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Chart: Chinese Junk Dollar Bonds Set for a Record-extending Seventh Straight Loss

Source : Bloomberg


China Youth Jobless Rate Drops Slightly From Record in August 2022

China’s youth unemployment eased in August from a record in the previous month, a surprise slowdown at a time when new graduates usually flood the labor market.

The surveyed jobless rate for those aged 16-24 slid to 18.7% last month from 19.9% in July, the National Bureau of Statistics said Friday, the first decrease in 10 months. The national urban unemployment rate also eased, to 5.3% from 5.4%.

The improvement in the jobless rate came alongside better-than-expected figures for industrial production and retail sales as the economy shows some signs of recovery.

Youth unemployment usually peaks during graduation season around July and August each year, with a record 10.76 million students estimated to enter the job market this summer.

Despite the improvement last month, the unemployment rate remains close to 20% for young people and will continue to be a concern to policy makers, especially ahead of the Communist Party’s twice-a-decade leadership congress next month.

The government has recently stepped up policy incentives to address the problem, including expanding subsidies to businesses that hire fresh university graduates. However, economists say structural changes in the economy mean the youth jobless rate will remain elevated.

“No amount of manufacturing and infrastructure stimulus would be effective in relieving” the problem, Morgan Stanley analysts including Robin Xing wrote in a report last week. “Younger cohorts prefer opportunities in services” and recent graduates “suffer from skill mismatch due to unrealized expectation of high growth in the tech and education sectors,” they said.

Source : BNN Bloomberg

Infographic: World Cup in Qatar – The Most Expensive Ever

Source : Statista

What Does The Yuanization Of The Russian Economy Mean For The Dollar?

By The Jamestown Foundation . . . . . . . . .

On September 12, Russian President Vladimir Putin stated that, given mounting economic sanctions, full “de-dollarization” of the Russian economy is only a matter of time. Putin`s remark was preceded by a statement from Russian Deputy Finance Minister Alexey Moiseev, who argued that “Russia no longer needs the US dollar as a reserve currency.” Instead, Russia must accumulate funds in currencies of so-called “friendly countries,” such as the Chinese yuan, which is playing a key role in this regard. The idea of departing from the US dollar as a reserve currency is by no means new to Russia: It was first entertained in the 1990s. By 2018, Moscow had devised a “plan on the de-dollarization” of its economy. Prior to the outbreak of Russia`s war against Ukraine on February 24, Dmitry Medvedev stated that, if the Kremlin`s operations with US dollars were to be restricted, Moscow could fully switch to the yuan and euro instead. However, following Russia`s attack on Ukraine, the United States, the European Union, and other large economies have effectively barred Moscow from using their national currencies. As a result, aside from the Turkish lira, the United Arab Emirates` dirham and the Indian rupee—each of which cannot be fully relied on due to a number of factors—Russia has been reduced to the use of the yuan as an alternative reserve currency to the US dollar and euro.

Growing popularity of the yuan in Russia reached an intermediary zenith in August 2022, when sales of the Chinese currency skyrocketed. Importantly, business giants, including Rosneft, Rusal, Polus and Metalloinvest, dramatically increased their investments in yuan bonds. As stated by Alexander Frolov, deputy director of the National Energy Institute, it makes perfect sense for Rosneft (and other resource-producing companies) to strengthen cooperation with the Chinese side via increasing the yuan’s use in their operations.

Yet, while many Russian experts and officials are applauding the decision to increase the yuan’s use in financial operations, other experts and officials share serious doubts and concerns. For instance, during the Moscow Financial Forum, Russian Minister of Finance Anton Siluanov and Maxim Oreshkin, current economic adviser to Putin, disagreed on the yuan’s role as a reserve currency. While the former stated that currencies of foreign “friendly countries” should become a key factor in diversification of assets, the latter disagreed, arguing that all monetary reserves must remain in Russia’s national currency. Interestingly, even one of Russia’s main proponents for “de-dollarization,” Andrey Kostin, chair of the VTB Bank management board, speaking at the Eastern Economic Forum (September 5–8) in Vladivostok, argued that, while there are many positive aspects related to the use of the yuan, other negative aspects reveal the risks of overreliance on the Chinese national currency, which is stipulated by “distinctive features of Chinese financial legislation”.

