Richard Casey
12.5K posts
@Richard_Casey
Macro/EM Strategist/Economist/PM. Ex a lot of places but not Bridgewater 🇺🇸🇪🇸🇬🇧
Good morning my loves, happy Saturday. Sorry I've been quiet, obviously been busy, but thought it'd be nice to give you all the details on the multi-strategy absolute return program that experienced the 28% drawdown this year. (1/n)
While most global bond markets are under pressure, Chinese bond yields are still sitting at multi-decade *lows*. While the government can make the stats look better than reality (like the 5% growth nonsense), the market pricing suggests the economy is very weak.
China doesn't negotiate with anyone about dividing up global power and especially not with the US. As we told the world over a decade ago China is rolling out a multipolar world via mutual respect and coordination and global win-win cooperation. Since then we have discussed hundreds of Chinese developments related to this. As ever never look at China through the eyes of the West and especially not via a US hegemonic world. We explained in our recent YT clip why Xi summoned Trump to Beijing. The entourage with Trump is there with a begging bowl. youtu.be/un7yUqSovwo
So funny that for California governor, the Democratic Socialists of America endorsed billionaire Tom Steyer, whose resume includes Stanford MBA, Morgan Stanley, Goldman, private-equity, and hedge-fund founder whose firm invested in private prisons and coal.
The White House is inviting Tesla’s Elon Musk, Apple’s Tim Cook and Boeing’s Kelly Ortberg and executives from other large companies to accompany President Donald Trump on his trip to China this week bloomberg.com/news/articles/…
China has been telling the world it is abandoning the dollar. The Council on Foreign Relations just published a detailed analysis showing that China may actually hold more dollars off its official books than on them. The de-dollarization story is largely a magic trick. Here is how it works in plain terms. China's official foreign exchange reserve, managed by an agency called SAFE, used to hold about 79% of its assets in US dollars back in 2005. By 2019, that number had dropped to 55%. That is the number that gets reported. That is the number that generates headlines about China dumping the dollar. But while China was reducing the dollar share of its official reserves, it quietly stopped growing those official reserves altogether. They have been stuck at roughly $3.3 trillion for eight years. All the new money China accumulated went somewhere else entirely, into the foreign lending of state-owned policy banks like the China Development Bank, into the foreign assets of state commercial banks, and into various state investment funds. None of this is fully disclosed. None of it shows up in the headline de-dollarization numbers. CFR senior fellow Brad Setser ran the math. China's official reserves hold approximately $1.8 trillion in dollars. But Chinese state commercial banks hold an estimated $1 trillion in dollar assets abroad. The policy banks hold close to another $1 trillion in foreign claims, most denominated in dollars. The China Investment Corporation, the country's sovereign wealth fund, holds roughly $450 billion in foreign assets, the majority in dollars. Add it all up and China's total dollar holdings across all state entities likely exceed $4 trillion, more off the official books than on them. Every debt restructuring case where China's policy banks were involved, Zambia, Sri Lanka, Ecuador, Angola, involved dollar-denominated loans. Not yuan. Not euros. Dollars. The de-dollarization narrative serves a specific purpose for Beijing. It signals geopolitical independence from the US financial system, which is valuable messaging for domestic audiences and Global South partners. But the actual financial behavior of Chinese state entities tells a different story. China's banks are still borrowing and lending predominantly in dollars. China's investment funds are still holding predominantly dollar assets. The label changed. The exposure did not. China is telling the world it is exiting the dollar while quietly holding more of it than ever. That is not de-dollarization but a very well-executed press release. #China #CCP #Dollar #DeDollarization #Geopolitics #Finance #CFR #Economy #GlobalFinance #SAFE
