Saturday, October 29, 2016

Yuan Hits All-Time Low

China’s currency is almost the lowest it has ever been in comparison to the U.S. dollar, and no one is quite sure why it has fallen so much. These are some of the theories that have been proposed:

  • The Chinese central government and central bank want to slow the decline but aren’t able to.
  • Some speculators thought a Trump victory in the U.S. presidential election could boost trade (though the proposed mechanism was not well explained), and a Trump win now seems highly unlikely.
  • With exports level or declining, there is less demand for Chinese currency.
  • Real estate investors are buying more foreign real estate.
  • The Chinese central government and central bank are allowing the currency to decline to support exports and the stock market bubble.

Friday, October 14, 2016

Which Matters More: Exports or Imports

China’s exports might be down more sharply, but imports are also down, and some analysts believe imports are a better indication of factory activity. Almost anything manufactured in China requires a range of imported inputs, so the decline in imports show that less manufacturing activity is taking place. You would expect a slight decline in inputs as manufacturing efficiency and yield increase over time, but imports into China are going down faster than that.

Thursday, October 13, 2016

China Data Drags Global Stocks

Economic data continues to paint a discouraging picture of manufacturing in China. A 10 percent decline in Chinese exports for September, a bigger decline than expected, is contributing to a decline in U.S. stocks today.

Wednesday, October 5, 2016

US Truck Orders Plummet

U.S. orders for heavy trucks were 30 percent lower in September than the year before. Trucks have been in a slump for most of the year. Partly this is because trucks are becoming more durable, but the low demand for trucks mainly reflects excess capacity in moving manufactured goods. While the dollar value and various unit counts of manufactured goods sold in the U.S. show an increase, the total weight, volume, and shipment count show a decline. Perhaps there are fewer returns, but it must also be that manufactured goods are smaller than they were last year with changes in designs and packaging.