I Yuan U 2 Yuan Me

February 28th may perhaps be considered the last day of meteorological winter, but every American knows in her bones it ain’t over ‘til it’s over.  Just in case you needed reminding, the National Weather Service has cast these two pearls of timeless wisdom before the porcine herd:

  • There is no shortage of cold dense air in Canada.
  • There are few forecast elements that have a shorter shelf life in our area than [a forecast of] snowfall accumulation.


Yes, March will be coming in like a lion.  The lamb will have to wait her turn.  When feng shui soothsayers promised us that the Year of the Horse would be characterized by the elements of Wood above Fire, they must have had in mind the roaring furnaces that just barely manage to keep our houses habitable during this frigid winter.  Curious that they didn’t say so … Instead, they forecast extremely hot weather (and less rainfall) in the Year of the Horse —which we’ll probably see beginning in late May to June.  We have another meteorological adage in this part of the country:  if you don’t like the weather, just wait a while. Well, we’ve been waiting a while longer than we’d like.


In slightly warmer climates, it’s carnival time.  Revelers are rowing on the Grand Canal in Venezia and parading down the avenues and thoroughfares of New Orleans.  In Rio, les miserables are being evicted from their favela shacks to prettify the scenery for Brazil’s World Cup.  A few days from now, they’ll shimmy and shake through the Sambadrome, fueled by an ocean of rum and cocaine.  In Northern Europe, the carnival parades and festivities will probably be slightly more sober, somewhat quieter, and perhaps a bit less colorful.  A good pre-Lenten time will be had by almost all.


Further to the East –despite the winter chill– things are getting quite a bit hotter … for currency speculators.

China’s economy is still under pressure from heavy capital inflows both under the current account and the capital account.  Higher interest rate levels and better economic fundamentals continue to attract fund inflows.  [ In response, ] the People’s Bank of China has set about actively weakening its currency since mid-last week by using a mix of weak daily fixings for interbank lending rates and asking its agent banks to buy dollars.  The rate for the seven-day bond repurchase contract fell as low as 1.6 percent on February 21, its lowest since late 2010.  Weakening of the yuan over the past 10 days has exposed risks created by the rapid growth of offshore derivative products, with holders seen potentially facing billions of dollars of losses if the currency keeps falling.   Buyers of these leveraged bets — an estimated $100 billion this year alone — have largely been Chinese companies with large dollar receivables, who saw derivatives as a way to earn some extra income while the yuan rose against the US dollar.

There’s a lesson there somewhere.  Reflect deeply.  Madame Defarge would probably tell you to stick to your knitting.



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