Bravery = Stupidity? Alibaba Takes on the PRC

♠ Posted by Emmanuel in at 1/30/2015 01:30:00 AM
In a fight between Alibaba and the PRC, I'd bet on the PRC to win.  There's interesting news out today on Alibaba, China's giant business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) Internet giant. Just in September of last year, it supposedly set the record for the world's biggest initial public offering (IPO), making Jack Ma and company very wealthy people. I can only imagine that they were overjoyed then. But than was then and this is now: Alibaba stock is taking a beating since its earnings fell well below expectations in 3Q 2014. Alibaba now being a global company, its stock is...
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2017, the Year Indian Growth (Finally?) Beats China's

♠ Posted by Emmanuel in , at 1/29/2015 01:30:00 AM
As per the story of the and the hare, the World Bank is predicting something that's been a long time coming: With China slowing from its years of (reported) double-digit growth year in and year out to focus more on growth quality rather than quantity on one hand and India (hopefully) speeding up with a reformist, pro-market leadership under Nejendra Modi on the other, the World Bank is predicting that 2017 is the year Indian's growth rate moves ahead of China's. See the 2015 Global Economic Prospects from which the chart above is taken from. Onto the story: This is a short-term forecast based on some very specific circumstances....
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PRC Goes From Devaluing to Defending Yuan

♠ Posted by Emmanuel in , at 1/28/2015 01:30:00 AM
Pile 'em high, but don't sell 'em cheap: the yuan circa 2015. China amassing $4 trillion in foreign exchange reserves by 2014 is an astounding if somewhat mindless feat. Everyone thought that a developing country amassing $1 trillion in reserves was mad; what more four times that amount? It's not because the dollar is tanking at the moment--quite the opposite.  Rather, all that money cannot be spent on things that can spur Chinese development like health and education. After all, they are foreign reserves whose previous purpose was to keep the yuan weaker than economic fundamentals would apply to help Chinese export...
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"Kicking Out Greece Bodes Well for the Euro"

♠ Posted by Emmanuel in , at 1/27/2015 01:30:00 AM
Sorry, Greece, but you're on the way back to drachmas (and the EMU may be glad you're gone). Sherlock Holmes once said something to the effect that if all other alternatives have been ruled out, then the remaining one, however implausible, must be true. Today, we saw the election of an anti-austerity party in Greece in Syriza. Its leader, Alexis Tsipras, has threatened at various points in his short but eventful political career to upend the status quo by leaving the Eurozone, repudiating Greece's debts, or at least renegotiating the terms of its obligations to the EU and the IMF. Consider: As for investors. there are...
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Got $50B? IMF's Ukraine Money Pit & Franklin Templeton

♠ Posted by Emmanuel in , at 1/26/2015 01:30:00 AM
There's "postwar reconstruction," but the IMF has completely lost the plot with "duringwar reconstruction." I am unsure of many, many things, but this I know: Ukraine is a bottomless money pit. I figured this out a long time ago when I said that if the West really wanted to "punish" Russia, it should have let the Putinists "have" Ukraine. Think of the untold sums of money the Russians would have wasted instead of the West. Predictably if stupidly enough, the powers-that-be thought that the "country" of Ukraine was worth saving and have forced the IMF to act on their cause. You can read the hilarious econospeak elsewhere,...
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Dead Cat Bounce? Oil Prices After King Abdullah's Death

♠ Posted by Emmanuel in , at 1/23/2015 09:44:00 AM
Meet the new boss [L], same as the old boss [R]? This has been an atypical year with lots of Saudi-related posts, but this one cannot be ignored: The newswires were all abuzz this morning about the passing away of King Abdullah, formerly Crown Prince Abdullah before his half-brother King Fahd passed away in 2005. Now that he too has died, Abdullah's half-brother Salman has become Saudi king. In terms of the broader energy market, the notable news is that oil prices have bumped up slightly on the news. To be sure, Abdullah's passing was not unexpected since he has not been in the best of health in recent years and succession...
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Professional Stand-In-Liners, a Venezuelan Profession

♠ Posted by Emmanuel in , at 1/22/2015 01:30:00 AM
"Everyday I dream dipeys don't run out once I finally get into the store." To be sure, professional waiters-in-line are not unique in Latin America. In countries like Brazil where red tape was (still is?) prevalent and people had to stand in line at government offices to obtain various licenses and permits, there already were folks offering to wait for you all day long. There is a term for them; it's on the tip of my tongue but I forget at the moment. (Do e-mail me if you can provide the correct Portugese term.) Indeed, it is not only a "third world" phenomenon as those buying Apple iPhone 6s have relied on those offering...
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After Swiss Capitulation, Will Danes Keep Their Peg?

♠ Posted by Emmanuel in , at 1/21/2015 01:30:00 AM
Older bills feature a homburg wearer. Should we keep faith in homburg wearers? First off, you can discount the headline from the rather sensationalistic Daily Telegraph--bastion of economic illiteracy--that the removal of Denmark's krone (DKK) peg may cause similar effects to the disruption caused by the Swiss uncoupling the franc's value from that of the euro. From BIS figures, the Swiss franc (CHF) is the world's sixth most-traded currency in global markets--involved in 5.2% of all transactions--whereas the Danish krone's share of 0.8% is a rounding error in comparison. It's simply not one of the world's most widely...
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National Debt That's 245% of GDP? No Worries, Japan

