In anticipation of the commencement of operations in 2016, the Asian Infrastructure Investment Bank (AIIB) has been increasing its engagement with potential clients and development partners. The AIIB is one of three major new infrastructure financing initiatives led by China—the other two are the New Development Bank and the Silk Road Fund. The AIIB will have a total authorised capital of US$100 billion and initially aims to lend between US$10 and US$15 billion a year.

The AIIB’s incoming President, China’s former Vice-Minister for Finance, Jin Liqun (pictured), has recently met with the heads of the Asian Development Bank (ADB), the World Bank, and the European Bank for Reconstruction and Development. Mr Jin has also visited several potential recipient countries—including Indonesia, Bangladesh, and Pakistan—where it is expected the AIIB will play an important role helping meet infrastructure funding gaps. Indonesian officials have expressed an interest in accessing US$1 billion in AIIB financing, including for coal-fired energy projects. Chinese state media reports that Burma is looking to the AIIB to fund priority projects, as is Thailand.

Regional financing needs are enormous. In 2009, the ADB estimated that between 2010 and 2020, Asia needs to invest approximately $US8 trillion in national infrastructure. Ambitious connectivity initiatives such as China’s ‘One Belt-One Road’ concept (OBOR, see map) and the Greater Mekong Sub-region (GMS, see map) network will also require the mobilisation of substantial levels of public and private capital.

In helping meet these needs, Mr Jin has promised that the AIIB will be characterised by a less bureaucratic and ‘leaner’ decision making structure than that of the established multilateral development banks. The AIIB Secretariat is recruiting staff, with a focus on experience in ‘investment finance, infrastructure development, treasury operations, administration, monitoring and evaluation, and management’. Significantly, unlike the ADB and the World Bank, the AIIB will have a part-time, non-resident board of directors, an arrangement that will likely enhance the autonomy of the bank’s Beijing-based managers.

Nevertheless, the AIIB is unlikely to be fully immune from the challenges that bedevil its established counterparts. Many of the countries that comprise OBOR rate high on assessments of levels of security, political and legal risk. In GMS countries such as Cambodia and Myanmar, some of China’s infrastructure investments have been a source of political contention. Assessments of credit risk and moral hazard will require meticulous due diligence, as will implementing members’ agreement that the AIIB’s social and environmental standards ‘should be based on international best practices’. The AIIB released draft standards for consultation in August 2015. Other challenges include building the capacity of local officials charged with implementing large-scale projects, allowing adequate time for project preparation and design, and ensuring transparent procurement arrangements. Mr Jin has stated that the AIIB will have a ‘zero-tolerance’ approach to corruption.

Seen in the light of these challenges, claims that the AIIB will simply be a vehicle for pursuing China’s regional economic and strategic objectives become harder to sustain. While China will have the largest voting share (see table), Beijing’s ability to pursue its own agenda through the AIIB will be tempered by the complexity of lending operations, the scrutiny that will inevitably surround the implementation of agreed standards and safeguards, and the strictures of the multilateral form. For these reasons, China will continue to pursue infrastructure investment opportunities outside of the AIIB framework, including through state-owned enterprises.

Nevertheless, the AIIB represents an important platform for Australia and others to engage with China on regional development issues. After some debate, in June 2015, Australia—along with 49 other founding members—signed the AIIB’s Articles of Agreement. An additional seven members have signed subsequently. As the Parliamentary Library noted at the time, the Australian Government’s decision to join the AIIB was supported by the Labor Opposition and the business community. The Australian Government will contribute US$738 million (approximately A$932 million) paid-in capital to the AIIB over five years and will be the sixth largest shareholder.

Australia has a long history of working with the established multilateral development banks to improve aid effectiveness in small island and ‘fragile’ states and, more recently, to strengthen social safeguards in areas like resettlement and HIV/AIDS prevention.

Australia is also gaining some experience working with China on development issues. In 2013, China and Australia signed a Memorandum of Understanding (MOU) on Development Cooperation. This MOU provides the basis for a new joint program to combat malaria in Papua New Guinea.

The lessons that have emerged from this interaction, albeit tentative, in the field should assist Australia’s efforts to influence Beijing, other board members, and the bank’s management as the AIIB commences operations.

