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Thread: The US Recovery

  1. #601
    Official Thread Jacker Senior Contributor gunnut's Avatar
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    Quote Originally Posted by tantalus View Post
    Is this largely due to the Chinese economy?
    Nope, you got that backwards.

    Chinese economy is a manufacturing economy. Not only that, it's a consumer's work shop. All that stuff has to go somewhere, as in, someone has to buy those things they make. Without customers, a factory is doomed.

    China is slowing down because its customers are slowing down. The biggest customer is the US. China slowing down is due to gloomy forecast of US demand. China does not drive global economy. China is the symptom. The root cause is slowing US demand.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  2. #602
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by tantalus View Post
    Is this largely due to the Chinese economy?
    The Chinese economy in 2015 was more than 50% services (50.5%, to be exact, but only if you believe the numbers). Industry is barely one-third. See: http://www.stats.gov.cn/english/Pres...1_1307717.html

    According to US data, exports to China fell 5.1% in Jan-Nov 2015, vis-a-vis the same 2014 period. That was equal to a 5.6% share of the 6.9% decline in US exports to the world. On the (US) import side, purchases from China rose 4.3%, vs. -2.1% overall.

    East Asia was good for the US economy last year. Exports to the region fell 3.8%, as compared to the 8% drop in sales to the rest of the world.

  3. #603
    Senior Contributor DOR's Avatar
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    Chinese consumer demand is not slowing, at least not according to the statistical evidence. Retail sales grew year-on-year – in real terms – as follows:

    Q1 2014 _ +9.7%
    Q2 2014 _ +10.0%
    Q3 2014 _ +9.9%
    Q4 2014 _ +10.2%
    Q1 2015 _ +12.7%
    Q2 2015 _ +12.7%
    Q3 2015 _ +14.1%
    Q4 2015 _ +13.6%

  4. #604
    Defense ProfessionalSenior Contributor tbm3fan's Avatar
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    DOR your take?

    REUTERS/Brendan McDermid

    Texan hedge fund manager J. Kyle Bass, the founder of Hayman Capital, has sent his first letter to investors on a global scale in two years.

    The letter, seen by Business Insider, warns that China has a problem much bigger than the subprime crisis in 2008.

    Bass was one of the hedge fund managers who correctly predicted and profited from the mortgage crisis in 2008.

    The problem in China, according to Bass, is the banking system and its coming losses.

    "We have been vigorously studying China over the last year, with the view that the rapid credit expansion in the Chinese banking system will result in significant credit losses that will require the recapitalization of Chinese banks and materially pressure the Chinese currency," Bass wrote in a letter to investors dated February 10.
    More from Business Insider

    "This outcome will have many near-term and long-term effects on countries and markets around the world. In other words, what happens in China will not stay in China."

    In the investor letter, titled "The $34 Trillion Experiment: China's Banking System and the World's Largest Macro Imbalance," Bass says China's banking system has similarities to the US banking system before the most recent financial crisis — excessive leverage, regulatory arbitrage, and irresponsible risk-taking.

    Bass said he had met with Wall Street firms, consultants, and China experts and they all had the view that China would get through the recent turbulence without an economic reset.

    That's not how Bass sees it. He wrote:

    What we have come to realize through these discussions is that many have come to their conclusion without fully appreciating the size of the Chinese banking system and the composition of assets at individual banks. More importantly, banking system losses — which could exceed 400% of the US banking losses incurred during the subprime crisis — are starting to accelerate.

    Bass is among a handful of hedge fund managers betting against China's currency, the yuan. Much of Hayman Capital's fund right now is devoted to the yuan short.
    http://www.businessinsider.com/kyle-...icals#comments

  5. #605
    Senior Contributor DOR's Avatar
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    So, a financial mercenary examines China with the preconceived notion that the banking system is about to collapse and as a result drive down the value of the renminbi.

    1. If the banking system in Shaanxi were to collapse, that has nothing to do with the banking system in Guangxi. Shanghai isn’t Liaoning. There is no single Chinese banking system, just a loosely aligned – no, ‘loosely associated’ – collection of provincial and municipal structures.

    2. If the various banking systems were to simultaneously collapse, the very obvious fact that the debts are domestic makes it impossible for such an occurrence to directly cause a decline in the Rmb. There would be no rush for dollars for the simple reason that the loans are denominated in Rmb; dollars wouldn't help. It is possible, maybe even likely that the currency market would panic under this particular highly unlikely scenario, but that would be the market causing the depreciation, not the banking sector’s problems being the cause.

