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October 01, 2014

Today's Commentaries on Economic & Resource News by Ian R. Campbell FCPA FCA FCBV

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Important Highlights from Today's Commentaries

 

Commentaries

More on possible Catalonian separation referendum. Now Spain says it will block it. On Tuesday a Spanish Court suspended the planned November 9 Catalonia independence referendum. Catalonia's regional government has said it plans to hold a non-binding referendum if a binding referendum is blocked.

 

There almost certainly is much more to hear on this in coming days.

 

Spurred on by Scotland: Catalonian President signs decree for independence referendum (CityAM – reading time 1 minute). Spain to block referendum, after Catalonia signs decree (EU Observer – reading time 1 minute). Spanish court suspends Catalonia independence referendum (Deutsche Welle – reading time 1 minute).

China renminbi endorsement

Do you know that in past months the Chinese renminbi (yuan) has increasingly become directly tradable for a number of other currencies? From today that will be the case between the renminbi and the euro.

 

I see this as a "big deal" potential for "death by a thousand cuts" for the U.S.$ as the world's sole reserve currency at some future date.

 

Here is a further, and I think informative, article on the internationalization of the Chinese renminbi – see Direct trade with euro will help renminbi go international.

 

Britain gives Chinese renminbi a big endorsement (MarketWatch – reading time 1 minute). Direct renminbi-euro trade will start Tuesday: PBOC (WantChinaTimes – reading time 2 minutes, thinking time longer). Direct trade with euro will help renminbi go international (WantChinaTimes – reading time 2 minutes.

Derivatives risk (again)!

I suggest you focus on the derivatives numbers quoted in 5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives - and then think for yourself about the apparent quantum of outstanding derivatives contracts. Certainly some part, if not most, of this derivatives business is unregulated.

 

At the same time consider the total individual bank asset comparators the author quotes. Assuming he has the bank book asset values stated correctly I think a very good question is: In the face of abandonment of the "mark to market" accounting rules in 2008-2009, is it possible bank "book asset values" are in fact materially overstated?

 

I have little doubt that derivatives overhang the financial markets and both the world and country-specific economies like a very dark large cloud on a semi-sunny day. My question is when, if ever, will that dark cloud unleash what may be its pent-up thunder, lightening, hail, high velocity winds, and whatever else may be embedded in it?

 

5 U.S. Banks Each Have More Than 40 Trillion Dollars In Exposure To Derivatives (Economic Collapse Blog – reading time 3 minutes).

U.S. Dollar's recent strength

Clearly currency exchange rates at any given point in time are driven by perceived comparative sovereign economic strengths and weaknesses.

 

Strong US dollar reflects everyone else’s weakness discusses in an overview manner the recent U.S.$ strength. What it doesn't say is that the old saying is "a chain is only as strong as its weakest link". The old saying IS NOT "a chain is as strong as its strongest link".

 

It seems to me that is one thing to consider. At least one other thing to consider is the U.S. economy "isn't what it used to be", or so I think.

 

Strong US dollar reflects everyone else’s weakness (WantChinaTImes – reading time 2 minutes).

Eurozone inflation!

News both yesterday and this morning that eurozone inflation has been reported to have dropped to 0.3% again signals that we "live in interesting times" –see Eurozone inflation falls to 0.3 percent as euro hits two year low against the dollar.

 

As I am sure you know that the English adaption of the Chinese proverb "may you live in interesting times" is more a curse than it is a positive statement.

 

Eurozone inflation falls to 0.3 per cent as euro hits two year low against the dollar (City A.M. – reading time 1 minute).

Geneva report on world economy

If you have not read the comparatively short report Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy you might consider doing that - if for no reason other than it is a quick read that highlights and summarizes broad economic concerns in what I think to be an objective way.

 

Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy (Credit Writedowns – reading time 5 minutes).

Gold?

Interested in gold? If you follow the gold price you might want to read Gold Prices: The Only Buying Opportunity Left in This Market and End of ‘safe haven’ gold?

 

Gold Prices: The Only Buying Opportunity Left in This Market (Profit Confidential – reading time 3 minutes). End of ‘safe haven’gold? (Resource Investor – reading time 4 minutes).

Italy and the eurozone?

Do you think the eurozone's current economic issues are likely to prove to be a big deal? Either way, you should consider reading Miracle Not Enough to Save Italy; Disruptive Eurozone Breakup Awaits.

 

Italy is the eurozone's third largest economy measured by annual GDP.

 

Miracle Not Enough to Save Italy; Disruptive Eurozone Breakup Awaits (Mish’s Global Economic Trend Analysis – reading time 4 minutes, thinking time longer).

Too big to fail: ongoing!

If you pause to think about the "too big to fail" positions taken in the fall of 2008 and thereafter, you might want to read The rise of the commercial banking sector and household debt and "think some more" about what that might mean to us all.

 

The rise of the commercial banking sector and household debt (Washington Center for Equitable Growth – reading time 4 minutes).

Articles Posted Today to Stock Research Portal

Today, supplementary to the articles discussed in this newsletter, filtered articles were posted to the Home Page of Stock Research Portal in the following categories.

News Category No. of Articles
Posted Today
Economic News 183
Financial Market News 15
Precious Metals News 9
Base Metals News 1
Other Minerals News 5
Oil & Gas News 13


For a quick review of filtered world news by category visit www.stockresearchportal.com

Newsletter Methodology and Objective

Each morning we personally filter (on average) over 750 economic and resource articles published in the previous 24 hours. We select those we think to be particularly important, comment on their subject matter, and give you balanced views that save you time.

Our objective is to help you keep up to date, gain new ideas, better trade and invest, better communicate with your investment advisor if you have one, and importantly make your own ‘penny drop’.

About the Author

Ian R. Campbell

Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
* Canadian Institute of Chartered Business Valuators
** through The Ian R. Campbell Research Initiative

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