Devaluation of Chinese Yuan

[TPTB_need_war]

The purpose of the Yuan devaluation is likely to be that the investment opportunities in the local economy had dried up and this was causing rampant speculation. Many were finding they could make more money betting short against the stock market than investing for example in export industry. Also there was a carry trade of borrowing abroad and bringing the money into the local economy to speculate with.

This is designed to boost competitiveness of the export and industrial sector, which will also diminish some of the speculation. This is an admission of defeat on the short-selling ban.

We should view this as a sign of massive global deflation and the coming stampede into the US dollar and US dollar denominated investments such as the stock market.

This is a reflection of the China's collapsing manufacturing sector, which has I believe two consecutive readings below 50. It was turning into a rout. Also labor costs have risen so much in China and the Yuan had appreciated so much that China has become uncompetitive globally with manufacturing costs being about on par with the USA.

Overall this is an ominous sign of the collapsing global economy.

[tss]

So do you think that devaluation will cause people to turn to bitcoin instead of yuan? I still think it is too far fetched analogy.
Russian currency - Ruble had recently a lot of problems, was devalued a lot due to Russian vs Europe and USA crisis and I seriously can't see massive bitcoin revolution in Russia.

the wont go to bitcoin now.  currently there is no reason ignoring 2014 devaluation.  this past year the russian ruble is seen as one of the world's best performing currency

[deisik]

As I expected, earlier at night today China's Central Bank devalued its currency once again, now at 1.6%. Yesterday they were saying that the previous devaluation at 1.9% was not to be expected to continue...

I didn't believe them at once

[deisik]

So do you think that devaluation will cause people to turn to bitcoin instead of yuan? I still think it is too far fetched analogy.
Russian currency - Ruble had recently a lot of problems, was devalued a lot due to Russian vs Europe and USA crisis and I seriously can't see massive bitcoin revolution in Russia.

the wont go to bitcoin now.  currently there is no reason ignoring 2014 devaluation.  this past year the russian ruble is seen as one of the world's best performing currency

You seem to be quite unfamiliar with what has been happening to Ruble the last few weeks. With oil prices collapsing Russian Ruble lost about 20% to US dollar within a month or so...

[TPTB_need_war]

Go to the Martin Armstrong thread to learn more about what is really happening in the global economy.

I corrected MA's typo and clarified his intent as follows...

http://www.armstrongeconomics.com/archives/35858

The dollar rally and the devaluation of the yuan is not a fluke and it most certainly is not a one-time event. The dollar declined[appreciated] against the yuan for 19 years during the same timing that saw gold decline from 1980 to 1999. The major low on an annual closing basis at 2013 and 2014 was an outside reversal to the upside for the dollar. The Yearly Bullish Reversal stands at 683 and technical resistance stands at 658. The dollar filled the gap that existed prior to 1994 and is yet another confirmation that the dollar rally is underway.

Yes, the world trade is contracting and will get much worse after October.

...we see capital still pouring into the USA from both China and Europe. The real estate cycle has/or will peak with this turning point around the world from Switzerland, Britain, Canada, to Asia right down into India and Australia.

The dollar rally is unfolding despite the fact people do not understand why. They look only at the USA debt and assume the dollar must crash, when in fact, the problem we face is on a global scale and $18 trillion in U.S. debt is simply not the large enough for international capital to hide[runaway from the USA as a safe haven]. The future is going to be anything but a textbook move.

[deisik]

Go to the Martin Armstrong thread to learn more about what is really happening in the global economy.

I corrected MA's typo and clarified his intent as follows...

http://www.armstrongeconomics.com/archives/35858

The dollar rally and the devaluation of the yuan is not a fluke and it most certainly is not a one-time event. The dollar declined[appreciated] against the yuan for 19 years during the same timing that saw gold decline from 1980 to 1999. The major low on an annual closing basis at 2013 and 2014 was an outside reversal to the upside for the dollar. The Yearly Bullish Reversal stands at 683 and technical resistance stands at 658. The dollar filled the gap that existed prior to 1994 and is yet another confirmation that the dollar rally is underway.

Yes, the world trade is contracting and will get much worse after October.

...we see capital still pouring into the USA from both China and Europe. The real estate cycle has/or will peak with this turning point around the world from Switzerland, Britain, Canada, to Asia right down into India and Australia.

The dollar rally is unfolding despite the fact people do not understand why. They look only at the USA debt and assume the dollar must crash, when in fact, the problem we face is on a global scale and $18 trillion in U.S. debt is simply not the large enough for international capital to hide[runaway from the USA as a safe haven]. The future is going to be anything but a textbook move.

Could you please make the long story short? What does this Armstrong actually try to convey? What should we expect near-term and when?