In yesterday's overnight market wrap, we commented that while Chinese stocks had succeeded in levitating following another massive government intervention, "the global market was far more focused with what was going on in China's currency, which as previously reported, plunged to new 5 year lows, while the spread between the onshore and offshore Yuan rose to a record wide, suggesting the depreciation in the currency is only going to accelerate from here, and a big payday for Kyle Bass is coming."

A few hours later this was confirmed when China set the Yuan fixing some 0.5% lower, the biggest drop since the official August devaluation...

... and unleashed a global selling panic after China's stock market was promptly shut down less than 30 minutes into trading, when it hit the -5% "15 minute" circuit breaker, and immediately thereafter the -7% "all day" circuit breaker. This was the second market halt this week, and means that Chinese stocks have been fully halted on half of all trading days so far in 2016, just as we said was the endgame for this massively rigged market back when we described the Hanergy fiasco.

The following chart courtesy of Holger Zschaepitz summarizes the utterly farcical nature of Chinese markets quite effectively:

At that point the PBOC yuantervened...

... but it already too late: the damage had been done, and all in just 14 minutes of actual trading (net of the 15 minute trading halt).

"It’s a brutal start of the year, there’s just nowhere to hide on the market. This looks like a ripple effect from what happened back in August. It might continue for a few weeks, but given China’s central bank fire power, it shouldn’t last for more than that,” Alexandre Baradez, chief market analyst at IG France, says by phone.

As we also warned yesterday that none of what is going on in China should be a surprise, this is precisely how global markets took it, because what is taking place now is a carbon-copy of the global market response to the August devaluation, one which unleashed a 10% correction in the market, and led to the August 24 ETFlash crash, one which may also recur today judging by where global sotcks and US equity futures are trading right now:

Global stocks and crude oil tumbled on widening concerns about the Chinese economy, as markets' turbulent start to the year intensified. The Stoxx Europe 600 was down 3.4% in midmorning trading, while Brent crude oil was down 1.9% at $33.42 a barrel.

S&P futures are holding near their worst levels of the day (had dropped as much as 55pts or 2.77%) amid global rout in stocks, commodities. In pre-mkt trading, Apple -3.2%, FreeportMcMoRan -5%, Netflix - 3.1%, Twitter -3%, Facebok -3%, Bank of America -2.8%, Wells Fargo -2.7%, Amazon -2.7%, Alphabet -2.6%. WTI down 2.7%, paring earlier loss of as much as 5.5% to $32.10/bbl.

Futures:

S&P Futures 48pts or -2.4% to 1,938
DJIA futures -389pts or 2.31% to 16,449
Nasdaq 100 futures -139pts or 3.1% to 4,308
Commodities:

WTI Crude -2.6% to $33.07/bbl
Brent Crude -2.1% to $33.50/bbl
Gold +0.3% to $1,096/oz
Copper -2.9% to $2.03/lb
Rates/FX:

30-yr -2.26bps to 2.9149%
10-yr -2.64bps to 2.1438%
2-yr -2.40bps to 0.952%
Dollar Index Spot -0.3% to 98.89
Euro/Dollar +0.5% to $1.0837
GBP/Dollar -0.5% to $1.4563
Dollar/Yen +0.7% to 117.63
Other Assets:

MSCI Asia Pacific down 2% to 124
US 10-yr yield down 3bps to 2.14%
Dollar Index down 0.36% to 98.82
WTI Crude futures down 2.6% to $33.09
Brent Futures down 2% to $33.54
Gold spot up 0.2% to $1,096
Silver spot down 0.2% to $13.99
Some other highlights: European shares fell the most since August, crude oil tumbled to a 12-year low, and South Africa’s rand sank to a record; haven assets extended gains, with Treasuries rising for a sixth day and the yen reaching a four-month high. Gold is trading near $1100, while Bitcoin is surging and was last seen at $450 as increasingly more Chinese use the digital currency to transfer their rapidly devaluing money offshore into more stable currencies.

As Bloomberg summarizes, China’s tolerance for a weaker yuan is being seen as evidence policy makers are struggling to revive an economy that’s the world’s biggest user of energy, metals and grains. Those concerns helped wipe $2.5 trillion off the value of global equities in the first six days of this year.

It wasn't just China: as we observed overnight, George Soros warned that markets are facing a crisis, while the World Bank cut its global growth forecasts for this year and next as China’s slowdown prolongs a commodity slump and contractions endure in Brazil and Russia. "China has a major adjustment problem," Soros said Thursday at an economic forum in Colombo, Sri Lanka. “I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”

He could very well be right.

* * *

Looking at regional markets, Asian stocks continued the 2016 stock market rout, which has already seen the S&P 500 record its worse 3-day start since 2008. Nikkei 225 (-2.3%) and the ASX 200 (-1.7%) was led lower by losses in energy after oil prices declined to test the USD 33/bbl level to the downside with Brent at its lowest level since 2004. US equity futures declined with E-mini S&P down over 1% and Dow futures shedding around 150 points, as Chinese markets were halted for trade after the Shanghai Comp and CSI 300 fell by over 7%, with continued aggressive CNY devaluation again acting as a catalyst for the downturn. 10yr JGBs gained as losses in riskier assets supported a flight to quality, while today also saw a relatively well-received 30yr auction where b/c printed much higher than the 12-month average and the tail in price CSRC capped large shareholders' stake reduction to 1% of total outstanding share for 3 months, effective from January 9th and said that major shareholders should disclose share sale plan 15 days before the sale.

The MSCI Asia Pacific Index slipped 2 percent. A gauge of Chinese shares listed in Hong Kong slumped 4.2 percent and the Hang Seng Index dropped 3.1 percent. Benchmark stock indexes in Australia, Japan, Singapore and Thailand all lost more than 2 percent.

“The Chinese yuan is smack bang at the heart of concerns,” Chris Weston, chief market strategist in Melbourne at IG Ltd. “For risk assets to stabilize and sentiment to turn around, we are going to need a stable or even positive move in the Chinese currency. It’s clear that the market is becoming increasingly concerned by the global inflation outlook.”

Top Asian News:

China Regulator Said to Discuss Markets Without Taking Action: Authorities met to discuss market conditions, circuit breakers
China Renews Curb on Major Investors’ Stock Sales to Ease Panic: New rules ensure “orderly and legal” sales by key shareholders
DBS, Standard Chartered Said to Face China Currency Suspensions: Standard Chartered said to have appealed to shorten hiatus
Lack of Options on North Korea Presses China to Shift Policy: Diplomats question China threshold for ending Pyongyang cover
In Europe, equities have undergone another bashing today as global markets react to the continued bearish sentiment in China. With equity trading in China lasting just half an hour today, in a similar fashion to the rest of the week Euro Stoxx is lower by 2.8% on the day, now lower by almost 6.6% on the week The Euro Stoxx 600 has fallen today by the most since the August 24th collapse , after the CNY fix was moved by the most since the same date, and as such safe havens Bunds, JPY and gold have all benefitted today, while in terms of fixed income, short sterling has seen bull flattening extended, with the June contract breaking above Q4 highs. In line with the China concerns, energy and material names are once again under performing, with Brent and WTI both reaching fresh multi year lows in early European trade.

Top European News:

Euro-Area Economic Confidence Increases to Highest Since 2011: Reflects better sentiment in industry, services
Marks & Spencer Chief Bolland Quits as Sales Slump Persists: Retailer’s holiday sales decline more than analysts’ estimates
German Factory Orders Rise in Sign of Solid Domestic Demand: Orders up 1.5% in November vs. estimate for 0.1% increase
Osborne Warns U.K. Economy Faces ‘Dangerous Cocktail’ of Risks: China, commodity prices, Middle East cited as hazards
Euro-zone Dec. Economic Confidence 106.8; est. 106
Euro-zone Dec. Business Climate Indicator 0.41; est. 0.39
Euro-zone Dec. Industrial Confidence -2; est. -2.9
Euro-zone Dec. Consumer Confidence -5.7; est. -5.7
Euro-zone Nov. Unemployment Rate 10.5%; est. 10.7%
Euro-zone Nov. Retail Sales -0.3% m/m; est. 0.2%
Netherlands Dec. EU Harmonized CPI 0.5% y/y; est. 0.5%
Germany Nov. Factory Orders 1.5% m/m; est. 0.1%
In FX, the offshore yuan swung from a 0.3 percent gain to a 0.7 percent loss and back in the space of about 30 minutes in early trading in Hong Kong’s freely traded market. It was subsequently 0.4 percent higher versus the greenback, while the onshore rate weakened 0.5 percent. The People’s Bank of China cut the yuan’s reference rate by 0.5 percent, the most since the week of an Aug. 11 devaluation that roiled global markets.

