B.R.I.C.S BUILDING WITHOUT THE WEST

Charles Payne 


Yesterday, BRICS nations (Brazil, Russia, India,
China, and South Africa) formally announced
the creation of a special reserve fund that will
rival the International Monetary Fund (IMF).
BRICS Fund in
Billions Country IMF in
Billions
$41 China $9.5
$18 Russia $5.9
$18 Brazil $4.3
$18 India $5.8
$5.5 S. Africa $1.9
In addition, a $50 billion Development Bank
(each nation contributing $10 billion) will be
created to help non-member nations build out
their infrastructure. Who knows, maybe
America could dip into the fund to help bridge
the gap in the financing needed to improve
highways and bridges by 2020. According to
the America Society of Civil Engineers,
governments (state and federal) will fall $1.6
trillion short of the $3.6 trillion needed.
Of course, that is not going to happen. In fact,
BRICS and other nations in developed
countries believe that the IMF, which made
draconian resources involving the decolonized
nations, have been overly generous to
European borrowers.
IMF
The IMF was created in July 1944, at the
Bretton Woods Conference. IMF Special
Drawing Rights (SDRs) are issued through the
General Resource Account (GRA) to borrowers:
117 Members
$302 Billion Total Assets
$3.2 Billion Gold
$142.7 Billion Currencies r Genl Resource
Account
General Resource
Account SDR % Outstanding
GRA
Africa 856 0.9
Asia/Pacific 1,640 1.8
Europe 80,373 89.2
ME/CA 5,931 6.6
Western Hemisphere 1,382 1.5
The move by BRICS is an extension of the
financial deals between them and other non-
western nations. It illustrates a determination
to eventually move away from the US dollar
and further mitigate America's influence. Part
of the issue is President Obama's waning
popularity; according to Pew, only South Korea
has a higher favorable opinion than in 2009.
The other part of the equation is the growing
economic clout of the emerging nations and
sleights felt through the large international
organizations like the World Bank and the
IMF.
Brazil, Russia, India
and China
% World
GDP
% IMF
Voting
24.5 10.3
Germany, France,
UK, Italy
% World
GDP
% IMF
Voting
13.4 10.6
Brazil, Russia, India and China
It's a good wake-up call for the United States,
which has to decide if it wants to bow out
(somewhat) gracefully or continue to be the
economy that stirs the global economic drink.
Economic Date and Corporate Earnings
Earnings beats from huge names turned equity
futures around, although there is a cautious
aura about them.
> Goldman Sachs $4.10, Street was looking
$3.05
> JP Morgan $1.46, Street was looking for
$1.30
> Johnson & Johnson $1.66, Street was looking
for $1.55
Retail Sales came in +0.2 against consensus of
+0.6, but April and May were both revised
higher. Out of the 13 total categories, 9
categories came in higher and the ex-auto was
+0.4, in-line with the Street consensus.
Retail sales might be stronger than
government data, in terms of moving the
market, as chain store sales are climbing
higher each week with strong year over year
changes.