Technical & Fundamental Oil Reports Specialists

Follow us

Relax – it’s the new normal

Published Tuesday, September 8th, 2015

The G20 are a complacent lot. After meeting in Turkey over the weekend they are “confident the global economic recovery will gain speed”. They accepted China’s explanations that its recent currency devaluation was not motivated by ill intent but a move towards a more market determined exchange rate as called for by the IMF. The group agreed that they “will refrain from competitive devaluations and resist all forms of protectionism”. We will see but such non-binding promises are not compatible with the “whatever it takes” policies promoted by the likes of Mario Draghi.

Chinese officials assured the group that their stock market correction is nearly over, that they are in control of events and China is adjusting to a “new normal” growth rate. New normal is a sugar-coated way of saying standards of living will not rise as rapidly as they have done in the past. Chinese data was the talking point yesterday and will be again today. The country’s growth rate for 2014 has been revised down from 7.4 to 7.3% and in August its foreign exchange reserves fell by $94 billion, the largest monthly fall ever recorded. On Monday the Shanghai Composite closed down 2.6%.

Today comes news that Chinese exports fell in August by 5.5% year-on-year and imports by 13.8% leaving the country with a $60.2 billion trade surplus. In July exports fell by 8.3% and imports by 8.1%. The Shanghai Composite was down by another 2.3% at one point but state-backed buying in the last hour took the index to a close of +3%.

to read the rest of the report, please click here

Posted by David Hufton