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China Contracts: HSBC Flash Mfg PMI At 48.9, Down Form 50.1, First Sub-50 Print In A Year As Agriflation Still Rages

Tyler Durden's picture




 

The rumors were true: after printing on the verge of a contraction back in June, July's HSBC Manufacturing PMI is now sub 50, or 48.9: the first sub-50 print in this particular series in a year. This confirms that the manufacturing sector is now in contraction mode. The immediate kneejerk response is a 20 pip slide in the EURUSD which has retraced half the surge on the earlier, and repeatedly priced in, news about the nth Greek bailout. Now if only China could slow down that inflation to go alongside its economic contraction, which unfortunately as the following chart from Bloomberg demonstrates, will be a difficult proposition.

 

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Wed, 07/20/2011 - 22:46 | 1476007 vote_libertaria...
vote_libertarian_party's picture

ummmm...how are you the mfg center of the world, have 10%+ GDP growth and a contracting PMI???

 

Oh...never mind...buy buy buy

Wed, 07/20/2011 - 23:01 | 1476045 Cursive
Cursive's picture

@ vote_libertarian

ummmm...how are you the mfg center of the world, have 10%+ GDP growth and a contracting PMI???

Word.  Believe none of what you hear and half of what you see.

Thu, 07/21/2011 - 02:48 | 1476273 Michael
Michael's picture
Foxcom of China employees more that 300,000 people manufacturing stuff for these guys.I bet the total number of employees employeed by these big guys in the US don't add up the number of employees that company in China Foxcom has. How many Google employees are employed in the US?
As of June 30, 2008, it had 19,604 workers. How many Microsoft employees are employed in the US?
USA 56,654 How many Google employees are employed in the US?
As of September 27, 2008, the Company had approximately 32,000 full-time equivalent employees and an additional 3,100 temporary equivalent employees and contractors. Etc. Etc. The total number of people employed by the big tech companies don't even add up to 1 million people I bet. Why do they keep screaming for more H1B visas when I'm sure among the 330 million people living in the USA, they could easily find the people they need from that lot?
Wed, 07/20/2011 - 22:48 | 1476009 vote_libertaria...
vote_libertarian_party's picture

Off topic

 

Maddow implied today the Repubs (Boehner and McConnell) were hastily called to the White House late in the day because Moodys may announce the official downgrade away from AAA.

 

buy buy buy

Wed, 07/20/2011 - 22:51 | 1476017 Tyler Durden
Tyler Durden's picture

According to Maddow a failure to raise the debt ceiling would result in a surge in the budget deficit.

Wed, 07/20/2011 - 22:57 | 1476037 cat2
cat2's picture

Shouldn't that be impossible?  Am I just slow?

Wed, 07/20/2011 - 23:17 | 1476070 bob_dabolina
bob_dabolina's picture

I dunno. I've seen some crazy shit. 

We're close to 17% U-6 and food stamp participation @ an all time high, with some of the lowest labor participation ever on the back of a weak real estate market. The DOW is still only 1-2 thousand points off it's all time high and Apple sold almost every IPAD it could make.

BTW those results only carried a price tag of 5 or so trillion dollars.

Wed, 07/20/2011 - 23:42 | 1476110 SouthHedge
SouthHedge's picture

10/10

Thu, 07/21/2011 - 00:52 | 1476209 kito
kito's picture

its all good because americans are using their credit cards again!!!!! 

http://www.bloomberg.com/news/2011-07-21/consumers-in-u-s-relying-on-credit-as-inflation-erodes-incomes.html

Thu, 07/21/2011 - 02:31 | 1476262 TruthInSunshine
TruthInSunshine's picture

Debt slavery is so old school as a means of expanding the economy/brutalizing people/prolonging the Ponzi-Pyramid Scheme.

When are they going to think outside of the box?

Fractional Reserve Banking & Fiatskiism needs to reinvent itself...do something bold, fresh and new.

 

Thu, 07/21/2011 - 01:31 | 1476230 Ham Wallet
Ham Wallet's picture

All time stock highs vs. Gold??? Umm no.

Wed, 07/20/2011 - 23:34 | 1476099 Reven
Reven's picture

She may mean the corresponding plunge in tax revenue that would inevitably follow the instant austerity of the debt ceiling.  So if we borrow 42 cents of every dollar now, the shortfall could be over 50 cents once GDP starts declining.

Thu, 07/21/2011 - 01:42 | 1476238 Ham Wallet
Ham Wallet's picture

According to Maddow, a vagina is a penis.

