David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Shadow Lending Slump Shows Deleveraging Picking Up

    This note from Fielding Chen at Bloomberg may be of interest to subscribers. Here is a section:

    Looking at the details, the composition of lending continued to shift toward on-balance-sheet lending from off-balance sheet:

    New bank loans denominated in yuan totaled 1.14 trillion, up slightly from 1.1 trillion in April. The 41.3 billion yuan rise was slightly below the average increase of 98.1 billion yuan recorded in the same month over the past five years.

    The stock of shadow bank lending -- entrusted loans, trust loans, and back acceptances -- dropped across the board. The total fell 421.5 billion yuan, the steepest monthly drop in data available back to 2016.

    Net financing of corporate bonds contracted by 43.4 billion yuan, after an increase of 377.6 billion yuan in April. Rising defaults have hit sentiment in the bond market. Equity financing was more stable, falling moderately to 43.8 billion yuan from 53.3 billion yuan.

    Recent policy moves have been tilted toward support for bank lending. In April, the PBOC cut the reserve requirement ratio for banks. In June, it broadened the types of collateral that could be used against central bank loans.

    This section continues in the Subscriber's Area.

    Truckers Protest High Gas Prices in Spotty Strikes Across China

    This article by Te-Ping Chen for the Wall Street Journal may be of interest to subscribers. Here is a section:

    While trucker protests in China have occurred in the past amid complaints of road tolls, fuel prices and excessive fees, Geoff Crothall, spokesman for the labor monitoring group, said he couldn’t recall trucker protests of a similar scale. He estimated thousands of truckers participated.

    As they have the world over, gas prices have risen in China this year, by 8.6%, according to data from the Ministry of Commerce. Taxes and other fees generally make gas more expensive in China than the U.S., and on top of that the government sets the prices, lagging changes in international oil markets by 10 days or more.

    China’s National Development and Reform Commission, which sets those prices, announced Friday that it would cut the retail price of gasoline and diesel by 130 yuan ($20.29) per ton for gasoline and 125 yuan per ton for diesel. The new prices, effective this past Saturday, reflect a recent retreat in global oil prices. In the central province of Anhui, a transportation hub where protests occurred, gasoline now costs $3.99 a gallon, and diesel $4.04 a gallon.

    Rising fuel costs have elsewhere prompted worker frustrations to spill over, most notably in Brazil, where protesters blocked highways and halted shipments of food, fuel and medicine before the government called in the military to help end the strike. Other trucker protests have also recently broken out in Iran.

    This section continues in the Subscriber's Area.

    Brace for the World Economy's Most Important Week of the Year

    This article by Simon Kennedy for Bloomberg may be of interest to subscribers. Here is a section:

    Trump and North Korea leader Kim Jong Un convene in Singapore for their on-off summit, the first such meeting ever.

    Trump last week predicted “great success” and said it’s possible he could sign an agreement with Kim to formally end the Korean War. Back in Washington, the government releases a monthly report on inflation that will be a key gauge of how hot -- or not -- the U.S. economy is getting.

    Trump, Kim Said to Be Planning One-on-One Talk at Summit Start

    These Are the Dealmakers Behind Trump and Kim

    What a Trump-Kim Deal May Look Like

    This section continues in the Subscriber's Area.

    How Fitbit is trying to transform healthcare, and itself

    This article by Mark Sullivan for Fastcompany.com may be of interest to subscribers. Here is a section:

    In the future, Fitbit hopes to leverage Google’s machine learning capabilities to draw even deeper insights from the combined data sets. For instance, machine learning algorithms might be able to see indications in the data that a user is at high risk for a certain disease, then proactively treat them for it.

    The Google machine learning is just one of the deliverables in Fitbit’s recently-announced partnership with Google Cloud. The combined Fitbit and Twine Health services and data will be served up to healthcare providers via Google’s cloud and healthcare API. Google could also give Fitbit the scale it needs to integrate with large hospitals and insurers. It’ll also give Fitbit a HIPAA-compliant data repository that can connect with the electronic medical records (EMR) systems used by health providers.

