I wanted to write about China and this is, sadly and embarrassingly, the only moderately witty title I could come up with. Not terribly creative, I know, but I did like the song back in the '80's.
I wrote a blog back in Sept/16 about China and the offshore yuan etc. It was a bit technical in nature but feel free to re-read it here: highrockcapital.ca/pauls-blog/the-last-time-this-happened-in-china-the-world-stock-markets-sneezed
Today, I wanted to keep it a little lighter. I noticed a few things about China recently that have me somewhat concerned about the state of the global economy.
First of all, China continues to devalue to yuan (the Chinese currency). They are likely doing so for two main reasons: 1) to spur exports to the USA and 2) to export the deflation in China along with their exported goods. When China devalues their currency, it is not really a great signal for the global economy. (Remember, higher on the graph is a weaker yuan). Exhibit A:
Second thing I noticed is the price of Iron Ore has been..."smoked" (old trader-speak for hammered hard, slammed, monkey-hammered....you get the picture...it declined). Not a good sign. Exhibit B:
And the third thing, it the result - the Chinese stock market has been hit pretty hard from its high point showing a decline about 10% since early April. Exhibit C:
Riposa in Pace David Bowie.