Dollar bubble: Trade-weighted US dollar will peak as China devalues

When the dollar eventually turns down, capital will exit the currency.  The trigger will likely be either 1. Indication by the Fed that further tightening is unlikely; or, 2. Significant drop of the Renminbi.

US mortgage applications are up 25% year-over-year

This week one of my daughters and her husband are taking out a 30-year mortgage. I guess they are not alone:

This ought to have a positive effect on consumer spending, all other things being equal.

India issues domestic bonds denominated in gold

The government of India began issuing bonds denominated in grams of gold in November. They are currently purchasable at post offices in denominations of 1 gram to 500 grams at the equivalent of $1194.39/oz. (2600 rupees/gram at an exchange rate of 67.7 rupees/dollar). 8-year maturity and putable at par (x grams of gold) from year 5. 2.75% coupon in rupees.

Why is India doing this? They want to reduce the current account deficit attributable to gold imports. (Also, the 2.75% coupon is lower than the government's domestic borrowing cost of 7.5%.) Consumer demand accounts for about 1000 tons of gold imports a year. So far Indian consumers have bought only 1 ton worth of bonds. This is disappointing to the government but understandable. Consumers would rather pay the 30% premium for buying coins and jewelry than trust the government to hand over the promised gold in eight years. Greater demand is likely to develop over time, however, as investors are lulled into the belief that the government will deliver the promised gold at maturity.

Will such bonds be issued in other emerging countries? It makes in terms of availability of financing at a lower cost.

BCA: S&P earnings growth negative and forward PE's are high

Even in a good economy, the US stock market is pricey. With earnings growth turning negative, it is very pricey indeed.

Who benefits from low oil prices?

Here are the top five oil importers. (data is for 2012, but it's probably fairly representative)

Japan is interesting. They benefit and their currency is relatively cheap.

Chinese imports near record levels in December. What does this mean?

The FT reported this morning that Chinese imports of oil and copper were both up 9.3% (is this some sort of luck number?) in December. Iron ore was up 11% and soybeans rose 23%. Overall imports were "near record levels." For the year as a whole, oil imports were up 9%.

http://www.ft.com/intl/cms/s/0/9b685f82-b9d8-11e5-bf7e-8a339b6f2164.html#axzz3xEevmhh8

Interesting, n'est-ce pas? But what does it signify?

Is Japan a vision of the future of the US and Europe were it not for immigration?

The FT this morning had these sober numbers describing Japan, which show plummeting number of 20-year-olds and eroding monthly earnings.  Without immigration, Japan's present would be Europe's and North America's future.  Japan, however, would rather shrink in many ways than change its culture.

See "Deflated Generation": http://www.ft.com/intl/cms/s/0/1b24264e-b9d8-11e5-bf7e-8a339b6f2164.html#axzz3xEevmhh8