Spamdex - Spam Archive

Report spam

Send in your spam and get the offenders listed

Create a rule in outlook or simply forward the spam you receive to

Also in

Yuan Yawn

Having trouble viewing this email? View it online.
Tuesday, August 18, 2015
Money and Markets
Yuan Yawn
by Jon Markman

Dear ,

Jon Markman

The Chinese yuan dropped in value three straight days until Friday, finishing the week with a 3% loss. Beijing authorities tried to stabilize the situation by saying the currency didn't have much reason to fall further. They also dismissed talk that Beijing was targeting a 10% devaluation, a figure that many Western economists argued is in store.

Are they right? Yeah, actually, you know, they might be. This time. For once.

U.S. and eurozone analysts are trying to figure out who will be worst hurt by the currency's trip-and-fall, which looked originally like an opening salvo in a mercantilist-style currency war, a last ditch effort to reinvigorate China's sputtering economy by spurring exports. But upon further review, a 3% to 5% deval is not going to help matters all that much. There might be something else going on.

David Rosenberg at Gluskin Sheff looked at China's main exports and compared them to other countries focusing on the same things. He found China's main exports are electric equipment, machinery, furniture, vehicles, clothing, medical/technical goods, plastics, and iron/steel products.

Germany had "the most vulnerability by far in this sense" according to Rosenberg, with the two countries competing in practically every export category. This was followed by Italy, France, and the Netherlands. India was vulnerable in clothing, as was Turkey. Mexico had exposure in furniture, machinery, cars, and electronic products. And Japan was vulnerable in cars, machines, and technical equipment. The United States — not so much.

To be sure, there are risks to the health of the global economy and markets if one considers the currency devaluation as a desperation play — a financial Hail Mary. Sarah Boumphrey at Euromonitor International finds that Asian economies near China are most at risk of economic weakness should a "hard landing" scenario play out in Hong Kong, Taiwan, and Vietnam.

Oxford Economics estimates that a 10% devaluation would have a "small positive effect on Chinese GDP, but is deflationary for other countries." Long-term implications revolve mainly around the accumulation of dollar-denominated debts. These become more expensive, which is a drag.

According to Hans Redeker from Morgan Stanley, short-term dollar liabilities in China reached $1.3 trillion earlier this year — equal to nearly 10% of Chinese GDP. Historically, in his words, this level of foreign indebtedness in emerging markets has been a "perfect indicator of coming stress." A repeat of the Asian financial crisis of the 1990s, if that's where we're headed, would hurt pretty much everyone. Duh, right?

Multiply Your Money!

I'm so confident that simply by taking the right steps now, you can USE these fast-breaking events to multiply your money ... I am ready, willing and able to give you everything you need to help protect and multiply your wealth in 2015 — absolutely FREE! Click here to view now! –Larry

Internal Sponsorship

But hold on. Not so fast. Rosenberg dismisses the comparison. He notes China's currency was devalued a whopping 33% in 1994 — more than 10x what we've seen so far. And he doesn't believe China has launched a currency war either.

Rosenberg buys the idea that the devaluation was merely a market reform effort, that the Chinese government is mindful of their dollar-denominated debts and realizes a deeper devaluation would trigger capital outflows and destabilize sensitive Chinese markets. The IMF and the United States have both ganged up on China in recent years and begged it to let the yuan float. This week's activity could very well be a step in that direction. Like the old saw says, be careful what you wish for.

For now, I am taking the yuan out of my list of things to worry about.

Bottom line: For now it looks like fears over what China has done are overblown. And that's probably at least one reason that stocks rallied back on Friday and could very well firm up this week.

Indeed, analysts at Capital Economics believe all of this is part of an effort to get the International Monetary Fund to include the yuan in the Special Drawing Rights currency basket. They note that while the yuan "may fall further in coming days" the "bulk of the depreciation has already taken place."

I guess we'll see, but for now I am taking the yuan out of my list of things to worry about.

* * *


What a session on Wednesday last week! The S&P 500 sank a whopping 1.54% to lows at 10:30 a.m., then stabilized and slowly climbed higher and into the green by the closing bell. The rally from low to close was 1.65%. You'd have to assume that's a good sign, and perhaps a sign that the bottom for the recent excursion lower might be over. Yet history does not let us make that snap decision.

To answer the question, we turn to the data hounds at Bespoke Investment Group for their expertise and insights. They have an intraday S&P 500 price database that lists minute-by-minute price data for the index going back to 1983.