Thu, 07/21/2011 - 06:08 | 1476328 richard in norway
richard in norway's picture

it is, just inverted or something

 

we are all female until we get a massive dose of testosteron and then the vagina/clitoris gets inverted into a penis

 

I'm resisting the urge to start talking about sex change operations

Thu, 07/21/2011 - 02:13 | 1476255 Derpin USA
Derpin USA's picture

If a default occurs, it could cause interest rates to rise. Woudn't that increase the deficit?

Thu, 07/21/2011 - 02:25 | 1476257 TruthInSunshine
TruthInSunshine's picture

Not if the underlying debt was wiped out. Some claim that we could/will have a partial default, in which case, yes, possibly?

In any event, nothing is ordinary now, whether bond or priceline.com share prices.

So, a default would probably cause interest rates on any future bond issuances to plunge.

And the dollar would probably skyrocket, also, causing precious metals, junk bonds, fine art and vintage muscle cars to either explode and/or plunge.

And commodities would absolutely explode/plunge/stabilize, also.

Thu, 07/21/2011 - 05:34 | 1476320 Havana White
Havana White's picture

Explunge.

Wed, 07/20/2011 - 22:54 | 1476025 TruthInSunshine
TruthInSunshine's picture

I wouldn't want to engage in hyperbolic ranting or jump to unwarranted conclusions here, but -

1) I find China's dilemna to be a quite stark one, with contraction apparently setting in and inflation raging (contractflation?).

2) Why wasn't this number spun? IOW, why didn't China lie?

 

Something much larger than China is afoot, and coordinated?

Wait - I said no hyperbolic ranting. And I meant it.

 

Thu, 07/21/2011 - 00:28 | 1476180 Reven
Reven's picture

Perhaps continuing to print Yuan to buy Dollars as the basis for a trade strategy has inevitable drawbacks (just like QE)?  The Chinese have to stop supressing the value of their currency.  The market may be slow to force change, but it will come in the form of an economic earthquake as the tectonic plates can sustain no more pressure.

Thu, 07/21/2011 - 00:39 | 1476194 TruthInSunshine
TruthInSunshine's picture

I'm the furthest thing from a China expert, but I'd think the leaders are far more worried about rising unemployment and economic contraction, on balance, versus inflation, given their demographics and the current economic conditions around the globe and within China as of now.

 

Thu, 07/21/2011 - 00:51 | 1476208 Reven
Reven's picture

Now they may get economic contraction, rising unemployment, AND inflation as a result of their shortsighted policies.  Growth by any means necessary is not a strategy for winning.  China is far too eager to be a world super power, and they're making major mistakes in my humble opinion, the kind of mistakes that blow up in your face and cause that which you most fear, total social chaos.

Thu, 07/21/2011 - 00:56 | 1476211 TruthInSunshine
TruthInSunshine's picture

I am thinking maintaining the highest # of people employed given the factors unique to their social and political structure and situation is their current focus.

Again - just my free opinion. China has a potential FUBAR crisis if unemployment rises significantly as a avalanche type condition could be triggered (maasive number and % of under 20 year olds).

Thu, 07/21/2011 - 09:19 | 1476717 SoNH80
SoNH80's picture

One thing worth keeping in mind is that 70%+ of the Chinese population is composed of semi-subsistence peasants.  These inflated food prices are good for the peasants, who feed themselves by trading in their villages (barter), and sell the surplus to the urban markets nearby.  So, the ChiComs are keeping that 500-pound panda happy.  The noveau riche in the cities (aka ChiCom nomanklatura and friends) don't care about sesame oil going up a few cents in price.  It's the urban working class that's getting boned by this, and when the construction frenzy grinds to a halt and people get laid off.......... that's what keeps the Politburo up at night.  They remember 1927..... 

Thu, 07/21/2011 - 10:46 | 1477087 TruthInSunshine
TruthInSunshine's picture

1927.

Indeed.

I wonder how many ex-construction workers Foxconn can absorb when the inevitable building boom does grind to a halt, as you so aptly put it.

Wed, 07/20/2011 - 22:54 | 1476027 papaswamp
papaswamp's picture

Whooops

Wed, 07/20/2011 - 23:03 | 1476049 HungrySeagull
HungrySeagull's picture

Oh shit.

Hurry! Save the Cooking Oil!

Wed, 07/20/2011 - 23:05 | 1476051 bob_dabolina
bob_dabolina's picture

China Rapemeal has grinded to a halt. 

I guess we have enough Weiners, Boehners, and Dicks to compensate for the Rapemeal slack in China.

Wed, 07/20/2011 - 23:37 | 1476089 GiantWang
GiantWang's picture

How long before the entire illusion of control by policy makers disappears?