    3. The largest part of the banks’ non-performing loans are those to state-owned enterprises. When a state-owned bank is owed money by an SOE, the repayment is subject to administrative negotiation. There cannot be an SOE foreclosure without Party approval. I do not envisage the Party, at whatever level, deciding now would be an excellent time to generate a bit of financial panic.

    4. “Wall Street firms, consultants, and China experts” “all had the view that China would get through the recent turbulence without an economic reset.”
    Mr Bass disagrees. Well, I know who I’d put my trust in, and it isn’t some fishy financial mercenary.

  6. #606
    Senior Contributor DOR's Avatar
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    May 6, 2016
    Americans collecting unemployment checks lowest since end of Clinton presidency


    Initial jobless claims below 300,000 for 61st straight week

    The number of Americans collecting unemployment benefits fell in late April to a nearly 16-year bottom, largely reflecting the low rate of layoffs taking place across the economy.

    Some 2.12 million people collected weekly unemployment benefits, known as continuing claims, in the seven days stretching from April 17 to April 23, the Labor Department said Thursday.


    The last time fewer Americans were collecting unemployment checks was in November 2000, shortly before President Bill Clinton exited the White House.

    The number of unemployment checks the government sends out has tumbled 82% after hitting a record 11.6 million in early 2010, when the U.S. was in the early stages of a recovery following the Great Recession. The figure includes millions of people who received emergency benefits that are no longer available.

    The drop in continuing claims is not entirely the result of an improved labor market, however. Millions of people have since found jobs, but a larger share of Americans are no longer part of the labor force. The so-called labor-force participation rate stood at 63% in March, down from 65% when the recovery began. Retiring baby boomers account for some but not all of that decline.

    Initial jobless claims, meanwhile, climbed by 17,000 to a five-week high of 274,000 in the last week of April. Despite the increase, new claims have been below the key 300,000 mark for 61 straight months, the longest stretch since the waning stages of the Vietnam War.

    Economists polled by MarketWatch had forecast claims would rise to 265,000 in the seven days stretching from April 24 to April 30 (figures are seasonally adjusted.)

    The average of new claims over the past four weeks, a less volatile measure, edged up by a much smaller 2,000 to 258,000, the Labor Department said Thursday. A week earlier the monthly average had fallen to a 43-year low

    Low jobless claims have contributed to marked improvement in the labor market over the past several years. The unemployment rate falls more quickly when hiring is strong and fewer people are being laid off.

    On Friday, the government will issue its latest snapshot of the labor market with the April employment report. Economists predict a 203,000 gain in nonfarm jobs, down slightly from the prior month.

    The economy has created an average of more than 200,000 jobs a month since 2014, knocking the unemployment rate down to 5%.

    ADD: April was the 67th straight month of YoY increases in employment, and the 20th straight month of a rising labor force.

    Add chart:
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    Last edited by DOR; 06 May 16, at 17:15.

  7. #607
    Defense ProfessionalSenior Contributor tbm3fan's Avatar
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    On Friday, the government will issue its latest snapshot of the labor market with the April employment report. Economists predict a 203,000 gain in nonfarm jobs, down slightly from the prior month
    Ended up being 160,000 this morning.

  8. #608
    Official Thread Jacker Senior Contributor gunnut's Avatar
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    Quote Originally Posted by tbm3fan View Post
    Ended up being 160,000 this morning.
    This is the greatest recovery since 2008.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  9. #609
    Senior Contributor Doktor's Avatar
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    Quote Originally Posted by tbm3fan View Post
    Ended up being 160,000 this morning.
    20+% miss. You only had one job..
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  10. #610
    Senior Contributor GVChamp's Avatar
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    It's hard to forecast the future.

    It's softer than expected, but the US still nearing full employment. This makes it pretty unlikely for the Fed to tighten again in June, especially since other nations are tumbling.
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  11. #611
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by gunnut View Post
    This is the greatest recovery since 2008.
    Did you read the new claims chart?
    The last time the line did an imitation of a rock trying to do the backstroke was in the early 1980s, and it bottomed out quick.

  12. #612
    Senior Contributor GVChamp's Avatar
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    This has been the longest continuous expansion in history. I'm definitely getting a bit wary....
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  13. #613
    Official Thread Jacker Senior Contributor gunnut's Avatar
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    Quote Originally Posted by DOR View Post
    Did you read the new claims chart?
    The last time the line did an imitation of a rock trying to do the backstroke was in the early 1980s, and it bottomed out quick.
    Which part of my statement is incorrect?
    "Only Nixon can go to China." -- Old Vulcan proverb.

  14. #614
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by gunnut View Post
    Which part of my statement is incorrect?
    The part about "since 2008."

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