12/08/2021 - Yra Harris: It’s Hard to Believe

“If the G-7 nations would coordinate their policy decisions and the DOLLAR were to weaken, then the U.S. YIELD CURVE would probably reverse its recent FLATTENING action. Pay attention to currency levels. A critical currency outlier continues to be the Chinese yuan as it continues to rally in direct contravention to conventional wisdom: weak Chinese economy, weak currency. It is making a 40-month high Wednesday. Does this mean a further commodity rally as the CHINESE ECONOMY shifts to more domestic consumption? .. There was a Financial Times piece last week by Ruchir Sharma titled, “China is Faltering, but the World is not Feeling the Effects.” Sharma, a Morgan Stanley global strategist noted “exports have fallen as a share of China’s GDP from above 35 percent before 2010 to less than 20 percent today.”I s this the sea change in the global economy that Professor Michael Pettis has been discussing for many years? If so, what will the impact be on the world economy and especially will the disinflationary force of China’s one billion workers be felt through higher prices as the Chinese export less and consume more?”

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