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A Detailed Look At China's August Trade Surplus
Last week the Chinese Customs Administration released its August trade balance details, which came at a hair over $20 billion, slightly short of analyst expectations. The number was a substantial decline from the July surplus of $28.7 billion, which had also resulted in a surge in the US trade deficit to $49.8 billion in the past month, which subsequently declined to $42.8 billion in July, prompting Morgan Stanley's David Greenlaw to boost its Q3 GDP estimate to 2.4% from 2.1%, after it had reduced its economic forecast three short weeks earlier. Notably the decline in the overall surplus was almost exclusively a function of declining exports, which dropped from $145.5 billion to $139.3 billion, which imports increased modestly to $119.3 billion from $116.8 billion. Most interestingly, for all those who considered this month's US trade data as indicative of a moderation in the reliance on Chinese exports, and a preemptive resolution of upcoming US-China trade wars, may want to reevaluate that assumption in the face of the Customs data showing that US Imports declined just marginally, from $27.4 billion to $26.7 billion, which was still the second highest number ever. In other words, with numbers near all time record on the margin, fluctuations at this point are merely noise as exporters and importers shifts shipments temporally: next month's data will most likely demonstrate a continued deterioration in the US trade deficit, putting further pressure on 2011 US GDP expectations, which an increasingly more pessimistic Goldman will likely soon reduce to sub-1%.
Chinese monthly gross imports and exports and net trade balance:
Monthly trade deficit by country:
China-US monthly trade balance:
China-EU monthly trade balance:
China-Rest of World trade balance:
Overall, the last month trade data was sufficiently noisy to not confirm any inflection points in an overall trend of increasing wealth transfer from the US to China. And yes, if China is truly as focused on developing its middle class as it parades, the trade surplus should continue declining. Although the probability of that happening is small at best. As for what will most likely end up happening, once the noise has washed out of the system, Michael Pettis sums it up best:
What does this all mean? I would argue
that the trade imbalances are getting worse, but the rising US trade
deficit is not being driven by another US consumption binge. No matter
what US consumers might choose to do, the US trade defcit will continue
rising as an automatic consequence of events and policies abroad, and as
they do, the US fiscal deficit will probably need to rise even faster
to minimize the employment impact. This will keep on going until the US
retaliates. For me this is not a matter of if, but when.
So what may be driving the increase in imports? This Friday's biggest jump in wholesale inventories (higher by 1.3% on expectations of 0.4%, the biggest surge since July 2008's 1.5%) may provide a clue as to how America is now copying all the tricky moves used by China in pretending the private sector is still viable. Of course, once inventory liquidations pick up once again, and wholeseller margins collapse, the impact on the GDP will be once again materially negative. But by then the S&P should be at A Joseph Cohen's target so it won't matter anyway.
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Critical pivot point for the Shanghai Index.
Bears need to turn this thing down ASAP, otherwise it's going to be a long September - October.
How fast will this comment thread devolve into another clusterfuck end-of-the-world discussion of bunkers/gold/bullets/truthers?
Anyone?...class?......Bueller?
Hey I got an idea .... lets send MONGO after Hal 9000 and see who wins :)
I'd say it depends on the length of the timeline
It's "Buellers day off." And mine as well. BBQ'ing doesn't get any better in Tulsa. Ain't nothing finer than an equity market slashing and burning while interest rates soar. Well...I take that back...you can still go to the Wal Mart "outdoor goods section" and see it well stocked. And did i even mention Cabela's or Gander mountain? Yeah...throw your beautiful wife out on the trail BO. If it were me I'd be keeping her as close and quiet as anyone would to "the only and greatest thing that ever happened to me." And don't forget your SecDef. I hear they can be good friends in time of need.
"Ain't nothing finer than an equity market slashing and burning while interest rates soar".
Yup - except it ain't and they're not.
DavidC
Cocca futures down 3% , again. Oh shit ...
Price at purchase .....................$3,000.00
Today's price...................$2,624.00
....( July 16) Armajaro’s bold bet on higher prices comes as cocoa prices have risen 150 per cent over the past two-and-a-half years, prompting recession-hit chocolate makers to reduce the size of their bars and increase prices.
Armajaro appears to believe that the market is going to spike significantly higher by September, traditionally the tightest period of the year as chocolatiers ramp up production ahead of Christmas and the main West African crop has not yet come to market.
Traders said that Armajaro, which runs several commodities funds, took delivery on Friday of 240,100 tonnes of cocoa, the biggest delivery from London’s Liffe exchange since 1996 and equal to about 7 per cent of annual global production.
http://www.ft.com/cms/s/0/e50feefc-9120-11df-b297-00144feab49a.html
That's too bad, B-B-Q always gets better in TEXAS!!!
Confucius say:
It is good for girl to meet boy in park, but better for boy to park meat in girl.
"For me this is not a matter of if, but when." - Yes eventually the calls for "more education" will get laughed out of the beltway - but not yet.
I didn't understand why the wholesale inventories was considered bullish. MSM called it a "sign of confidence" from corporations. Huh? Inventory to sales ratio went higher, so perhaps the inventory build was unintentional - a sign of slowing sales?
China will report anything it wants at anytime. Trade, growth and inflation are to China what unemployment is to Obama. Also, there is a larger battle going on (last 15 years) between the US and China in Africa. China understands that US political power projection is not just contained in Carrier Srike Groups, but in aid supplied to the developing world - who then turn around and "Buy China." BANDUNG SPIRIT YES! Thus there is plenty of growht without the good ol' US of A. China will be a more agressive "Discount Window" for the developing world and they will not have the compunction to deny building oil refineries in Iran or coffin factories in Sudan - not that the US has any scruples either. China gets more and better technology everyday from the rest of the world, in additon to vacuming up basic sciences. You are watching Food Party. The inflection point will be more bond offerings denominated in RMB for "US" corporations. China certainly has the deep pockets to self finance the next 50 years of industrial development. The question is can they resist the West's attempts to foster China inflation and civil unrest via the IMF/BIS - Western Central Bank cabal. Hard to believe the Chinese civilization will capitulate on a national level. But maybe that is the end-game - the breakup of China into another Three Kingdoms period. Its a big piece of the pie for all those regional factions. And I thought you need 5 parties for Realpolitiking.
Great. China can have more slaves from the countryside (village areas) working slave hours for slave wages, to the point they want to commit suicide, so the leaders of companies like Apple and Nike can get rich, and a few Chinese businessmen in coastal Chinese cities can get rich, while Americans are unemployed. Reagan and Newt Gingrich were right all along---Free trade really is great.
Updated DOW weekly chart:
http://stockmarket618.wordpress.com
Thank u, i found this for a long time.
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There is a lot of work to be done in re-setting the U.S./China trade relationship that goes way beyond a market for the yuan. Arguing for a modest increase in the yuan seems be a major triumph for market forces but in fact is a ruggedly waged episode in a major struggle for market openings.The Chinese economy seems to be receding away from open markets to greater government control at the national, regional and local level as its trade surpluses grow. http://www.prime-targeting.com/us-china-trade-imbalance/