Wed, 07/20/2011 - 23:26 | 1476090 camoes
camoes's picture

Release the Kraken! And by Kraken, they mean the trillions of US dollar trash they have in reserves for the rainy day!!!Goodbye US dollar, hello commodities!!!

Chinese stimulus bitchez! this one works cause they're not printing trash, just spending what they already had...

Wed, 07/20/2011 - 23:32 | 1476098 chump666
chump666's picture

...and the Chinese are gonna love USD selling on that maniacal Obama/Bernake.  Oil inflation on a crunched PMI  = crash

Wed, 07/20/2011 - 23:53 | 1476124 Caviar Emptor
Caviar Emptor's picture

The great Chimerica experiment, launched in 1971, is starting to sag. The imbalances that gave it life are now reversing. It's no longer acting as a solution to the problem of inflation brought on by the death of the gold standard and too much money printing.  

Thu, 07/21/2011 - 00:11 | 1476148 Space Potato
Space Potato's picture

There was once an awesome industrial punk band called "Cop Shoot Cop," When asked why they named their band that they said "Most problems usually take care of themselves."

Check it http://en.wikipedia.org/wiki/Cop_Shoot_Cop

Thu, 07/21/2011 - 00:37 | 1476191 spear-x
spear-x's picture

Hitler operated on that basis.

Thu, 07/21/2011 - 00:45 | 1476201 Oh regional Indian
Oh regional Indian's picture

Who is making what and selling to whom? Who is shipping crap that was mostly crappily made, often toxic to boot, offering cheap credit to cheap people, so they, unable to pay, buy cheaper crap.

Such a crap filled, vicious downward spiral of supply side, borrowed and deficiently spent ponzimoney. China PMI.
NUMBers!
ORI

http://aadivaahan.wordpress.com/2010/07/24/value-vs-price/

Thu, 07/21/2011 - 00:50 | 1476207 Space Potato
Space Potato's picture

No, he pretty much created the problems and solutions for himself. Man made, I deal in universal.

Thu, 07/21/2011 - 00:52 | 1476210 MiddleageThinni...
MiddleageThinninghair's picture

I have a couple Zero Hedge concerns:

1) I constantly need to reset my password through my email account.  Why does the Zero Hedge site not recognize my password.

 

2) I would like to donate some money to Zero Hedge but I am concerned about the governments being aware of any donation.  Does anyone have an insight into this.

 

Thanks,

Thu, 07/21/2011 - 02:20 | 1476256 Peter K
Peter K's picture

Looks like the beginning of the end of the Euro project. Once the Chinese stop slow down in buying all things German, who will prop up the EuroProject? Hint: Mind the Gap;)

Thu, 07/21/2011 - 02:28 | 1476259 TruthInSunshine
TruthInSunshine's picture

The Germans are well underway building many 'German' things in China.

They're not as far along as the U.S., but they will catch up - maybe.

Chinese made Harley-Davidsons & Porsches will share highways.

I buy 100% American made chopsticks whenever possible.

Thu, 07/21/2011 - 06:27 | 1476341 djcando
djcando's picture

Minnesota is the world's largest chopstick producer.

Thu, 07/21/2011 - 02:28 | 1476261 qussl3
qussl3's picture

Youre more likely to see total economic collapse in china before you see the robber barons stop their consumption.

Take NK as an example.

Thu, 07/21/2011 - 05:36 | 1476322 PaperBear
PaperBear's picture

Do we need a dose of global QE ?

Thu, 07/21/2011 - 06:26 | 1476339 djcando
djcando's picture

Looks like it's crude protien and wheat again tonight!

Thu, 07/21/2011 - 06:27 | 1476340 buzzsaw99
buzzsaw99's picture

speaking of hsbc (from reuters):

...the U.S. Internal Revenue Service said it would give foreign financial institutions another six months to start complying with a new law to prevent offshore tax evasion by Americans under a phased-in schedule of compliance. Under the deal, institutions now have until June 30, 2013, to reach agreements with the IRS on cooperation. These agreements previously had been expected to be concluded by the end of 2012...

Thu, 07/21/2011 - 06:33 | 1476345 papaswamp
papaswamp's picture

I could see Boris drooling over this. Put you money in our banks we don't care what your government thinks.

Thu, 07/21/2011 - 06:44 | 1476354 buzzsaw99
buzzsaw99's picture

hsbc is complying but as you say there are some who won't care what the irs or turbo timmy want. ironic when you think about it, a tax evading treasury secretary getting hosed by a bunch of wealthy tax evaders. sweet karma served up a double portion.

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