There were two reports this week, plus the usual suspects:
- Retail Sales (RSAFS): +0.72% m/m; strong gains (+1.82% m/m) in “non-store” sales; a Bezos Win. Longer term edging higher.
- Industrial Production (INDPRO): +0.98% m/m, recovering after this year’s decline. Longer term edging lower.
- Fed Balance Sheet (WALCL): -62.5B (-0.77% w/w), a big weekly drop, deflationary.
- Total Bank Credit (TOTBKCR): +0.8B (unchanged); flat, bad.
The big news this week involved China, where up to 40% of China’s home sales companies have now defaulted on debt (Source guardian). Japan extended-and-pretended for 30 years. China is choosing the default route, after pretending for a few years. Evergrande declared bankruptcy on Thursday, while Country Garden stopped paying on overseas bonds last week, and has until September before they default. I suspect these events were planned for a while and Big Money already knew – in the chart below, see the RMB/USD break out to new one-year highs? I suspect some Big Money found out early this month, and others were read in back in May.
New home sales are down 33% in July vs 2022; Country Garden’s home sales were down 60%.
Again, rising RMB means you have to pay more (now 7.28) RMB for each dollar. Note that China does not have an open capital account (you can’t just transfer money “whenever”, to “wherever”), so these currency moves are understated. Even Big Money can’t get out of China very easily.
The buck rose 0.59 [+0.57%] to 103.28, breaking above the falling 200 MA for the first time in 9 months. The buck is now in an uptrend in all 3 timeframes. Isn’t it interesting how, leading up to that “gold-backed BRICS meeting” (next week!) the buck has recovered its recent losses, and it may be setting out to make new highs vs the RMB? We will have to see how that BRICS meeting plays out in the currency markets. On the chart, DX still needs a close above the previous high (around 104.50ish) to convincingly resume its uptrend.
This week, paper gold fell 30.10 (-1.55%) to 1916.50. The price dropped for 4 days out of 5. The banksters did not ring the cash register on the drop; open interest actually ticked higher – about 1% – so I’m guessing this move down was probably engineered by our friendly banksters.
by westcoastjan