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29 Sep, 4 tweets, 1 min read
GPIF said it wont buy yuan denominated sovereign.
A big deal of course because people care about what the largest pension in the world buys. It has 1.75trn asset under management and gains in one quarter was USD45bn so what GPIF buys/don't buy matters.
Note that GPIF hasn't invested in China sovereigns but the fact that the largest sovereign fund (who invests in sovereigns) isn't including yuan denominated sovereign means fear that China'd hoover liquidity is less so, positive for emerging Asia excluding China sovereigns.
Key pts:

FTSE Russel included Chinese govies in WTSE World Government Bond Index (WGBI) & the move phased out over 3 yrs.

GPIF, largest pension fund, uses the index. GPIF decided to stop adding Chinese govies.

GPIF sets the tone for Japanese investors.

asia.nikkei.com/Business/Finan…

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More from @Trinhnomics

Trinh Profile picture
29 Sep
China isn't the only one in Asia that is heavily dependent on coal for electricity (about 70%), India is too.

And guess what? Prices have risen. And so India too will need to make difficult choices as reserves run low.
India coal stockpiles at power plants are the lowest in four years & so it has to choose whether to import expensive coal or have blackouts.

What is happening in China is not a China story but regional & global.

Winter is coming. 🥶🇮🇳🇨🇳
And as my Indian followers pointed out: India (and like much of Southeast Asia), winter is actually good for electricity demand, as in it would go down because cooler temperatures require less cooling & not much heating.

The same cannot be said for China.
Read 10 tweets
Trinh Profile picture
28 Sep
Got gas? Got coal? Got oil? Got renewables?

What do we learn from the energy supply shock? We learn that the world is still energized and driven by fossil fuel.

In emerging markets, coal is still the main source of electricity (not just China but also India).

And guess what?
Yes, and yes, and yes: THE WINNER IS INDONESIA.

It exports it to China & China is paying higher prices for energy (natural gas, coal, etc).

Best performing currency this month: Indonesian rupiah. Your loss, its gain!

It exports natural gas + palm oil too, both more expensive!
And of course you knew that because I wrote that ASEAN supply shock story a couple months back & that it said: Indonesia is the biggest commodity exporter in Asia, yes, absolute & relative share of exports.

So what? Manufacturers cry over higher costs but Indonesia gains. Right?
Read 9 tweets
Trinh Profile picture
21 Sep
Good morning. I know, I know, many of u have asked me to opine on Evergrande contagion etc. But let's first start with this: Happy Mid Autumn Festival! 🏮 Meaning, eating a lot of moon cakes. That means mainland China is off so if u're waiting for partial bailout, gotta wait🤗
Let's see what has happened & priced. This is month to date (September) that has plenty of news from crackdowns (education, entertainment, property, casinos, tech) to slowdown (retail sales on Delta) & of course the latest is how Evergrande is going down, orderly or disorderly.👈🏻
You can see that at first it was rather contained to just Evergranded and then to high yield and then spreading a bit. But what are markets saying:
* No contagion to systemic (meaning banking sector) as in no Lehman Brothers
* But uncertainty on bailout/scale of it + sector & eco
Read 8 tweets
Trinh Profile picture
13 Sep
Good morning! All about inflation again! Dejavu! Okay, why? Well, look at US PPI, off the chart in August at 8.3%YoY on supply-side issues, from raw materials, to intermediates (chips!!!), to logistics, to labor costs.

So what? Well, what's next for CPI & le Fed regarding QE??? Image
Eyes are on US CPI tomorrow - it is expected to rise on a month-on-month basis but decelerate on a YoY to 5.3%YoY.

While CPI may have peaked, don't expect it to fall down to le Fed 2% target anytime soon.

A lot of news about the Fed over the weekend. Mesters wants to taper! Image
If u think I'm being tough on the Fed & apparent disregard for its "data-dependency" and keep saying "temporary" and "transitory" while CPI heads north & GDP higher & asset inflation eroding average Americans' purchasing power, check this:

THEY PROFIT.

reuters.com/business/finan…
Read 4 tweets
Trinh Profile picture
9 Sep
Good morning: The Fed says US inequality costs the country nearly USD23trn since 1990.

But guess who is helping push that inequality higher??? Le Fed of course with its zero interest rate policy + quantitative easing (QE) to reduce the costs of risks for capitalists vs labor.👈🏻 Image
Who is fueling asset prices in the US? The Fed. How? By making the cost of taking risks LOW. When that happens, people who have access to cheap credit /capital GAIN at the expense of LABOR as the increase is less than asset price.

So relative wealth WORSENS or inequality rises. Image
Who is responsible for inequality in the US? Well, many many factors. But the one institution that is the ONLY ONE THAT CAN CREATE THE SUPPLY OF MONEY has got to be responsible.

Why? Because the Fed determines the PRICE OF MONEY or the COSTS OF RISKS.

kansascityfed.org/documents/8337… Image
Read 12 tweets
Trinh Profile picture
6 Sep
Interesting timing for the ECB as prices already rose rather high & now power prices rising further on higher costs! Rally for gas & coal.

Question: What is Germany #1 source of energy?
It is phasing out nuclear + coal.

Answer: Oil & natural gas. Image
Check this out: Energy consumption in Germany.

Look at solar and wind. Look at how much it increased by? And juxtapose that to the MASSIVE INCREASE OF NATURAL GAS.

It has consumed more natural gas from Russia. That smudge of solar + wind got a lot of press but man it's small. Image
Two things:

When people write about how "green" Germany is, they are not talking about German consumption of energy but SUPPLY. So look at below, that's Germany's production of "green" or <coal & >wind + >solar.

But its CONSUMPTION is more imported fossil fuel - Russian ones!👌🏻 Image
Read 7 tweets

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