Monthly Archives: January 2016

After QE failure, BOJ’s Kuroda says no plan to ease policy now

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“Bank of Japan Governor Haruhiko Kuroda said on Friday he had no plan to expand monetary stimulus now, blaming sharp declines in oil costs for keeping consumer inflation distant from the bank’s ambitious 2 percent target.  While he maintained his optimistic view of the economy, Kuroda stressed his resolve to ease monetary policy further if risks threaten achievement of the BOJ’s price target.  The remarks, made in response to a question by an opposition lawmaker, pushed down Japanese stocks on disappointment that no immediate monetary stimulus was forthcoming.”

http://www.reuters.com/article/us-japan-economy-boj-idUSKCN0UT0C3

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After vote, China tells Taiwan to abandon independence “hallucination”

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“Taiwan should abandon its ‘hallucinations’ about pushing for independence, as any moves towards it would be a ‘poison’, Chinese state-run media said after a landslide victory for the island’s independence-leaning opposition.  Tsai Ing-wen and her Democratic Progressive Party (DPP) won a convincing victory in both presidential and parliamentary elections on Saturday, in what could usher in a new round of instability with China, which claims self-ruled Taiwan as its own.  Tsai pledged to maintain peace with its giant neighbour China, while China’s Taiwan Affairs Office warned it would oppose any move towards independence and that Beijing was determined to defend the country’s sovereignty.”

http://in.reuters.com/article/taiwan-election-idINKCN0UV02I

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Hedge Fund That Called Subprime Crisis Urges 50% Yuan Drop

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“Mark Hart, the hedge fund manager whose bets against U.S. subprime mortgages and European sovereign debt proved prescient, said China should weaken its currency by more than 50 percent this year. Hart, whose prescription clashes with consensus forecasts for the yuan and recent comments from senior government officials, said China would be justified in weakening the currency after central banks in Europe and Japan fueled declines in their exchange rates to stoke economic growth in recent years. Such a move would likely come as a surprise to global investors, who were rattled by a drop of less than 3 percent in the yuan last August.”

http://www.bloomberg.com/news/articles/2016-01-19/hedge-fund-that-called-subprime-crisis-says-yuan-should-fall-50-

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As China Dumps Treasuries, World Sees No Better Place for Refuge

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“As the biggest overseas creditor to the U.S., China has bankrolled hundreds of billions of dollars in deficit spending, particularly since the financial crisis. And that voracious appetite for Treasuries in recent years has been key in keeping America’s funding costs in check, even as the market for U.S. government debt ballooned to a record $13.2 trillion.  Yet for many debt investors, there’s little reason for alarm. While there’s no denying that China’s selling may dent demand for Treasuries in the near term, the fact the nation is raising hundreds of billions of dollars to support its flagging economy and stem capital flight is raising deeper questions about whether global growth itself is at risk.”

http://www.bloomberg.com/news/articles/2016-01-10/china-retreat-from-u-s-bonds-prompts-shrugs-where-fear-reigned

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ISIS Fighters’ Salaries Halved After Loss Of Territory And Air Strikes

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“The terror group’s ‘treasury’ released a document stating that they have decided to cut the salaries due to ‘exceptional circumstances.’  The document does not describe the reasons behind its decision, it is thought to be the result of strikes that destroyed its bank and millions in currency.  ‘On account of the exceptional circumstances the Islamic State is facing, it has been decided to reduce the salaries that are paid to all mujahideen by half, and it is not allowed for anyone to be exempted from this decision, whatever his position,’ the document states.”

http://breaking911.com/isis-fighters-salaries-halved-due-loss-of-territory-and-air-strikes/

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Saudi Arabia Just Got Turned Into an ETF

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“Such a fund was not even possible until June, when Saudi Arabia opened up to direct foreign investment, albeit limited, in its stock market to boost economic growth while the country looks to diversify its $750 billion economy away from oil. Similar to the China A-share market, KSA gives quick access to a market that was previously accessible only by using indirect, costly channels.  The ETF will track the MSCI Saudi Arabia IMI 25/50 Index, which holds about 50 large-, mid-, and small-cap stocks that cover approximately 99 percent of the free float-adjusted market value of Saudi Arabia. One interesting note is that the index has only 1.4 percent allocated to energy stocks.”

http://www.bloomberg.com/news/articles/2015-09-16/saudi-arabia-just-got-turned-into-an-etf

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Saudi Arabia’s Secret Holdings of U.S. Debt Are Suddenly a Big Deal

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“That question — unanswered since the 1970s, under an unusual blackout by the U.S. Treasury Department — has come to the fore as Saudi Arabia is pressured by plunging oil prices and costly wars in the Middle East. As a matter of policy, the Treasury has never disclosed the holdings of Saudi Arabia, long a key ally in the volatile Middle East, and instead groups it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria. Apart from the kingdom itself, only a handful of Treasury officials, and those at the Federal Reserve who compile the data on their behalf, have a clear picture of Saudi Arabia’s U.S. debt holdings and whether they’re rising or falling.”

http://www.bloomberg.com/news/articles/2016-01-22/u-s-is-hiding-treasury-bond-data-that-s-suddenly-become-crucial

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Saudi Arabia Said to Ban Betting Against Its Currency

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“Authorities this week ordered banks to limit traders’ ability to bet against the riyal, whose peg to the dollar has been a bulwark of the kingdom’s economic and financial stability since its introduction three decades ago. Countries with currencies pegged to the dollar, such as Saudi Arabia and Hong Kong, are coming under increasing pressure from traders speculating that it’s become too expensive for policy makers to continue defending exchange rates as the U.S. currency soars. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the Saudi Arabian Monetary Agency said for a second time in four months it will stick with its currency peg.”

http://www.bloomberg.com/news/articles/2016-01-20/saudi-arabia-said-to-order-halt-of-local-riyal-forward-options

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World Bank tells Saudis to prop up currency amid global devaluation war

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“Saudi Arabia should use its massive foreign exchange reserves to defend the riyal, amid fears the world is descending into a new phase of global currency wars, the World Bank has said. The kingdom’s shaky currency peg with the dollar has come under record pressure this week as the price of oil has plummeted to near 12-year lows.  Central bank reserves have dropped from a peak of $735bn to around $635bn this year – a pace of spending which will exhaust the kingdom’s fiscal buffers within five years  The monarchy has vowed to stick by the exchange regime and is instead planning to strengthen its coffers through the unprecedented flotation of its state-owned oil giant, Aramco.”

http://www.telegraph.co.uk/finance/economics/12089324/Saudi-Arabia-China-riyal-dollar-currency-wars.html

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Ron Paul Says to Watch the Petrodollar

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“From 1972 to 1974, the U.S. government made a series of agreements with Saudi Arabia. These agreements created the petrodollar system. The U.S. government chose Saudi Arabia because of its vast petroleum reserves, its dominant position in OPEC, and the (correct) perception that the Saudi royal family was corruptible. In essence, the petrodollar system was an agreement that the U.S. would guarantee the survival of the House of Saud. It’s hard to overstate how much the petrodollar system benefits the U.S. dollar. It’s allowed the U.S. government and many Americans to live beyond their means for decades.”

http://www.internationalman.com/articles/ron-paul-says-to-watch-the-petrodollar

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