“We saw aggressive intervention in the offshore yuan market,” said Zhou Hao, an economist at Commerzbank AG in Singapore. "We don’t really understand the rationale behind the market movements in the past few days. Obviously, these movements have reminded us of the market rout last year.”

The central bank is considering new measures to prevent high exchange-rate volatility in the short term, according to people familiar with the matter. China updates its foreign-currency reserve levels Thursday, giving traders an insight into how much its management of the yuan cost in December. The holdings fell by more than $400 billion in the first 11 months of 2015 as the PBOC bought yuan to support the exchange rate.

The yen, which has been the best-performing major currency so far this year amid the demand for safe-haven assets, rose as much as 1 percent to its strongest level since August versus the dollar.

In commodities, the Bloomberg Commodity Index fell 0.8 percent, headed for its lowest close since 1999. Copper dropped 2.7 percent in London and nickel sank 2.9 percent.

West Texas Intermediate crude slid 3.3 percent to $32.86 a barrel, poised for the lowest settlement since February 2004. U.S. gasoline inventories surged the most in 22 years and crude supplies at Cushing, Oklahoma -- the American hub -- climbed to an all-time high, government data showed Wednesday. Concern about a global oversupply saw crude cap its biggest ever two-year tumble in 2015, with OPEC abandoning limits on production and U.S. oil stockpiles remaining about 100 million barrels above their five-year average.

Gold rose as much as 0.8 percent to a two-month high of $1,102.85 an ounce.

“Gold is probably the only one beneficiary among all the commodity markets from all the turmoil in the geopolitical scene,” Bob Takai, chief executive officer and president of Sumitomo Corp. Global Research, said by phone from Tokyo.

The only data of note in the US this afternoon is the latest weekly initial jobless claims reading, while we’re also due to hear from the Fed’s Lacker (at 1.45pm GMT), delivering his economic outlook, as well as Evans (at 7.15pm GMT) who is scheduled to talk on the economy and monetary policy.

Top Global News:

Chinese Stocks Halted as Yuan’s Slump Sends Markets Into Turmoil: Equity rout triggers trading halt in less than 30 minutes, PBOC cuts yuan fixing most since August; Shanghai Fund Manager Dumps All Holdings in ‘Insane’ Market: Shanghai Heqi Tongyi forced to liquidate holdings amid plunge
George Soros Sees Crisis in Global Markets That Echoes 2008: China’s devaluation hurting rest of the world, Soros says
Barclays Said to Plan Closing Most of Asia Cash Equities Unit: About 50% of positions in Asia equities may be eliminated
United CEO Munoz Has Heart Transplant With Return Still Seen: Expected back at work by start of 2Q, company says
Microchip Said to Be Reconsidering Offer to Acquire Atmel: Atmel’s disappointing quarterly sales said to raise concerns
Yahoo Said to Propose Job Cuts as Part of Mayer’s Revival Plan: Announcement expected by earnings report in coming weeks
$30 Oil Just Got Closer as WTI Slides to 12-Year Low on China: WTI trades at lowest since December 2003
Morgan Stanley’s Gorman Extends Tenure, Spurring Fleming’s Exit: In senior-level shakeup, Gorman names Colm Kelleher president
Red Kite Bucks Metals’ Worst Year Since Crisis With Mining Bets: Firm is committed to physical metals fund after ‘tough year’
U.S. to Deepen Probe Into BofA’s Client Protection Rules: WSJ: Scrutiny on certain dividend-tax trades, whether bank broke rules designed to safeguard client accounts
‘Star Wars’ Shoots Past ‘Avatar’ to Break U.S. Box Office Record
Bulletin Headline Summary from Bloomberg and RanSquawk:

