Trinh Profile picture
Aug 19, 2019 β€’ 7 tweets β€’ 3 min read β€’ Read on X
Morning!!! EUR moved downward on stimulus expectations! Dollar πŸ’΅ king 🀴! The APAC region is watching:

China stealth move to lower rates (people watching OMO too not just lending), Korea super data tom (1st 20-day trade) Fed, Indonesia monetary (fiscal budget was out last wk)
So today China CNY fix key but more key is LPR & also whether other rates will get pushed downward too. All have implications for China itself, the rest of the Asia region, & of course the world.

Q: What happens to FX when rates move lower? 🧐🧐🧐

Busy morning! RBA minutes at 930 after China data. AUD has been trending back to the level of the day where RBNZ slashed rates by 50bps. Not a coincidence. Taiwan export orders out today & expectations are WORSE of -5.9% for July. But we all know that Korea is really the key data
Let's look at foreign ownership of UST in June: it is totally up (+97.2bn). Note that some of this is due to valuation impact but still!

Japan πŸ‡―πŸ‡΅overtook China πŸ‡¨πŸ‡³ as the largest holder of UST! Everyone is buying thanks to NIRP. Btw, if u add it up, Europe 28 ownership BIGGEST!!
Repeat after me: NIRP loves PIRP! The US is totally PIRP (even if the Fed cuts rates by another 50bps by end 2019, still pretty PIRP compared to these NIRPers). Hence, King USD πŸ™‡πŸ»β€β™€οΈπŸ™‡πŸ»β€β™€οΈπŸ™‡πŸ»β€β™€οΈ.

As China reduces purchases, the EU is buying more! So is Japan! So is the rest of the world!
NIRP πŸ˜˜πŸ’œ PIRP . Yep, true story - the data shows!!! Opposites attract! Totally complementary. Totally natural & u know what that means?

The PIRPers of EM Asia should be doing okay. We're talking about current account deficit guys like India, Indonesia, the Philippines, etcπŸ‘πŸ»πŸ‘πŸ»
China 1yr LPR is 4.25%, which is 6bps lower πŸ“‰ (was 4.31% before) & so moving lower slowly here. Treading very gently here. Note that this is a rate set by 18banks w/ a spread over 3.3%1yr MLF.

RBA is saying that, "reasonable to expect extended period of low interest rates."

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More from @Trinhnomics

Sep 4
The best research on India is written by the @RBI and it's called the RBI Bulletin (very similar to BOE bulletin) & it's amazing. Go to the state of the economy for charts/details on what's going on in India & then they always have essays on specific issues.

Central banks are consistently the best place to get information on a particular country. I also like the RBA website as well. Enjoy!

We can read some of these together in case you find it intimidating reading central bank language.

rbidocs.rbi.org.in/rdocs/Bulletin…
Some charts of interest from my reading.

India annual installed capacity of solar + wind + other renewables > coal, oil and gas since 2017. Image
India merchandise export contribution:

Positives = Electronic goods + engineering goods + pharma

Bad = petroleum, jewels/gems, rice & ceramics Image
Read 7 tweets
Sep 3
Germany is in structural decline & the path for that was waved by Angela Merkel who:
a) Allowed for mass irregular migration since 2015 that paved ways for Brexit, the far right rise in Germany and Europe
b) Appeasing Russia after its annexation of Crimea and expansion dependency on Russian gas
c) Phasing out nuclear energy.

As a result, Germany today deals with HIGHER input costs (energy is obvs) & also the political fallout of irregular migration.

Sholz of course is a worse politician than Angela Merkel but the path of its demise is paved by her.
The fact that China has pursued:
a) Expansion of coal, solar, wind, and nuclear to REDUCE INPUT COSTS
b) Subsidies in high-tech
c) Allowed for it to be competitive despite higher tariffs in Europe.

Meanwhile, Sholz asleep at the wheels. This is his reaciton: β€œOur country cannot and must not get used to this,” he went on. β€œThe AfD is damaging Germany. It is weakening the economy, dividing society and ruining the country’s reputation.”
Germany doesn't understand that it cannot pursue its current path of extreme liberalism that worsens its competitiveness and destabilize its own society & expect to do well to lead Europe out of this mess.

Extreme liberalism can only exist in a vacuum or hypothesized world.

