Thursday, June 9, 2016

Globalization Is Going Out of Business aka. 1997 x 2008

"They bet it all on the jobless consumer, because no one told them they're fucking idiots..."




The world's three largest economies are locked in a three-way death grip by currency flows. Unfortunately, Ponzi schemes don't go in reverse. Like the U.S., China is now betting on the jobless consumer to save their economy. 

"China’s shift to consumption and services lies at the heart of Xi’s quest for new growth...The government at all levels in Guangdong has been encouraging companies to replace human workers as rapidly as possible,” said Lu. “I can see our business increasing more than 50 percent this year.”



"More than half of the members of the American Chamber of Commerce in China said the increase in costs was the biggest challenge to their businesses in the country"

$.80 per hour is a tremendous "challenge" to the "business" of global slavery...

Meanwhile, I just came to the very obvious realization that the USDJPY is tracking Chinese reserves outflow...bolstered by the fact that USDJPY usually goes down at night, because Chinese algos are buying Yen whereas U.S. algos are selling Yen...

Human history's largest hedge fund is unwinding daily, having lost -20% from the top ($800 billion)...every time the Chinese step into the market to prop up Yuan, they are pushing down USDJPY...and when they don't prop up Yuan, CNY devaluation accelerates carry trade unwind...

Which means:
Strong dollar = more selling, due to lower exports
Risk off = more selling, due to carry unwind
Global deflation = more selling, due to EM devaluation
China devaluation = more selling, due to carry unwind

One year % performance is identical:



Chinese FX Reserves with oil. Rally compliments of the Shanghai Accord...



China is no longer competitive with the rest of Asia:
This is CNY as ratio of all EM Currencies. CNY has gained 16% over five years, so the "unwind" process is about half way there...




In the meantime, CNY devaluation will continue obliterating carry traders on an accelerating basis, who will be forced buyers of Yen...

Yen / Yuan -20% in one year



Pushing USDJPY lower, amid "volatility"...
S&P opening gaps with USDJPY: