Guy Haselmann: China is Unfolding as the Most Important Story of 2015

July 23, 2015

1 minute read

by Guy Haselmann, Director, Capital Markets Strategy, Scotiabank GBM

I believe the plunging of the commodity complex is telling us that the China economy could be imploding. Problems stemming from China are spreading further into more sectors and markets (various high yield sectors, emerging markets, EM and commodity currencies).

As I wrote in my note Tuesday (Too Much of Everything), Zero interest rates have contributed to over-production, pressuring consumer prices lower. Certainly, borrowing in the energy sector contributed to the over-supply of oil and look what has happened in that sector. Now, weakening demand from China is accelerating the decent in most commodities. Budgets of EM supplier-countries and commodity exporters are being materially impacted.

As commodities fall, the FOMC says that inflation targets are harder to obtain, leading to a self-perpetuating belief that continued cheap money is needed.

Yet, claims fell to the lowest level since 1973, housing is strong, and auto sales are back to almost 17mm units (etc). Clearly, the Fed has gotten itself into a difficult position. By not lifting-off and taking their medicine in 2014 – market imbalances today are now bigger and the consequences greater.

China is unfolding as the most important story of 2015 for markets. Stay alert. Long-dated US Treasuries remain attractive and good place to hide.

Guy Haselmann | Capital Markets Strategy
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Scotiabank | Global Banking and Markets
250 Vesey Street | New York, NY 10281
T-212.225.6686 | C-917-325-5816
guy.haselmann@scotiabank.com

Scotiabank is a business name used by The Bank of Nova Scotia

Author

Guy Haselmann

Mr. Haselmann has 30 years of diverse capital markets experience, including 14 years building and managing assets at 2 well-known macro hedge funds. During his career, Mr. Haselmann traded numerous capital market securities. He has developed risk management strategies and trading procedure guidelines.

Previously, Mr Haselmann was Director of Capital Markets strategy, at Scotiabank GBM, where he incorporated a global macro approach. Mr. Haselmann has been published in academic journals, newspapers, and has written countless strategy pieces. He has appeared on various TV and Radio programs, such as BNN Bloomberg and Bloomberg. Mr. Haselmann is a guest lecturer at several universities, including his alma mater the University of Delaware Lerner College of Business and Economics. He is a frequent panelist at industry conferences.

In addition, Mr. Haselmann was a gubernatorial appointee to the NJ State Investment Council and was appointed by the chair to the Investment Policy, Executive, and Nomination subcommittees. Mr. Haselmann is President, and a member of the Board of Governors, of the NY Money Marketeers.

Specialties: Analyzing global macroeconomic policies and capital market interconnections to strengthen investment and strategic decision-making in financial markets. Providing portfolio construction solutions to enhance risk-adjusted returns. Macro trading and strategy. Risk management. Alternatives advisory services. Hedge funds and other alternative investments. Funds of Hedge Funds. Analysis for optimizing position sizes. Capital market products. Options.