From his side, well-known Russian economist Stanislav Mitrakhovych indicated three main risks Russia could face when increasing reliance on the yuan. First, the Russian Federation does not have the necessary skills and infrastructure to work with the Chinese currency. Although manageable over the long term, for now, the Russian financial system is ill-equipped and largely unprepared for the challenges of relying more on the yuan. Second, a high level of nonmarket regulations will make the process incredibly difficult. Unlike Russia’s previous experience of dealing with foreign currencies—both the US dollar and euro are currencies of free-market economies—the yuan’s price is regulated by the Chinese state. Thus, when in need, Beijing can easily manipulate the price of the yuan (say, to create favorable conditions for foreign trade). This could leave Russia as a “hostage” to Chinese interests. Third, despite China’s growing trade power and economic might, the yuan has not yet become a fully independent currency, remaining tight to other leading global currencies. Thus, it should be remembered that—at least in the short term—the yuan will still be tight to the US dollar, meaning that the Chinese national currency might become an excellent investment tool for the future. For now, however, “making a bet solely on yuan could be a risky enterprise”.

Other Russian economists have also drawn attention to the fact that operations with the yuan could pose multiple risks. For instance, even ultra-conservative Russian information outlets have argued that the People’s Bank of China (PBC) could easily devalue China’s national currency, which could result in serious challenges for Beijing`s partners who are investing in the yuan. Thus, despite its decreasing volatility, the yuan remains a somewhat challenging investment tool, whose exchange rate is almost fully dependent on the PBC. Interestingly, now—only after Russia was barred from operations with the US dollar and euro—Russian economists are starting to realize that it is much safer and more beneficial to work with transparent reserve currencies. For instance, Sofia Donets, an economist at Renaissance Capital specializing on Russia, complained that, if before, Russian economists and finance experts could easily access and read all regulations in “plain English,” now, working with the Chinese side, regulations are opaque and unclear.

In truth, some of the challenges feared by Russian economists and finance experts regarding Russia’s growing involvement with the yuan are coming true. The Russian side has been compelled to admit that Moscow’s inquiry to China to strengthen their partnership in the realm of financial cooperation has not been strongly supported by Beijing. In effect, Chinese authorities are unwilling to change domestic regulations to allow its investors to operate with Russia-issued bonds. Instead, China is more comfortable with foreigners investing in its so-called “panda bonds,” which are sold only in the internal Chinese market. Moreover, Russian experts fear that, with 17 percent of foreign exchange reserves in yuan, the Kremlin will not be able to pull money promptly when needed, thereby becoming trapped by China.

Source : Oil Price

Chart: The Letters of Economic Recovery

See large image . . . . .

Source : Business Times Singapore

Charts: Euro Area Inflation Surged to New High

Source : Bloomberg and Eurostat

U.S. Case-Shiller 20-City Composite Index Recorded First MoM Drop in Ten and Half Years

Source : Bloomberg

In Pictures: Food of Schloss Schauenstein in Fürstenau, Switzerland

Fine Dining Creative Modern Swiss Country Cooking

No.40 of The 50 Best Restaurants in the World 2022

Why Do We Eat Food That We Know We Shouldn’t?

Morgan Hines wrote . . . . . . . . .

I’m lactose intolerant and I know I should keep an eye on my cholesterol, but neither of these factors stop me from picking at a cheese board or ordering ice cream for dessert.

I’m aware while I am eating that my choices aren’t benefiting future me. I never feel good after, yet I keep repeating the cycle.

I don’t know why I keep doing it. I often swear that I’ll stop. “No more cheese,” I say to myself, or, “I’ll stay away from sugar.” But somehow, even with the restraints I put on myself, I still want what I “shouldn’t” have – sometimes even more.

I’m not the only one who struggles with this. When I shared my problems with this decision-making process on Twitter, several users replied with their own stories about foods they consume despite being better off staying away from them.

Zach Honig wrote that even though he knows he’s susceptible to gout, he still indulges in red wine, rich foods and beer. “I just deal with the gout attacks from time to time.”

Like me, Victoria M. Walker refuses to give up dairy. And @ACHolliday replied that they have cysts and aren’t supposed to drink coffee, but sometimes they still do because it provides “comfort”.

Sean Devlin added that food helps to get through the “slog” of the daily grind. Another user, @pablopaycheck, said they choose to eat foods that maybe they shouldn’t “Because yoloooooo”, meaning because you only live once.

Why do we keep choosing foods that we shouldn’t?