Another day of turmoil in China as more circuit breakers are triggered in the domestic markets and more intervention is required in the CNY
European equities have undergone another bashing today with the Euro Stoxx 600 posting the largest intraday decline since the August 24th collapse
Looking ahead, today's highlights include, US Initial and continuing Jobless Claims and comments from Fed's Lacker and Evans
Treasuries advanced for a sixth day after a plunge in Chinese stocks halted trading for a second time this week and as oil fell to a 12-year low, WTI nearing $30/bbl.
The worst start for Chinese markets in two decades showed no signs of letting up after PBOC cut its yuan reference rate by the most since August, sparking a selloff in stocks that forced the $6.6t market to shut early
“This is insane. We were forced to liquidate all our holdings this morning,” says Chen Gang, CIO at Shanghai Heqi Tongyi Asset Management Co., which manages about 300m yuan
China’s FX reserves tumbled by a record $108b in December as the PBOC sold USD to stem a slide in yuan. That was about four times greater than analysts predicted in a Bloomberg survey, and reduced the stockpile to the lowest level in three years
The manager of a Chinese hedge fund that returned a surprising 86 percent during last year’s stock rout will sell all its stock holdings as renewed fears tanked China’s markets again
French police confirm report of gunshots fired outside a police station in the 18th arrondissement, or district, of Paris; I-Tele reports police shot an attacker who entered the station with a knife
DBS Group Holdings Ltd. and Standard Chartered Plc are among banks suspended from some forex business in China, according to people with knowledge of the matter
Anglo American Plc led a slump in mining stocks to the lowest in more than a decade as market turmoil in China, the biggest consumer of metals, ignites a vicious spiral of tumbling equities and collapsing commodity prices around the world
Iran accused Saudi Arabia on Thursday of an aerial attack on its embassy in Sana, the capital of Yemen, in a potential escalation of a sectarian and geopolitical conflict that has put the region on edge, NYT reports
South Korea will resume the propaganda broadcasts that previously led the Kim Jong Un regime to threaten war, in order to punish North Korea for conducting a fourth nuclear test
The latest outbreak of bubonic plague on the Indian Ocean island of Madagascar has killed 63 people since August, the Health Ministry said
$8.25b IG priced yesterday, no HY. BofAML Corporate Master Index OAS +1bp to +174, 2015 range 180/129. High Yield Master II OAS widens 8bp to +711; 2015 range 733/438
Sovereign bond yields mixed. Asian and European stocks plunge, U.S. equity-index futures slide, with S&P -2.4%. Crude oil and copper lower, gold gains
US Event Calendar

7:30am: Challenger Job Cuts y/y, Dec. (prior -13.9%)
8:30am: Initial Jobless Claims, Jan. 2, est. 275k (prior 287k)
Continuing Claims, Dec. 26, est. 2.2m (prior 2.198m)
9:45am: Bloomberg Consumer Comfort, Jan,. 3 (prior 43.6)
Central Banks

8:10am: Bank of Canada’s Poloz speaks in Ottawa
8:45am: Fed’s Lacker speaks in Raleigh, N.C.
2:15pm: Fed’s Evans speaks in Madison, Wis.
We concludes as is customary with Jim Reid's overnight event wrap

The holiday period is starting to feel like a bit of a distant memory. There’s a huge sense of unease in markets at the moment and a big part of that are the concerns with China which dominated much of yesterday’s risk-off tone and, given the Asia session overnight, look set to dictate markets today. From the opening bell this morning the CSI 300 took 12 minutes to tumble to -5% and trigger a 15-minute trading halt. After resuming, the index then took 2 minutes to hit -7% for the day, breaching the second threshold of the circuit breaker and resulting in Chinese equity markets shutting early for the second time this week. So markets were open for just 29 minutes with a total trading time of 14 minutes. The Shanghai Comp closed -7.32% and Shenzhen -8.34% with the latter down over -15% YTD already. Those huge moves have dragged the rest of Asia lower. The Nikkei (-1.96%), Hang Seng (-2.39%), Kospi (-0.77%) and ASX (-1.93%) are all in the red. US equity futures have tumbled over 1% and Oil is testing the $33 mark (down -2%) after falling nearly 6% yesterday. Asia and Australia iTraxx indices are 3 to 4bps wider.

A lot of the blame is being put again on the currency after the PBoC set the Yuan fix 0.51% weaker today, the eighth consecutive weakening but this time the largest since August. That’s caused plenty of volatility in the currency this morning. The onshore Yuan is currently 0.6% weaker as we type while the offshore Yuan is actually +0.2% firmer although at one stage traded nearly as much as 1% weaker. The moves have however caused a broad sell-off across most EM currencies with China’s December FX reserves data due out at any time now and set be very closely watched. As we type headlines are also out suggesting that China’s securities regulator is to cap the size of stakes that major investors can sell at 1% of a company’s shares, effective this weekend, in a bid to surely help ease some of the panic ahead of the open tomorrow.

