The US has decided not to declare China as having manipulated its currency to gain an unfair trade advantage.
But the Treasury did say that China’s currency, the yuan, remains “significantly undervalued” and urged China to make further progress.
In its semi-annual report, it said Beijing did not meet the criteria to be called a currency manipulator, which could have sparked US trade sanctions.
Critics of China say it keeps the yuan low to keep its exports cheap.
There’s a point that no-one in the establishment will admit.
Guest post by Lance Roberts of Streettalklive.
The recent market selloff has not been about the re-election of President Obama but rather the repositioning of assets by professional investors in anticipation of three key events coming between now and the end of this year – the “fiscal cliff”, the debt ceiling and the expiration of the Transaction Account Guarantee (TAG). Each of these events have different impacts on the economy and the financial markets – but the one thing that they have in common is that they will all be battle grounds between a dividend House and Senate.
While there has been a plethora of articles and media coverage about the upcoming standoff between the two parties, little has been written to cover the details of exactly what will be impacted and why it is so important to the financial markets and economy.
One of the primary reasons for the market selloff since the announcement of QE3 has been in anticipation of the some of the largest tax hikes in the history of America, which will take place at the end of the year. These tax hikes will impact families and businesses, the middle class and the rich, the economy and the markets.
In 2001, and then again in 2003, President Bush and Congress enacted tax cuts to help restart the economy post the tech bubble, 9/11 terror attack and recession. Primarily these tax cuts were focused on small business owners, families, and investors and, while dubbed the “Bush Tax Cuts”, they became the “Obama Tax Cuts” when they were extended in 2010.
Guest post by Azizonomics.
There’s no country on earth that would tolerate missiles raining down on its citizens from outside its borders. So we are fully supportive of Israel’s right to defend itself.
Barack H. Obama
Well, he’s got one thing right. No country would tolerate missiles raining down on its citizens from outside its borders. And that goes for Gaza just as much as it does for Israel. Having lived in what David Cameron referred to as a “prison camp” for all their lives — Israel controls Gaza’s airspace, territorial waters and border crossings — and living under constant threat of Israeli F16 and drone raids, should Israel really find it surprising that young Gazans are fighting back? Hamas may have a counterproductive and dangerous strategy driven by a violent religious ideology that ends up hurting the Palestinians more than anyone else, but that’s not the point. The point is that nations don’t tolerate missiles raining down on citizens. That’s just as true for Palestine as it is Israel.
Via Michael Hudson.
The Democrats could not have won so handily without the Citizens United ruling. That is what enabled the Koch Brothers to spend their billions to support right-wing candidates that barked and growled like sheep dogs to give voters little civilized option but to vote for “the lesser evil.” This will be President Obama’s epitaph for future historians. Orchestrating the election like a World Wrestling Federation melodrama, the Tea Party’s sponsors threw billions of dollars into the campaign to cast the President’s party in the role of “good cop” against stereotyped opponents attacking women’s rights, Hispanics and nearly every other hyphenated-American interest group.
In Connecticut, Senate candidate Linda McMahon spent a reported $97 million (including her earlier ego trip) to make her Democratic challenger look good. It was that way throughout the country. Republicans are pretending to wring their hands at their defeat, leaving the Democrats to beat up their constituency and take the blame four years from now.
Jim Bianco of Bianco Research LLC chats with TrimTabs’ Charles Biderman about the financial impact of the Presidential Election and our economic future.
Biderman on Obama.
Unless Barack Obama dramatically changes, I predict by the end of his second four year term he will have earned the legacy of being the worst fiscal president ever. Why? The US will be bankrupt after another four years of the same Obama we had for the past four.
Here’s my evidence, before Obama was elected in 2008 after tax take home for everyone who pays taxes was just under $7 trillion annualized. That $7 trillion number included capital gains, an income source the US Bureau of Economic Analysis does not include in national income. Why is capital gains not included? Is there a prejudice against income on capital? Who knows. It’s the government.
Some statistics on the before/after elections performance of markets. Via Doug Short.
Today the S&P followed the time-honored pattern of post-election selloff. Of the 16 presidential elections since the middle of the last century, the close before the election has been a gain 13 times. The day after the election has posted a gain only six times. Today’s 2.37% post-election selloff was the second worst in 60 years, the worst being the -5.27% gut-wrencher the day after Obama’s first victory.
Earlier today: As I type this, about 90 minutes after the US equity markets opened, the major indexes are selling off. The S&P 500 is down over two percent. In my S&P 500 daily update for yesterday, I pointed out that Election Day or the day before prior to 1984 (when it was a market holiday) have usually recorded gains, at least as far back as the middle of the last century.
But what about the day after elections? The pattern of “second thoughts” appears to be the norm. Here is a table showing the 16 Election days starting with Dwight Eisenhower’s 1952 win over Adlai Stevenson. It’s the same table I posted yesterday, but this version adds the S&P performance for the day following the election.
Guest post by Peter Tchir.
Is Europe really going to let Greece go and risk a series of exits? That was my concern last week when I invoked quotes from Planet of the Apes. Nothing much has happened since then to change that view.
Greece has a vote that may or may not pass. If it doesn’t pass, the process of a nasty Greek exit and full default is likely accelerated. If they pass it, which I expect they will, then that process is likely just delayed. Until the “official sector” takes losses on all of its dumb purchases of Greek bonds and restructures the loans that were made that never had a chance of getting paid back, there will be no other course for Greece. The fact the European officials either don’t see it, or are just ignoring it is a major concern. Greece and the risk of a painful and chaotic exit for Greece that affects the other weak countries is a real risk. I expect a small pop when the vote is done and it “passes”. If it doesn’t pass I will quickly get very nervous about the markets, but history tells us it will pass and everyone will pretend this time it will work. At least for a couple of days we can live that fairytale.
Then there is Germany. The comments coming out of Germany are growing more hostile. Germany today mentioned direct influence on other country’s budgets. Draghi specifically tried to point out to Germany that the European debt crisis is hurting Germany already and will hurt it more. He is clearly trying to make it easier for Germans to get on board with some aggressive ECB action. If you are truly an optimistic, you can think Draghi said this as a warning shot before he acts “independently”. While not completely at the beck and call of Germany, the ECB is far less independent than our Fed. Draghi has already made it clear that the IMF would be a model for any new programs, so he has given away some independence. He won’t just act unilaterally and aggressively. That leaves us with the conclusion that he is pushing Germany, and that Germany needs to be pushed. Back in September, Merkel sounded downright dovish. She pointed out even to her own finance people that the ECB had to remain independent. That is not the message that came out last week when she appeared to backtrack on letting banks get direct bailout money, and that message was further diminished by today’s comments. Germany will be hurt by not supporting more aggressive action, but people know smoking is bad, and yet many still do.
Picture of the day, courtesy Bloomberg Business Week.
And a few thoughts via The Economist.
Barack Obama has just won re-election, but America remains a country bitterly divided, as it has been for well over a decade. The divide is simultaneously very narrow in numerical terms, and gaping in ideological or partisan terms. This is what strikes one most strongly looking back at America from across an ocean: the country seems repeatedly embroiled in savage 51-49 electoral campaigns, and it seems to be increasingly paralysed by irresolvable rancour between right and left.
And think about it for a second: this is bizarre. If Americans are in fact divided between two extremely different political ideologies, it would be an extraordinary coincidence if each of those philosophies were to hold the allegiance of nearly equal blocs of support. That situation ought not to be stable. Adherence to these two ideologies ought to shift enough just due to demographics that the 50-50 split should deteriorate. And yet the even split seems to be stable. What’s going on?
Full article here.