The chart below is a comprehensive look at China’s capital flows. It includes foreign exchange deposits, trade, investment and portfolio flows. While the Chinese government touts slowing outflows from official reserves, the chart below shows a different story once private sector flows are included. The next chart shows imports from Hong Kong to China. In 2016 the theory was… Continue reading China’s Capital Flows
In late 2010 the Bank of Japan (BoJ) started buying ETFs as part of their Quantitative Easing (QE). As the bottom panel below shows, the BoJ now owns 78% of all ETFs in Japan. Note that the ETF market in Japan is small relative to the total stock market, less than 5%. When QE goes on too long, this is what happens and why… Continue reading Japan ETF Holdings
The Financial Times – Don’t bet on Trump’s Fed pick to really move the bond needle Finally and most importantly, we need to remember that this decision will be made by the president, who last year argued angrily that share prices were being maintained by “artificially low” interest rates and who now regularly tweets about higher… Continue reading The Race For Fed Chair
MarketWatch – How oil is escaping from ‘purgatory’ as supply glut turns to supply concern U.S. oil production, especially shale, could disappoint in 2018, analysts say In response to the supply glut and weak prices, the Organization of the Petroleum Exporting Countries and a group of non-cartel producers led by Russia agreed to cut production until… Continue reading More On U.S. Shale Oil Production
As the chart below shows, negative yielding bonds account for $8 trillion (orange), or about 16% (green) of the sovereign global market. If you were curious, the next chart shows the OAS (black), average maturity (brown) and average duration (red) of Bloomberg’s Agg Index. We are not sure what these metrics mean when yields are negative.… Continue reading Negative Yielding Bonds
Bloomberg View – Euro-Zone Tapering Is a Delicate Task The European Central Bank has to scale back quantitative easing without spooking investors. On Thursday, the European Central Bank is expected to announce changes to its program of quantitative easing. The threat of outright deflation in the euro zone has eased, so changes are indeed required. The… Continue reading Division Over QE Ending At The ECB
The chart below shows the largest automakers by market capitalization. Four years ago Tesla (black line) was the smallest shown. Now it has the fifth largest market cap. We discussed the disruption in automakers in July.
The Financial Times – Martin Wolf: Central banks alone cannot deliver stable finance Government policy must counter the growing risk of a crash in asset valuations Finally, we should not conclude that central banks have to abandon the priority of stabilising the economy in favour of the possibly conflicting goal of stabilising the financial system. One… Continue reading Central Banks Need Governments To Cooperate With Their Monetary Policy Moves
The Financial Times – Record flows for exchange traded funds that track bond markets Inflows into exchange-traded bond funds have surged past last year’s record with several months to spare, as the seismic migration towards passive investing broadens out beyond the equity market. ETFs that track fixed-income benchmarks have attracted nearly $130bn so far this… Continue reading Bond ETFs See Record Inflows
OPEC production cuts are expected to remain in place through March of 2018. Currently OPEC members produce approximately 32.83 million barrels of crude oil per day. Initially, after the production cuts were agreed upon, Saudi Arabia’s crude oil production fell as planned. After bottoming in June, crude oil production began rising.
The chart above shows the percentage of foreign exchange reserves held in euros peaked in 2009 at roughly 28% while US dollar reserves peaked in 2001 at roughly 73%. Euros now make up 20.18% of the world’s currency reserves and the US dollar makes up roughly 64%.
Use the interactive chart below to view total returns for all stock sub-indices.