Today’s moves so far come after another tough session for risk assets yesterday, while there was a reasonable amount of newsflow to get through too. The moves for Oil yesterday saw WTI close at the lowest since December 2008 and Brent at the lowest price since June 2004, while Gasoline closed -7.55% and Natural Gas -2.49% following the latest batch of bearish gasoline inventory data. Meanwhile, the FOMC minutes were probably a touch more dovish than expected (more shortly), although the US dataflow was actually relatively supportive with a much better than expected ADP print (257k vs. 198k expected) raising hopes for Friday’s payrolls, while the ISM non-manufacturing printed at 55.3 which was below expectations (56.0) and down versus November (55.9) but all things considered still relatively resilient in light of the manufacturing data earlier in the week. If this wasn’t enough, we then saw the World Bank weigh in after the closing bell, downgrading their global growth forecasts for 2016.

All told the S&P 500 closed yesterday down -1.31%, meaning the index is down -2.63% to start the year which is only just shy of the -2.73% return for the first three trading days of 2015 which was the worst start to a year since 2008. It was a similar performance for European stocks yesterday where the Stoxx 600 closed down -1.26%, taking its YTD loss pass the 3% mark already. Yields continue to dip lower in most core government bond markets. 10y Bund yields were down nearly 4bps yesterday to settle at 0.502% and nearing the early December levels. 10y Treasury yields finished down nearly 7bps meanwhile at 2.168% and a two-week low.

Onto the Fed. The main point of note in yesterday’s FOMC minutes were the comments from officials suggesting that last month’s decision to commence liftoff was a ‘close call’, reflecting concerns around the outlook for inflation in particular. The text revealed that ‘for some members, the risks attending their inflation forecasts remained considerable’ and that ‘among those risks was the possibility that additional downward shocks to prices of oil and other commodities or a sustained rise in the exchange value of the dollar could delay or diminish the expected upturn in inflation’. Aside from those comments, in truth there was little else of note from the minutes and instead the text was pretty consistent with the post-meeting statement. On timing of future moves, there was more emphasis on the need for ‘gradual’ adjustments in the fed funds rate, while also emphasizing the need to adjust policy as economic conditions evolve. There was also reference to the stress in US HY around the timing of last month’s meeting. While participants didn’t downplay the moves, there appeared to be little concern from officials about the wider implications for now however.

Back to the rest of the US data yesterday. As well as the ADP and ISM numbers, the final services PMI for December was revised up 0.6pts at the final count to 54.3. That helped to take the composite up to 54.0 at the final read from 53.5 in the earlier flash. Meanwhile, the November trade balance reading revealed a shrinking of the deficit to $42.4bn (vs. $44bn expected) from $44.6bn reflecting a drop in imports. Factory orders data offered few surprises after coming in at -0.2% mom in November as expected, while there was no change to the final revision for durable goods in the same month at 0.0% mom. Core capex orders was revised up one-tenth to -0.3% mom. Having highlighted the recent downward revision, yesterday’s narrowing of the trade deficit and resultant contribution from net exports has seen the Atlanta Fed now upgrade their Q4 GDP forecast to 1.0% from 0.7% a few days ago.

Meanwhile, the Fed Vice-Chair Fischer was vocal again yesterday. Following on from San Francisco Fed President Williams’ comments that he see’s 3 to 5 rate hikes this year, Fischer said that in his view four rate hikes ‘are in the ballpark’, although at the same time highlighted the concerns emanating out of China saying that there ‘are levels of uncertainty and they’ve risen a bit now’.

Over in Europe yesterday the final revisions to the December PMI numbers were generally encouraging. The final Euro area composite PMI was revised up 0.3pts to 54.3, with the services component up the same amount to 54.2. That took the composite back to its cyclical high seen in August. By country, Germany saw an upward revision to its already strong flash reading, by +0.6pts to 55.5. The print for Italy was also encouraging having risen +1.7pts to 56.0. This offset a bit of weakness in the final revision for France (-0.2pts to 50.1) while the reading out of Spain also fell last month (-1.6pts to 55.1). Our European economics team confirmed that yesterday’s PMI’s point to GDP growth of +0.5% qoq in Q4, which is slightly above their +0.4% expectation and suggestive that the economy should continue to expand at a solid rate in the near term, with external headwinds (China and the US) the main risks.

Before we take a look at today’s calendar, just quickly highlighting those World Bank growth forecast changes. 2016 global growth has now been downgraded to 2.9% from the earlier 3.3% forecast back in June. This reflected concerns of a slowdown for emerging markets, with the Bank citing concerns around China and also the recessions in Brazil and Russia. It was noted that the Bank cut its outlook for China growth this year to 6.7% from the earlier 7% previously, while a 6.5% forecast was made for 2017. That forecast for this year is in-line with the views of our Chief China Economist.

