Tag Archives | China

The real challenge is a lack of challenge

We all remember the Hans Christian Andersen story about the Emperor with no clothes.  His subjects were told that only those who were stupid or incompetent would be unable to see his wonderful new suit. Of course, nobody wanted to appear stupid or incompetent.  So when the Emperor paraded in his new clothes, nobody wanted to tell him the obvious.  It was left to a child […]

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Shiller warning suggests S&P 500 bubble coming to an end

Nobel Prizewinner Prof Robert Shiller correctly forecast the dot-com collapse in 2000, and the 2008 financial Crisis, using the chart above.  Now he is warning we risk a 3rd collapse. The problem is that Western central banks have undertaken the largest financial experiment in history.  Their policy has been to boost financial markets, particularly the US S&P 500 - the world’s […]

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Global stock markets still depend on low-cost money for support

The blog’s 6-monthly review of global stock markets highlights the narrow nature of the advance since September 2008, when the blog first began analysing developments.  It shows their performance since the pre-Crisis peak for each market, and the performance of the US 30-year Treasury bond. Remarkably, only the US, India, Germany and the UK stock markets […]

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Great Unwinding of policymaker stimulus creates interest rate risk

Interest rate risk is rising in the developed economies as the Great Unwinding of policymaker stimulus continues.  Since the blog first highlighted this Unwinding last month: Oil prices have continued to tumble, with Brent now down over $15/bbl from its late-June peak The US$ has continued to rise from multi-year lows versus the yen, euro and pound And of course, […]

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China Transformation webinar tomorrow

Today is Mid-Autumn Festival day in China, held to celebrate the harvest.  Traditionally it features the exchange of moon cakes filled with lotus paste and egg yolks, whilst children go to lantern parades. But in recent years, it has also become synonymous with corruption.   Silver moon cakes, as pictured above, became a common gift for […]

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“Serious economic cooling-off” makes China’s GDP likely to go negative, again

We all know that China’s published GDP figures are meaningless.  China’s premier, Li Keqiang, has told us so.  And common sense tells us that no country, large or small, can possibly produce accurate GDP data within 2 weeks of the end of a quarter.  Nor is it possible to believe that this data never needs to […]

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China’s waning stimulus spells trouble for the world’s biggest car market

The blog’s latest post for the Financial Times, published on the BeyondBrics blog is below. By Paul Hodges of International eChem China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead. The strong link between lending and passenger car sales […]

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China’s housing market enters New Normal as prices slide

Markets appear to be continuing to move, slowly but surely, into their expected ‘scary phase’.  The reason is the massive distortions that have been created in financial markets, and in China’s housing market, by the $35tn+ of stimulus from governments and central banks since 2009. Unwinding these distortions will not be simple.  The stimulus has not returned us […]

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China condom sales droop 1 million/day on anti-graft campaign

Condom sales have dropped by 1 million/day in China according to The Economist magazine.  It highlights how: Across China, luxury retailers and fancy restaurants are suffering from an edict against wasteful government spending. A chill has crept into karaoke parlours and brothels; mistresses also face a hard time. The reason is the new leadership’s anti-corruption […]

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China auto market to focus on low-cost, not luxury

The key to forecasting China’s auto demand since 2008 has been the level of bank lending, as the chart above shows.  This was critical in making China the world’s largest auto market.  Official data shows average disposable income was just Rmb 10k ($1600) in H1 2014, making it impossible for most people to buy a car out of income: […]

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