12:47:16","slug":"it-starts-broad-retaliation-against-china-in-currency-war","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=11250","title":{"rendered":"It Starts: Broad Retaliation Against China in Currency War"},"content":{"rendered":"

It Starts: Broad Retaliation Against China in Currency War<\/a><\/h3>\n

The biggest global \u201ctail risk\u201d\u00a0is China\u2019s deteriorating economy and an emerging market debt crisis, according to BofA Merrill Lynch\u2019s\u00a0monthly poll<\/u><\/a>\u00a0of fund managers. And 48% of them were expecting the Fed to raise rates, despite languid growth and low inflation expectations.<\/p>\n

Hot money is already fleeing emerging markets. Higher rates in the US will drain more capital out of countries that need it the most. It will pressure emerging market currencies and further increase the likelihood of a debt crisis in countries whose governments, banks, and corporations borrow in a currency other than their own.<\/p>\n

This scenario would be bad enough for the emerging economies. But now China has devalued the yuan to stimulate its exports and thus its economy at the expense of others. And one thing has become clear today: these struggling economies that compete with China are going to protect their exports against Chinese encroachment.<\/p>\n

Hence a currency war.<\/p>\n

It didn\u2019t help that oil plunged nearly 5% to a new 6-year low, with WTI at $40.55 a barrel, after the EIA\u2019s report of an \u201cunexpected\u201d crude oil inventory buildup in the US,now,<\/em>\u00a0during driving season when inventories are supposed to decline!<\/p>\n

And copper dropped to $5,000 per ton for the first time since the Financial Crisis, down 20% so far this year. Copper is the ultimate industrial metal. China, which accounts for 45% of global copper consumption, is the bull\u2019s eye of all the fretting about demand. 5,000 is the line in the sand. A big scary number. Other metals fared similarly.<\/p>\n

Copper powerhouse Glencore, whose shares plunged nearly 10% today,\u00a0blamed<\/u><\/a>\u201caggressive and synchronized large-scale short selling\u201d for the copper debacle, instead of fundamentals. But fundamentals have been whacking copper for years, and shorts have simply been joyriding the trend.<\/p>\n

\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

It Starts: Broad Retaliation Against China in Currency War The biggest global \u201ctail risk\u201d\u00a0is China\u2019s deteriorating economy and an emerging market debt crisis, according to BofA Merrill Lynch\u2019s\u00a0monthly poll\u00a0of fund managers. And 48% of them were expecting the Fed to raise rates, despite languid growth and low inflation expectations. Hot money is already fleeing emerging […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,2656,1099,188,1732,303,305,312,1123,431,8285,4254,4255],"class_list":["post-11250","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-copper","tag-currency-devaluation","tag-currency-war","tag-emerging-markets","tag-fed","tag-federal-reserve","tag-financial-crisis","tag-glencore","tag-interest-rates","tag-tail-risk","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11250","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11250"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11250\/revisions"}],"predecessor-version":[{"id":11251,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/11250\/revisions\/11251"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11250"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11250"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11250"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}