Bespoke analysts say it has been nearly four years since the S&P 500 had a day where it was down more than 1.5% in morning trading, only to finish higher on the day. The last time this happened was on October 4, 2011. That day was actually the bottom of the 2011 correction, and the index went on to gain 11.5% over the next month. But trading that day was much more extreme than it was on Wednesday, so don't draw a hasty comparison.

Bespoke says there have only been 42 days since 1983 in which the index fell 1.5%+ in morning trading only to finish higher on the day. These days are shown in the table above. Dates highlighted in green occurred during bull markets, while dates highlighted in red occurred during bear markets.

As you can see, there were a huge number of occurrences during the financial crisis of 2007-2009, with the first one coming about four months after that bear market started. Overall, the S&P 500 has averaged a slight decline on the day after these positive turnarounds, but the index has been higher only half the time.

Over the next week, the index has averaged a decline of 0.2% with positive returns 47.6% of the time. And over the next month, the index has averaged a loss of 1.31% with positive returns 54.8% of the time.

If you just look at the past few instances, or only instances in bull markets, this kind of action has certainly been a positive. But taking the longer perspective, the next move after a day like this is modestly positive, although the confidence level is not much more than a coin flip. So much for the conventional wisdom.

Best wishes,

Jon Markman

The investment strategy and opinions expressed in this article are those of the author's and do not necessarily reflect those of any other editor at Weiss Research or the company as a whole.

Have comments? Tell Us!

Facebook Twitter Linkedin YouTube Pinterest

About Money and Markets
For more information and archived issues, visit
Money and Markets is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our Terms and Conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, just follow these simple steps to add Weiss Research to your address book.

Attention editors and publishers! Money and Markets teaser content may be republished with a link to the full story on Such republication must include attribution with a link to the MoneyandMarkets home page as follows: "Source:"

Money and Markets: A Division of Weiss Research, Inc.
4400 Northcorp Parkway | Palm Beach Gardens, FL 33410 | 1-800-291-8545


All titles, content, publisher names, trademarks, artwork, and associated imagery are trademarks and/or copyright material of their respective owners. All rights reserved. The Spam Archive website contains material for general information purposes only. It has been written for the purpose of providing information and historical reference containing in the main instances of business or commercial spam.

Many of the messages in Spamdex's archive contain forged headers in one form or another. The fact that an email claims to have come from one email address or another does not mean it actually originated at that address! Please use spamdex responsibly.

Yes YOU! Get INVOLVED - Send in your spam and report offenders

Create a rule in outlook or simply forward the junk email you receive to | See contributors

Google + Spam 2010- 2017 Spamdex - The Spam Archive for the internet. unsolicited electric messages (spam) archived for posterity. Link to us and help promote Spamdex as a means of forcing Spammers to re-think the amount of spam they send us.

The Spam Archive - Chronicling spam emails into readable web records index for all time

Please contact us with any comments or questions at Spam Archive is a non-profit library of thousands of spam email messages sent to a single email address. A number of far-sighted people have been saving all their spam and have put it online. This is a valuable resource for anyone writing Bayesian filters. The Spam Archive is building a digital library of Internet spam. Your use of the Archive is subject to the Archive's Terms of Use. All emails viewed are copyright of the respected companies or corporations. Thanks to Benedict Sykes for assisting with tech problems and Google Indexing, ta Ben.

Our inspiration is the "Internet Archive" USA. "Libraries exist to preserve society's cultural artefacts and to provide access to them. If libraries are to continue to foster education and scholarship in this era of digital technology, it's essential for them to extend those functions into the digital world." This is our library of unsolicited emails from around the world. See Spamdex is in no way associated though. Supporters and members of Helping rid the internet of spam, one email at a time. Working with Inernet Aware to improve user knowlegde on keeping safe online. Many thanks to all our supporters including Vanilla Circus for providing SEO advice and other content syndication help | Link to us | Terms | Privacy | Cookies | Complaints | Copyright | Spam emails / ICO | Spam images | Sitemap | All hosting and cloud migration by Cloudworks.

Important: Users take note, this is Spamdex - The Spam Archive for the internet. Some of the pages indexed could contain offensive language or contain fraudulent offers. If an offer looks too good to be true it probably is! Please tread, carefully, all of the links should be fine. Clicking I agree means you agree to our terms and conditions. We cannot be held responsible etc etc.

The Spam Archive - Chronicling spam emails into readable web records

The Glass House | London | SW19 8AE |
Spamdex is a digital archive of unsolicited electronic mail 4.9 out of 5 based on reviews
Spamdex - The Spam Archive Located in London, SW19 8AE. Phone: 08000 0514541.