May, 19 2017 by lsr team

Charles Dumas, Chief Economist at TS Lombard.
Highlights:
- Dollar near past real highs – could relapse later this year
- Pound and yen both undervalued – likely to stay that way
- China’s yuan overvalued – no major move till autumn congress
- Euro still undervalued – may rise sharply when ECB tightens
- Current account balances now matter – yen safe haven in 2018
- China’s debt soaring but not yet dangerous – growth to slow
- Japan’s high debt rising inexorably &nd...

May, 12 2016 by lsr team

Following a surge in new loans earlier this year, investors are concerned again about the sustainability of China’s debt. Severe producer price deflation and decimated profits show just how unproductive investment has been. The good news is that China’s total non-financial debt is still low compared to most advanced countries. However, China’s refusal to tackle zombie companies has caused a massive slowdown in productivity, compromising China’s ability to grow its way out of the debt problem…

February, 17 2016 by lsr team

Beijing has pledged to embark on the necessary reforms to lower debt levels in the economy. Yet the latest money and credit numbers show that Chinese banks expanded their loan books at a record pace at the start of 2016. In January, Chinese banks extended a whopping RMB2.5 trillion in new loans, or 4% of GDP. On a seasonally adjusted basis, RMB 1.6 trillion new loans were extended. Given that local government bond issuance has come to a halt ahead of a new debt swap programme, local government financing companies might have taken out bridge loans from banks to refinance...

July, 27 2015 by lsr team

The minutes from July’s RBA meeting confirmed a cautiously dovish monetary stance. Given the subdued inflationary pressures- reflecting sluggish growth and a weak labour market, the downward pressure on policy rate should persist, at least in the near term. At the same time, Governor Stevens is under pressure to protect the economy from a lack of fiscal drive. The end of Australia’s commodity supercycle has far-reaching fiscal implications: government finances are stuck in chronic deficit and foreign debt build up is accelerating. Click below to find out...

June, 22 2015 by lsr team

China’s economy is losing steam fast under the burden of local government and corporate debt. According to our estimates, non-financial debt including shadow banking reached 240% of GDP in 2014, while real GDP growth averaged just under 5%. Beijing’s local government debt bailout plan buys time, but we estimate that a proper clean-up could mean government debt rising to as high as 105% of GDP. Click below for our exclusive report on ‘’Defusing China’s debt bomb” to find out if Beijing can afford to clean up past excesses, whether its d...