Today was a disaster for Chinese economic data. In the table below, we can see that every single data point missed consensus expectations in the wrong direction. Activity undershot expectations across the board. Data for China has been trending down for most of the year, and...
One metric I look at fairly often for various countries is the relationship between the performance of stocks vs. bonds. The idea is straightforward enough: when stocks are outperforming bonds, it tends to be associated with a growing economy. When bonds are outperforming stocks, it...
China reported year-over-year inflation last night at just 0.1%, 0.2% lower than expectations. Clearly China’s reopening is not creating price pressures, which brings the strength of the reopening into some question. Recently, we saw a fairly significant drop in China’s PMIs—all of them well below 50—indicating...
For decades since the end of the Cold War there have been very limited restrictions on foreign investments by US investors compared to those of other countries. This has allowed US investors to transact in a wide array of international investment options. Indeed, following the...
With Caixin China PMI numbers today broadly confirming Monday’s official CCP data, the outlook for China and its neighbors remains bright. The general trends shown in the Caixin PMIs reflect those of Japan and South Korea. Manufacturing held steady or gained slightly across Asia in...
In an abrupt volte-face, on December 7, 2022, China announced an end to its “Zero-COVID” policy after the country endured almost three years of damaging lockdowns. This began a flurry of speculation on the impact that China’s reopening would have on the world economy. Central...
All year inflation has been the narrative driving markets. Since December 2021, once the Bloomberg Commodity Index (BCOM) took off, rates have risen in tandem. But, interestingly enough the BCOM has been flat since peaking on March 8, 2022. Every day we seem to be blasted...
For a confluence of reasons ranging from COVID to property sector problems, China has been experiencing slower growth. Many cross-asset relationships suggest that a devaluation in China could help spur growth. Whether this will happen is another story, but if the Chinese Yuan began a...
Since May 2020, the Chinese Yuan has defied the path of other emerging market currencies, strengthening by almost 12%. This has left it overvalued compared to other emerging market countries. While Yuan strength made sense in 2020 when the USD was weakening. It is curious that in...
Yesterday saw the monthly slue of Chinese economic stats and the key feature among them was the continued broad-based weakness. The weakness in some of these statistics has been so pronounced (some things like IP and retail sales are at levels near or below those...
Last week we wrote that 2014 marked another year in which Chinese companies increased the leverage on their balance sheets. In fact 2014 marked the 10th consecutive annual increase in aggregate leverage as measured by total liabilities as a percent of equity. Meanwhile profit margins...
Not to take anything away from what has become a bona fide bull market in China, but we have been pretty skeptical that the rally in domestic Chinese shares has anything to do with corporate fundamentals. It more likely has to do with central bank...
The latest Chinese CPI and PPI readings were released today and showed the lowest year-over-year change in CPI since 2009 and yet another negative PPI reading (chart 1)....
The last few days brought another round of rather weak economic readings out of China. We saw total social financing (loans) drop to the lowest growth rate since 2006, measures of inflation turn lower, foreign direct investment decline on a year-over-year basis for the first...