The answer isn’t clear cut. There are a variety of reasons we choose to eat what we eat that depend on the individual, their circumstances and other factors.

There’s a spectrum when it comes to healthfulness and food. All foods can fit into a healthy diet, says David Creel, a psychologist and registered dietitian with Cleveland Clinic’s Bariatric and Metabolic Institute in the US.

But there are less healthy foods that we choose to consume even when we can foresee negative consequences like stomachaches or higher cholesterol levels, down the line.

“Some people actually think about it – they might [perform a mental] cost-benefit analysis … ‘What am I going to get from this? What does it cost me?’ and they make a decision based on that,” Creel says.

But that’s not how everyone’s brain works. For others, habit plays into the decisions they make. “A lot of people, they just kind of do what’s familiar to them, and they don’t do it with a lot of thought.”

What happens in the brain when we choose to eat something? Two areas are stimulated during the eating process.
“We know from people who do brain research that there tends to be two different drivers: liking food when we eat it – our brain responds and we can see that through imaging – and there’s also a ‘wanting’ piece,” Creel says.

Both are important. If someone is having a craving, that’s a “wanting” experience. It’s similar to when someone who smokes is asked if they like to smoke. They may not “like” to, but they do crave a cigarette. Certain emotional states may cause you to crave specific foods, too.

The “liking” experience comes after eating or experiencing a food. Sometimes, liking and wanting feed into each other, but they happen in different areas of the brain, Creel explains.

The physiology of how we decide what we want to eat is complex. It also varies based on who is making the choices.
So, what are some of the factors that play into the way we choose food if we aren’t actively assessing what the outcome of our eating decisions will be?

Foods that taste good and seem “fun” are appealing to us.

“The reason we consume those things that we shouldn’t for whatever reason is typically driven by taste or flavour,” says Charles Spence, a professor of experimental psychology at the University of Oxford, in the UK.
“It’s hard to resist the temptation of the sugar, or the salt or the fat.”

And part of why foods taste good is based on the associations we make with those foods.

“I ask my patients a lot: ‘What would you describe as a fun food?’ And things like pizza, or ice cream or cake, they come up,” Creel says.

Another association might be how comfort foods are identified. Creel associates home-made buttermilk biscuits with his grandmother. Conditioning from our upbringing contributes to how we associate food and when we want it.

So, it might not even be the food’s flavour or taste that appeals to us as much as the association we make with the food, Creel says.

Spence says that, as humans, we tend to prioritise what happens in the present over anything likely to happen in the future. People “might be drawn more to the reward of those … typically great-tasting foods in the moment because we weigh that more heavily,” he explains.

How we choose what we consume also has to do with human history and evolution, according to Spence. The human brain, he says, will pay more attention to foods that are energy-dense, with extra attention to those high in fat.
We’re evolved, he supposes, to find those foods attractive because at one point they were essential to survival.

Long ago, perhaps people were struggling to find sufficient food. But now, many of us live in a “food-rich environment”, Spence continues, explaining that some of the foods are more energy-dense than we need now.

“The brain evolved for feeding, foraging and fornicating,” he says, noting we all find it hard to override what he calls “ancient urges”.

Creel says he often encourages patients he sees to pause before taking action and consider their choice – not to see anything as “forbidden” but as two options that could have different outcomes.

“If you tell yourself ‘I should have one thing’ and ‘I shouldn’t have another thing’, it kind of sets us up to not do well,” he explains.

For example, if we say to ourselves “I should have an apple” and “I should not have cake”, you either eat the apple and feel like you missed out on the cake, or eat the cake and feel guilty because you didn’t eat the apple.

But if you look at these choices while weighing the outcomes, your actions will likely be different.

Changing “shoulds” to “coulds” gives you freedom to make the decision while removing any guilt, Creel says.

So, if you “could” have an apple or you “could” have cake, your decision might look more like this: you could choose to eat an apple that you think you will enjoy, or you could choose to enjoy the cake because it’s your favourite kind – and you don’t have guilt because you consciously came to the conclusion that eating the cake was worth it.

Making mindful decisions doesn’t just eliminate guilt. Creel says that it may also lead you to avoid less healthy choices.

Being mindful can enhance the enjoyment of all kinds of foods, he says.

“I think it can really help on both sides of the equation – it can be helpful to not over-consume unhealthy foods, and can help promote the consumption of healthier foods.”

Source : SCMP