YUAN Revaluation = Bullish!!

Quote from dougcs:

IMO:

Higher oil prices as the yuan is worth more, ie oil is cheaper to China so they can afford more or maybe if its price in dollars holds it will be less costly to China;

Higher US interest rates, including mortgages, as China buys less US bonds and this should slow down US economy;

Uptick in US inflation as Chinease imports get more expensive and oil goes up also;

No increase in US jobs and maybe a decrease as higher interest rates slow economic activity. Jobs shift a little from China to other low cost areas, maybe Africa/India?

Bigger trade gap as US keeps importing from China (short term, where else will the goods come from?)
DS
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A couple of things to add:

The 2% revaluation may be minute, but, it's a major change in policy.

The Yuan's revaluation, which is really a small first step in releasing the US from the chinese low wage iron ball chain, ugly as it seems, is the best (only) way out for the US economy.

IMO, currency devaluations are mainly used by governments as a veil to conceal lowering wages.

Just think about it, this is all about lowering wages in the US to allow US companies to survive the onslaught of the low chinese wage competitiveness.

Which, has been so corrosive to the US economy, that it has free market evangelists questioning their beliefs: maybe this time around, the speed of the changes, will not allow the US companies to adapt in time.

The only way out is to lower US wages by promoting a dollar decline. It's better to have a gradual decline in wages than to wake up one day to an absolute absence of jobs.

It's not a pretty picture, but, it shouldn't be. The chinese low wages and the deficits clearly say so...
We're headed for wage equilibrium.
 
Quote from TOSSGEMINI:

---- Can someone explain how this is good for the US ----

intermediate term prospective (could be):

- weaker dollar
- higher commodities
- higher bond yields
- higher US inflation, higher rates
- lower stocks

+

- higher mortgage rates
- lower housing prices
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It's good for that august body of economic experts called the US Congress, since at election-time they can now claim that they have forced the Chinese -- who allegedly were destroying our industrial base before the 2.1% reval -- to change their economic policy so that everything now will be right in the USA. (So long as voters do not know any better, why would Congress consider reality to be relevant in any way whatsoever?)
 
Quote from range:

It's good for that august body of economic experts called the US Congress, since at election-time they can now claim that they have forced the Chinese -- who allegedly were destroying our industrial base before the 2.1% reval -- to change their economic policy so that everything now will be right in the USA. (So long as voters do not know any better, why would Congress consider reality to be relevant in any way whatsoever?)
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well, I would hesitate to characterize China as destroying our industrial base. If China weren't flooding cheap goods in the US, it would be somebody else. Besides, it's a market economy, and from a purely economic standpoint, the opportunity cost in some of our manufaturing sectors are simply too high. It is how our American/capitalist system works, and I wouldn't have it any other way. I wouldn't be able to afford it!

My opinion is that the Yuan revaluation is over-rated. It's pure speculation what the effects will be since the intentions of the Chinese govt is also uncertain. The rise in the Yuan is a monetary policy adjustment just like any other govt will do, except this one is making headlines. In the long run, the effect will be minimal as it will most likely cool China's growth and provide some global stability. But, I am very curious what the outcome will be.
 
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