    This section continues in the Subscriber's Area.

    Bitcoin Tumbles Most in Three Months Amid South Korea

    This article by Eric Lam and Jiyeun Lee for Bloomberg may be of interest to subscribers. Here it is in full:

    Bitcoin extended losses for a third day, tumbling 12 percent Sunday as South Korean cryptocurrency exchange Coinrail said there was a "cyber intrusion" in its system.

    The largest cryptocurrency declined to $6,749 as of 2 p.m. in New York, the biggest drop since March 14, according to data compiled by Bloomberg from Bitstamp pricing. That widens Bitcoin’s losses for the year to 53 percent. Peer cryptocurrencies Ethereum and Ripple fell 11 percent and 12 percent, respectively.

    Coinrail said in a statement on its website that it’s reviewing its system due to hacking attempts. The exchange says it has managed to freeze all exposed NPXS, NPER and ATX coins, and that other cryptocurrencies are now being kept in a cold wallet. The statement is the only content available on the exchange’s homepage, and contact information could not immediately be located.

    The exchange trades more than 50 different cryptocurrencies and was the 98th largest, with a 24-hour volume of about $2.65 million, according to data from Coinmarketcap.com.

    This section continues in the Subscriber's Area.

    Biggest Electric-Vehicle Battery Maker Soars 44% on Debut

    This article by Ma Jie for Bloomberg may be of interest to subscribers. Here is a section:

    Shares of the world’s biggest maker of electric-vehicle batteries jumped on their trading debut as investors bet on rising demand for new-energy cars worldwide.

    Contemporary Amperex Technology Ltd. rose by the maximum 44 percent to 36.20 yuan at 10:17 a.m. in Shenzhen, China, valuing the company at about $12.3 billion. The manufacturer sold a 10 percent stake at 25.14 yuan a share in its initial public offering on May 30.

    Investors are confident that CATL, as the company is known, can fend off rivals including Panasonic Corp. and continue to win orders as automakers move toward electric vehicles. CATL, whose customers include Volkswagen AG, had reduced the size of its IPO by more than half compared with its original ambitions because of declining margins and a cap imposed by Chinese authorities on price-earnings ratios in IPOs.


    This section continues in the Subscriber's Area.

    The most expensive currencies in the world right now, in one chart

    This article by David Scutt for business Insider may be of interest to subscribers. Here is a section:

    It’s Deutsche Bank’s Cap-PPP currency valuation model, a visual indicator on what currencies it deems to be cheap or expensive right now based on capital and trade flows.

    By combining its capital-based valuation and trade-based PPP (purchasing power parity) models together, Deutsche says it provides a more complete picture of valuations, using weights that reflect the relative importance of capital and trade flows for each currency.

    It believes the model has “significant predictive power for FX, both in terms of directional accuracy and the magnitude of moves, especially over longer-term horizons”.

    This section continues in the Subscriber's Area.

    Regulatory Concerns Dampen Bitcoin Volatility

    This article by Charles Bovaird for Forbes.com may be of interest to subscribers. Here is a section:

     "It seems that a lot of activity has been suppressed," said Marshall Swatt, founder & president of Swatt Exchange, emphasizing that digital token sales are having the same experience. 

    Leveraged trading appears to have declined lately, emphasized Mati Greenspan, senior market analyst for social trading platform eToro.

    Marius Rupsys, a digital currency trader and investor, offered a slightly different take on the situation.

    "Some traders and investors are waiting for clarity from regulators," he asserted.

    However, Rupsys described both the statement made by U.S. Securities Exchange Commission (SEC) Chairman Jay Clayton that bitcoin is not a security and the government agency's decision to appoint a crypto czar as "very positive" developments.

    This section continues in the Subscriber's Area.