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China offers cryptic response on military drills around Taiwan

  
  Analysis

Well, they definitely are – at least from what can be observed in the region. The situation on the ground hasn’t changed all too much since last week. China were supposed to conduct military drills around Taiwan for four days (4 to 7 August) but they have continued operations until today. It was reported earlier that Chinese navy ships remained active off both Taiwan’s east and west coasts on Wednesday morning.

As mentioned yesterday, don’t expect China to relent on the pressure and they are likely to keep up military presence surrounding the Taiwan island for the foreseeable future.

Citi indicator at levels last reached in 2000, 2007: “after which global equities halved”

  
  Analysis

Posting this as an ICYMI. Dow Jones news/Market Watch have the piece, highlighting

a fat red flag investors may want to heed

It’s an index calculated by Citigroup equity stategists of global sell-side recommendations:

Our index of global sell-side recommendations is back to peak bullishness levels reached in 2000 and 2007, after which global equities halved”
“Analysts are net buyers of every sector in every region, but then they usually are,”

“They are still bullish on cyclical sectors suggesting few fears of oncoming global recession.”

Here is the link to the Market Watch article, which does caveat with:

Citi’s bear market checklist, which has eased to 6 from a potential 18 flags. Note, this particular flag gave a false sell signal in 2012, when global stocks were flat for the following 12 months.

spx month 10 August 2022

Global economy headed into a stagflation era, central bankers may be trapping themselves

  
  Analysis

Nouriel Roubini in an op-ed.

Roubini teaches at New York University’s Stern School of Business and has earned the moniker ‘Dr. Doom’. It may well be his time.

Main points:

  • “During the Great Stagflation, both components of any traditional asset portfolio — long-term bonds and US and global equities — will suffer, potentially incurring massive losses,”
  • Global economies carry larger debt ratios than before, setting up central banks for potential failure, Roubini said. “Central banks are thus locked in a ‘debt trap’: any attempt to normalize monetary policy will cause debt-servicing burdens to spike, leading to massive insolvencies, cascading financial crises, and fallout in the real economy,”

Full piece is here

Ongoing criminal investigations, including the FBI’s search for Trump.

  
Analysis, Politics

While not directly applicable to forex, the news of a judge granting a search warrant to the FBI given probably cause of criminal behaviour is attracting a lot of interest. Given Trump’s close links to Putin and other nefarious actors, his attempts at a coup, his leading of a violent cop-killing insurrection, and other activites, there could be more to this than meets the eye. I guess we’ll find out in time.

Reuters have a recap up of all the legal investigations into former President Trump. Allegations include:

  • boxes of White House documents from Trump’s Florida home, some of which contained classified materials
  • trying to overturn his 2020 election defeat
  • obstruct any official proceeding
  • raised some $250 million from supporters to advance fraudulent claims in court that he won the election, but steered much of the money elsewhere
  • efforts to influence the Georgia’s 2020 election results

The list goes on, Reuters link is here for more.

The ex-Prez playing golf a few weeks ago.

trump 29 July 2022
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