It’s set to be a slightly quieter day ahead for data with markets probably more focused on events in China. In Europe this morning we’ve got factory orders and retail sales numbers out of Germany, along with the latest Euro area confidence indicators as well as the November unemployment print and retail sales data for the region. The only data of note in the US this afternoon is the latest weekly initial jobless claims reading, while we’re also due to hear from the Fed’s Lacker (at 1.45pm GMT), delivering his economic outlook, as well as Evans (at 7.15pm GMT) who is scheduled to talk on the economy and monetary policy

Maybe see post #178939 regarding Babylon.

I do recall, that there was some discussion, and that more than one had pointed out, the 2520 years was not only an invalid speculation, but it did not coincide with 2015.

This “seven times” of dominion extended from 607 B.C. to 1914 A.D. But instead of ending, as one would normally expect, we saw the establishment of the Federal Reserve Bank, which extended our captivity for another century to the present time. The Federal Reserve Act was passed on December 23, 1913, and its hundredth anniversary is due in about two weeks on December 23, 2013.

The reason for the “extension of life,” prophesied in Daniel 7:12, is because Judah and Jerusalem were independent of beast rule from 163 to 63 B.C. after Antiochus Epiphanes desecrated the temple. The Judeans threw off the rule of Syria (part of the Grecian beast) in 163 B.C. and remained independent until Rome took Jerusalem in 63 B.C. Thus, the 2,520-year contract was suspended for a century, on account of Antiochus’ desecration, and this time had to be added at the end from 1913/14 to 2013/14.

It appears that we are now at the end of this time period. Of course, keep in mind that Jerusalem was originally captured by Babylon in 604 B.C., which was three years after Babylon became an empire in 607. If we date things from 604 B.C., then the 2,520 year contract should have ended in 1916/1917, and the added century would take us to 2016/2017. So in the big picture, we will probably see some sort of 3-year transition in the fall of Babylon.”

It was just yesterday when we documented the continuing slide in the loonie, which is suffering mightily in the face of oil’s inexorable decline.

As regular readers are no doubt acutely aware, Canada is struggling through a dramatic economic adjustment, especially in Alberta, the heart of the country’s oil patch. Amid the ongoing crude carnage the province has seen soaring property crime, rising food bank usage and, sadly, elevated suicide rates, as Albertans struggle to comprehend how things up north could have gone south (so to speak) so quickly.

The plunging loonie “can only serve to worsen the death of the 'Canadian Dream'" we said on Tuesday.

No "Jack Nasty" it's not The Great Depression, but as we highlighted three weeks ago, it is Canada's depression and it's likely to get worse before it gets better. "Last year, fruits and veggies jumped in price between 9.1 and 10.1 per cent, according to an annual report by the Food Institute at the University of Guelph," CBC said on Tuesday. "The study predicts these foods will continue to increase above inflation this year, by up to 4.5 per cent for some items."

If you thought we were being hyperbolic when we suggested that if oil prices don't rise soon, Canadians may well eat themselves to death, consider the following from Diana Bronson, the executive director of Food Secure Canada:

"Lower- and middle-class people — many who can't find a job that will pay them enough to ensure that they can afford a healthy diet for their families" — also feel the pinch of rising food prices"

"The wrong kind of food is cheap, and the right kind of food is still expensive."
In other words, some now fear that the hardest hit parts of the country may experience a spike in obesity rates as Canadians resort to cheap, unhealthy foods. As we put it, "in Alberta it's 'feast or famine' in the most literal sense of the phrase as those who can still afford to buy food will drown their sorrows in cheap lunch meat and off-brand ice cream while the most hard hit members of society are forced to tap increasingly overwhelmed food banks."

And the rub is that there's really nothing anyone can do about it.

Were the Bank of Canada to adopt pro-cyclical measures to shore up the loonie, they would risk choking off economic growth just as the crude downturn takes a giant bite out of the economy - no food pun intended.

Here is an interesting article quoting a high-ranking economist, William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS).

http://www.telegraph.co.uk/finance/finan...nk-veteran.html


I’m not sure that the Sumerians practiced debt jubilees, but I find it interesting that the word “jubilee” is now becoming part of economists’ jargon. Just ten years ago, no one ever used the word in public.