♠ Posted by Emmanuel in at 1/19/2015 01:30:00 AM
Relaaaaax; it's not as bad as it looks for Japan? Economics Professor Masazumi Wakatabe at Waseda University was prompted to write commentary on Japan's fiscal situation by a recent FT article calculating Japan's national debt to be a world-leading 245% of GDP. In Greece, it's a puny 176% by comparison. 245%! Why haven't financial yellow journalists been proven right in predicting Japan will be crushed by hyperinflation and other laughable nonsense? As the good professor explains, the fiscal situation in Japan is not nearly as bad as it looks. First, consider the usual explanations concerning how the assets held by the...
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Bleeding Forex Reserves: Russia & the 'Fragile Five'

♠ Posted by Emmanuel in ,,,,, at 1/19/2015 01:30:00 AM
The 90s "connected" developing countries through contagion . How about now? Whether through coincidence or not, this article on developing countries quickly losing foreign exchange reserves from the Nikkei Asian Review--fast becoming my Asian periodical of choice after the demise of the late, lamented Far Eastern Economic Review--comes from an issue whose cover story is..."Living With Terror"[!] Having been a onetime foreign exchange trader during the height of the Asian financial crisis in a crisis-affected nation, I can sympathize with the feeling of being subject to fear-inspiring events I'd much rather avoid. But the...
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Counting Ways the Swiss Franc Shook the World

♠ Posted by Emmanuel in , at 1/18/2015 01:30:00 AM
Some folks didn't know when to fold 'em, hurting FXCM. Less than a month into 2015, we already have a candidate for its biggest economic story for the year. Catching nearly everyone off-guard, the Swiss National Bank (SNB) indicated on Thursday (15 January) that it would no longer push down the value of the Swiss franc against the euro. You see, since 6 September 2011, the SNB had kept the Swiss franc (CHF) at 1.20 to the common currency to maintain the competitiveness of Swiss exports--especially to the Eurozone where over half of them go. The trigger of this guarantee was the CHF brutally gaining against EUR [1, 2] as...
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Strongman's Strongman: 30 Years of Cambodia's Hun Sen

♠ Posted by Emmanuel in at 1/16/2015 01:30:00 AM
He traded a walk-on part in the war for a [30-year] lead role in a [Cambodian] cage. This year marks the thirtieth that Hun Sen has been the prime minister of Cambodia. He is the sixth-longest tenured world leader after, er, Robert Mugabe of Zimbabwe. There have been  (count 'em!) 33 that preceded him, but once he assumed office, he's held on no matter what. For what it's worth, he sought refuge in Vietnam at the height of the Khmer Rouge and subsequently returned to oust those murderous folks. The Khmer Rouge were undoubtedly brutal, killing at least 2 million of their own people in the four years they were in power....
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How Cheap Oil Saved the Arctic From Drilling

♠ Posted by Emmanuel in ,, at 1/15/2015 01:30:00 AM
Save us from those "saving" the Arctic from discontinued plans for oil and gas drilling there. There has been much hot air--gas, if you will--expended in the past few years over the potential dangers of drilling for oil and gas near the Arctic circle. I myself am not fully convinced about the climate justice in first having Arctic oil reserves made available to human exploration by burning fossil fuels that have played a part is causing polar ice to melt, then obtaining more fuel to shrink the aforementioned polar ice anew. There's even been a high-profile campaign aimed at Lego (of all companies) to get Shell to stop...
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Occupy Hong Kong Meets Occupy Taiwanese Parliament

♠ Posted by Emmanuel in at 1/14/2015 01:30:00 AM
Do we need another hero? Sticking it to the mainland sympathizers. There is a saying that "the market" takes the brunt of the blame in capitalist countries when economic times are sour, while "the state" does in communist countries. In East Asia, there is another, rather more sinister offshoot at work--blame the PRC. We received a taste of this with the backlash against Hong Kong-based tycoons being perceived as the key mediators in the relation between that special administrative region and the mainland some weeks back. Well, guess what: largely the same things are happening in Taiwan at the moment as President Ying-Jeou...
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Boom's End? Saudis Sock It to North Dakota

♠ Posted by Emmanuel in at 1/13/2015 01:30:00 AM
Not everywhere in North Dakota adjacent to the Bakken Formation can be a boomtown. Only a few weeks ago--it feels like eternities now--we talked about how the Saudi Arabian government convinced other OPEC nations not to lower their cartel's output in response to falling oil prices. Rather than take their collective foot off the pedal of production, it signaled that it would be steady going as far as output was concerned. The result has been a further fall in oil prices. In the space of less than half a year, they are down over 50%. Although it's still early going, some of Saudi Arabia's intended targets--US shale produeers--are...
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AirAsia & Dealing with Disaster's Aftermath

♠ Posted by Emmanuel in , at 1/12/2015 01:30:00 AM
Partly due to appropriate post-crisis response, AirAsia stock has retained much value post-December 28 (Sunday). It behooves me that attention is seldom paid to businesses operating in Southeast Asia unless extraordinary things happen. Such was the case with Malaysia Airlines prior to the two tragic incidents that occurred last year [1, 2], and so it is now with budget carrier AirAsia. In terms of profitability, both have had differing trajectories as Malaysia Airlines had to deal with significant "legacy" costs whereas AirAsia has been relatively free from those in running a young, dynamic operation. Prior to recent incidents,...
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Sands' Sheldon Anderson 1, Online Gambling Stateside 0

♠ Posted by Emmanuel in , at 1/09/2015 01:30:00 AM
The US nanny state and a casino mogul combine to frustrate online gambling Stateside. For a long time, I have covered attempts to regulate Internet gaming Stateside and its effects on offshore service providers like the microstate of Antigua & Barbuda. It's a long story, but ancient, pre-Internet laws prohibiting interstate gambling have been invoked by those concerned about "morals" to not only stop foreign gaming sites but also those operating across borders of US states. Perhaps unsurprisingly, operators of bricks-and-mortar casinos have also lobbied against further liberalization of gaming laws to allow interstate...
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