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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

Dr. Copper Pulls Back, Other Metals Follow

On November 17, 2010, in Commodities, by Tim

The copper price is certainly not taking kindly to news that price controls are being imposed in China, the metal with a PhD in economics plunging $20 yesterday, recouping only a fraction of that today, and now down sharply from the two-year highs of a week ago.

And it’s not just copper. From the price peaks of early-last week, aluminum is now down 9 percent, nickel has dropped 12 percent, lead is 14 percent lower, and zinc, the metal with the least support from “normal” demand factors (i.e., actual demand, rather than just a place for some of the Fed’s easy money to go) has seen its price plunge 17 percent.

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A Bad Rap for Global Currencies

On November 12, 2010, in Asia, Currencies, by Tim

This video about U.S.-China trade relations has been popping up all over the place. The song is kind of catchy, though, in general, I’m not crazy about the term “frenemy”.

Favorite line by the Chinese character: “You’re in no position to call me a sinner. Without Bretton Woods you’d be Argentina.“

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What Germany Thinks of the U.S.

On November 10, 2010, in Asia, Debt, Economy, Europe, by Tim

This week’s G20 meeting in South Korea should become a little bit more interesting when the German and U.S. delegations get together to talk about how things are going in the global economy. Some comments by German Finance Minister Wolfgang Schäuble as reported in Der Spiegel yesterday detail some of the major areas of disagreement.

SPIEGEL: Minister Schäuble, how well do you get along with your American counterpart, Treasury Secretary Timothy Geithner?

Schäuble: Mr. Geithner is an excellent minister. We have a good personal relationship.

SPIEGEL: Nevertheless, he constantly criticizes government officials in countries that are achieving high export surpluses and not doing enough to stimulate their domestic economies. He’s referring to you, isn’t he?

Schäuble: It would appear that way. That’s why I tell him again and again that I think his point of view is incorrect in this regard.
…
Schäuble: The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies. There are many reasons for America’s problems, but they don’t include German export surpluses.

It would seem that the same areas of disagreement persist – the U.S. saying the world’s exporters such as Germany and China don’t spend enough while Germany and China say the U.S. spends too much. Surely there’s a balance to be struck there, but, it doesn’t look as though we’re any closer now than we were ten years ago.

(more…)

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Stimulating the Overstimulated

On October 25, 2010, in Asia, Commodities, Economy, by Tim

Via this item at Zero Hedge comes Niall Ferguson again talking about the perils of Keynsian solutions to our globalized  economy and how more money printing and higher budget deficits may cause more harm than good. While not coming off nearly as pompous as usual, he makes a good point about how additional stimulus is more likely to boost commodity prices and all sorts of things in emerging markets but won’t do much for jobs in Michigan.

To add a bit more color to the Ferguson commentary, we turn to Mr. Durden:

…the confines of a theoretical Keynesian system have been the recipe for the disaster unfolding now before our eyes (which is not to say that Austrian economics is necessarily better, although intuitively they certainly make a far more compelling case, and would certainly not have led to the current pre-apocalyptic economic situation, which only the most addicted to Kool Aid pig lipstickers refuse to acknowledge).

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From the G7, to the G8, to the G20

On October 25, 2010, in Asia, Europe, by Tim

A recent Bloomberg Chart of the the Day goes a long way in explaining why the G7 and G8 are now all but irrelevant and how recent concessions by both the G20 and the IMF aimed at giving a bigger voice to emerging market countries are long overdue.

Recall that, back in 1999, Russia was added to the G7 – the U.S., Japan, Germany, the U.K., France, Italy and Canada – to become the G8, but, for whatever reason, there was no further expansion to include China, as might be expected given the slope of the red curve above.

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China’s Impressive Economic Data

On October 21, 2010, in Asia, by Tim

You never quite know what to believe from the Chinese government when they report their economic data, but according to this story at xinhuanet, they seem to be having some success in dialing back on growth while keeping things humming.

China’s economy slows to 9.6 pct in Q3, inflation picks up

China’s GDP grew 9.6 percent in the third quarter from the same period last year, the National Bureau of Statistics said on Thursday. The growth rate slowed down from 11.9 percent in the first quarter and the 10.3 percent in the second quarter. Full story

China’s September CPI up 3.6%, a 23-month high

The consumer price index (CPI), China’s main gauge of inflation, rose by a 23-month high of 3.6 percent in September from one year earlier, the National Bureau of Statistics (NBS) said Thursday. The growth rate was 0.1 percentage point higher compared with that in August, NBS spokesman Sheng Laiyun said here at a press conference. Full story

China’s retail sales of consumer goods up 18.3% in Jan-Sept

China’s retail sales of consumer goods rose 18.3 percent in the first three quarters year on year, the National Bureau of Statistics (NBS) said Thursday. The retail sales of consumer goods in the January-September period totaled 11.1 billion yuan, NBS spokesman Sheng Laiyun said at a press conference. Full story

China’s fixed asset investment up 24% in first nine months

China’s fixed asset investment rose 24 percent in the first nine months year on year to 19.22 trillion yuan (2.89 trillion U.S. dollars), China’s statistics authority said Thursday. Urban fixed asset investment rose by 24.5 percent from a year earlier to 16.59 trillion yuan while rural investment increased by 20.5 percent to 2.64 trillion yuan, according to the National Bureau of Statistics (NBS). Full story

Chinese rural, urban residents’ incomes rise steadily for Q3

The income of China’s urban and rural residents continued to increase in the first nine months of this year, the National Bureau of Statistics (NBS) said here Thursday. In the first three quarters of the year, per-capita disposable income for urban dwellers reached 14,334 yuan (2,139.4 U.S. dollars), up 10.5 percent year on year. After deducting inflation, the actual growth was 7.5 percent, said NBS spokesperson Sheng Laiyun. Full story

Growth slowing to 9.6 percent is something that U.S. policymakers can only dream about. The last time we had anything close to that was a growth rate of 8.0 percent in the second quarter of 2000, just as the stock market bubble was bursting.

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