We exist in a world of limited resources. Countries like China are just better organized. Believe it or not. Sholz has no clue & will lose in 2025 but before he is gone he is still around to make a big mess.

Continuing to close the last 3 nuclear plants was a disaster.
Read 8 tweets
Aug 22
Statistics versus anecdotes. What do you believe? Well, if you study a Stat 101, the first thing they teach you is HOW the data is compiled & then you learn HOW to read it.

Fact: People feel that crimes are up because they know someone who is personally attacked or themselves;

Also fact: Crime stats show that crimes are down.

Can both be true? Yes, because crime stats can be manipulated by the source of crime but not including crime.

sfchronicle.com/crime/article/…
Are the Democrats the party of crime and punishment? Or are they the party of having low crime by REDEFINING what a crime is? Or even counting and prosecuting it?

The reality is that it is hard to know if the statistics are misleading because the beauty of statistics is to be impartial & to be able to aggregate and quantify your perceived reality, which is MICRO, and stats are supposed to help with MACRO & relative past/present/future.
Another example is of course the employment data that is just released by the BLS that revised downward jobs addition by almost a million jobs.

That's a lot. So you were right to think things were weaker than you thought. But you were also right to say that the labor market was strong, until they revise it downward for jobs that are interest rate sensitive.

Meaning, high real rates do impact the US.
Read 9 tweets
Aug 20
Pig Butchering Scam. Do you know what it is? I didn't until this Bloomberg Feature Story. USD75bn has been stolen from victims around the world & routed through crypto exchanges.

Before I go on about the story, I want to talk about this idea of Pig Butchering Scam. Basically, it works like this, usually via crypto.

You befriend a victim via social media & gain their trust & get them to invest in crypto & allow them to get "fat" or gain & finally "butcher" them by taking a larger sum and disappear.

bloomberg.com/features/2024-…
Scams are an industry. According to this Bloomberg story, there's an entire economic zone dedicated to it with an airport, casinos, resorts, basically soft & hard infrastructure.

A man called Zhao built it & gives the Laos government a 20% cut for a 99-year lease. He then leases out the infra to criminals that run online scams & also drug trafficking.

There's an entire supply chain w/ incentives, including the perpetrators, who are also victims of human trafficking.

bloomberg.com/features/2024-…
Criminals traffic scammers by offering them lucrative jobs but ended up having them being forced to work as scammers.

If they don't succeed in their targets, they get punished so high incentive to scam victims, who are usually in the US, China, etc.

There are an estimate 200,000 scammers in areas such as this who are themselves victims of human trafficking.
Read 8 tweets
Jul 24
India unveiled its FY25 budget yesterday (btw, they have another one in 6 months) & it was very much a fiscal consolidation, jobs, and responding to people's beef about the woeful labor market (Modi lost seats in Uttar Pradesh).

Before I talk about the Budget, let's talk about India labor supply & demand. Ready?Image
As you know, India is the most populous country in the world today & will be even more so in the future.

Let me put it a different way, by 2040, one out of 5 people will be Indian.

So what happens to India matters because it's a fifth of the world population by 2040. Image
India will have more people than China or the same as China and the US combined.

Yes, a lot of people. That's beautiful (generally referred as demographic dividend assuming that we have jobs for them) and highly problematic for India (high joblessness and civil unrest), Indian politics and also how to manage this massive supply of people (skilling them, finding jobs for them etc).Image
Read 31 tweets
Jun 18
As a follow up to that podcast, Bloomberg had a story that just came out that blew my mind. I knew it but they really dug deep.

This is a story about economics, resources, comparative advantage & the choices we make.

Nickel. What do you know about it?

bloomberg.com/features/2024-…Image
First, nickel is a material that has to be DUG out of the earth & process. Some easier (colder nickel in Russia) & some harder like wet & warm places like Indonesia where you have plenty of it but it's the processing that's difficult.

Here comes China.
The mining & processing of nickel are energy intensive. And more importantly, for Indonesian nickel, it was considered too low grade to do & China had breakthroughs in a technology called high-pressure acid leaching (HPAL). "Low-grade nickel ore is placed into pressure vessels, where it’s treated with sulfuric acid and heated. After that, the nickel that separates out will be suitable for batteries, once it’s refined"Image
Read 12 tweets

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