Talk is cheap

[MF Doom]

This is a reflection of the China's collapsing manufacturing sector, which has I believe two consecutive readings below 50. It was turning into a rout. Also labor costs have risen so much in China and the Yuan had appreciated so much that China has become uncompetitive globally with manufacturing costs being about on par with the USA.

Overall this is an ominous sign of the collapsing global economy.

I have heard/read about many manufacturers saying the cost savings of manufacturing in china has gone away.  Plus the logistical issues can become a nightmare if there are quality issues.  Even a bunch of entrepreneurs on the show shark tank have stated this as well.

This is turning places like vietnam/thailand into more opportunistic places for manufacturing. 

[OROBTC]

...

MF Doom and TPTB

Yes, China is having problems with other countries having lower production costs re export products.  

But for relatively complex products requiring certain reasonable quality standards (like rolling bearings), that production will likely stay there.  Also re bearing production, robots are rapidly going into Chinese plants, lowering their costs.

We will see in a month or two whether or not small importers of some Chinese products (like us) benefit from lower prices.

And how contagious those lower prices really are (we buy much more from Korea than China, we also buy from Japan).

[newcripto]

This devaluation of Yuan will really force the people to keep their savings in some independent and easy to access currency and then remain only Bitcoin.It will be seen huge investment in coming weeks from Chinese and I am thinking this way also.

[deisik]

This devaluation of Yuan will really force the people to keep their savings in some independent and easy to access currency and then remain only Bitcoin.It will be seen huge investment in coming weeks from Chinese and I am thinking this way also.

That would be no-brainer if the Chinese CB continues to devalue Yuan every night (which is what it seems to be fixed on right now, wtf)...

[malphite]

In any form of fiat theres always a devlauation due to being no limits of pumped more in circulation.

I think its better to take away that, since most are in debt with china that it may be worth while though to have yuan if you more of them wanting to be the us world reserve currency.

[botany]

The world used to call China a market manipulator because it wouldn't let its currency appreciate.
Now it goes ahead and devalues its currency. Go figure.

[OROBTC]

...

Tonight (US ET) China devalued a third time, that's three times in three days...  Link:

http://www.zerohedge.com/news/2015-08-12/china-devalues-yuan-3rd-day-4-year-lows-argentina-suffers-losses-japan-escalates-cur

*   *   *

Ahh, if I had to guess, this is an issue that will be recurring for some time.  Maybe a long time.  This is just one more variable to throw into the financial and investment equations.  Now it is harder still to figure out safe places for our money.

Shanghai is down 0.70% as I write.

[deisik]

Wow, China did it again!

Poor Argentina has suffered the most, since about a quarter of its foreign reserves (however small for a 43 million people country) are denominated in Yuan...

[TPTB_need_war]

Martin Armstrong's computer and I have been telling you for past years that October 1, 2015 is the BIG BANG and now you all better start to listen.

[Kprawn]

The Chinese are gearing up for something. First it was the "correction" on the stock markets and then they partnered up with the BRICS countries to create their own little circle of friends and now they are

devaluating the Yuan. It's as if they are preparing for a strategic move in the economic market. I would be worried if I was in debt to them at this moment. 

Do anyone else see this pattern or am I delusional? Break the economy and win the war before it started?   

[alva5763]

 Third day of devaluation of the  yuan but UK stocks rise. Reason given was an unlikely increase in US interest rates. Problem with devaluation of one currency is if other major currencies follow then it is just a meaningless cycle.

[deisik]

The Chinese are gearing up for something. First it was the "correction" on the stock markets and then they partnered up with the BRICS countries to create their own little circle of friends and now they are

devaluating the Yuan. It's as if they are preparing for a strategic move in the economic market. I would be worried if I was in debt to them at this moment. 

Do anyone else see this pattern or am I delusional? Break the economy and win the war before it started?   

I guess they would sooner break their neck. It may look as if they are up to something when essentially they may be just desperate in their efforts to save their own economy from collapsing...

Deep inside I never believed in China's economic miracle

[fullypak]

Recently chinese economy is going down for that they have tried their best by reducing interest rates to provide liquidity and stopped many companies stocks trading to reduce further markets collapse and so on however they failed to stabilize or improve the conditions. Now it is their another way to provide benefits to all chiniese companies by devaluating their currency. These are dirty tricks but I don't think these things they can do for long time

[MF Doom]

The Chinese are gearing up for something. First it was the "correction" on the stock markets and then they partnered up with the BRICS countries to create their own little circle of friends and now they are

devaluating the Yuan. It's as if they are preparing for a strategic move in the economic market. I would be worried if I was in debt to them at this moment. 

Do anyone else see this pattern or am I delusional? Break the economy and win the war before it started?   

at least one of their reasons is that now their exports will be cheaper.  If you were buying something in USD, the price has now essentially gone down 1.9% or whatever they devalued the yuan.  Of course politicians are now saying its giving them an "unfair" economic advantage.