ES Dripping On Ugly Asian Data

Tyler Durden's picture

It appears that Asia is not done tightening. In a surprising move South Korea's central bank on Friday raised its
policy rate by a quarter point which was against market
expectations and comes after rates were held steady for past two months. From Bloomberg: "South Korea’s Kospi Index (KOSPI) fell 0.7 percent, erasing a 1.1 percent gain, after Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3.25 percent from 3 percent, following quarter-percent increases in January and March." In other news, the beancount for China's GDP appears to be slowing following a smaller than expected trade surplus: "The Shanghai Composite Index slid 0.4 percent after China’s customs bureau said exports rose 19 percent from a year earlier and imports climbed 28 percent. The compared with the median forecasts for a 20 percent gain in overseas shipments and a 22 percent increase in exports" (we will have a full breakdown of the Chinese trade numbers tomorrow). Too bad the inflation in China is not slowing to go with its GDP, and the latest CPI print is now expected to be a record 5.5%. And completing the pain out of Asia was the deplorable Indian IP number which tumbled to just 4.4% YoY. As the chart below shows futures are definitely not liking this latest set of data (but, but, the services ISM was not a total disaster...) and the EURUSD is back to intraday lows. Europe opens next and Europe will not be happy.

India IP:

ES Futures:

And Goldman's take on the disappointing China trade data:

Key highlights:

  • The slowdown in exports growth is consistent with the moderation in external demand growth.
  • The rebound in imports growth was mainly because of the very low base. Its underlying growth momentum remains weak.
  • The trade surplus continued to rise as it is typically the case when the economy slows on domestic policy tightening measures.

What happened:

Exports growth decelerated to 19.4% yoy in May (our forecast: 20.0% yoy, Bloomberg consensus forecast: 20.4% yoy), down from 29.9% yoy in April. The implied month-on-month; seasonally-adjusted; annualized (s.a. ann.) growth rate was 23.0%, down from the 26.1% growth recorded in April.

Imports growth strengthened to 28.4% yoy in May (our forecast: 26.0% yoy, Bloomberg consensus forecast: 22.0% yoy), up from 21.8% yoy in April. On a mom s.a. ann. basis, imports growth was 35.6% in May, up from the -34.9% growth recorded in April.
The level of trade surplus came in at US$13.0 billion (our forecast: US$16.6 billion, Bloomberg consensus forecast: US$19.8 billion), up from US$11.4 billion in April.


The slowdown in exports growth is consistent with the moderation in external demand growth as indicated by the recent reading of our proprietary Global Leading Indicator (GLI) which has fallen to around 0% on a sequential basis in May. Besides, the export orders sub-index of the official PMI has also been trending down in recent months (see Exhibit 7).

On the other hand, the rebound in imports growth was mainly because of the very low base (April’s imports growth was exceedingly weak). We believe its underlying growth momentum has been weakening as a result of slower domestic demand growth. This weakening trend is better reflected in the quarter-on-quarter growth which has dipped into negative territory from triple digit levels at the start of the year.

The trade surplus continued to rise as it is typically the case when the economy slows on domestic policy tightening measures (for more discussions on this, see Asia: No stagflation but not much room to ease policy yet, Asia Economics Analyst 11/10, June 10, 2011). This is mainly because the volatility of real domestic demand growth in China is typically larger than that of China’s main trading partners. Furthermore, because of the significance of China in the global markets especially in some hard commodities, slowdowns in real demand are typically associated with moderation in some import prices as well. This cyclical effect is likely to continue until domestic demand growth rebounds as a result of expected policy normalization in 2H2011. Besides, there is also a seasonal factor at play as China tends to get a low trade surplus/deficit at the start of the year and rising surpluses within the year. This seasonal factor likely contributed to the rise in the trade surplus over the past two months and will support the level of trade surplus at a relatively high level even when domestic demand growth rebounds in 2H2011 and continued currency appreciation (we expect the USD/CNY to be 6.40, 6.31 and 6.12 on a 3, 6 and12-month basis respectively).

h/t Capital Context

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chump666's picture

yeah India GDP is weak...and China = slowdown alley. 

qussl3's picture

AUD puke time, took fucking long enough lol.

Michael's picture

Has anyone noticed how few people watch the lamestream media these days? Everyone gets their dose of reality from the Internet now.

We now call the former MSM the "Deadstream Media". The "DSM" if you will.

lynnybee's picture

hi michael !   i was @ SAM'S yesterday & the (very ) young man behind the DIRECT T.V. display was pitching his wares to me.    i told him, "sorry, i just cancelled my cable & don't even turn on the t.v. anymore; the truth is to be found now on the internet.  it's all propoganda & outright lies on cable television now & i refuse to listen."           the nice (very ) young man didn't understand what i was saying.     our youth have been severely brainwashed into "niceness & compliance" , they are now the good little people who march in a nice little line & think that Obama government is wonderful.   i feel for our young people & our elderly.

Smiddywesson's picture

That's why they want to control the Internet.

Another example is MSM now discussing technical analysis after decades of belittling it.

Control of information is power and money, the Internet cannot be allowed to threaten the ruling class, it is under attack.

Orly's picture

Amazing how resilient that thing is, eh?  The downside pressure on the pair must be enormous by now.

Michael's picture

Stop the presses!

CNBC World just did a little piece on The Bilderberg Group meeting of the 120 richest and most powerful people on the planet In Switzerland this week. They called it a conspiracy theory.


Reptil's picture

Hahaha they copied that from a BBC playbook: It's a concerted effort.

Listen to this hilarious rant:


Michael's picture

You've got to remember, the people attending the Builderberg meeting have Egos the size of the Grand Canyon, so it's easy to toy with them.

BlackholeDivestment's picture

...nice find. Brit said it well, BBC ...who buys their shit at this point? ABC NBC CBC CNN etc... they are a joke. Only a complete looser buys the Washington Post or The New York Times ...or listens to the MTV payola bullshit.

The best product is not in your big market chain store, even Whole Foods sold out now. China is producing human milk from their genetically altered cows and it's coming to a Great Wal Mart of China near you, if the WTO has it's way, along with that USAG approved human DNA rice crop (now in the field) in Kansas.

...but naw, money and politics never amount to temptation, no no neeew, it's not masonic fraternal orders with their stupid Fez head tax exempt status and their massive temples. The first third party of America was call the Anti Mason Party because, oh yeah, they murdered a guy that claimed they were a gang of thieves within the circles of politics, business and the courts, the court which proved the point after 7 attempts to hold the murdering bastards to account. It seems the secret nature of the ''order'' and their oath to one another infected the Jury and the Judges  so badly it led to the rise of the Anti Mason Party.

What do we have today? Oh yeah, some antichrist occult freaks put a pyramid on the dollar and some latin that proclaims there is no conspiracy, it's just business as usual zero freaking interest, so BTFD Cup of Fornication Chairsatan filled for you.

To hell with every stupid scumbag that continues to work as a sold out whore for any the big media scum and Hollywood Babylon. To all you jerks that listen to or buy the trash in the company stores, the bottomless pit is ...aaah wait'n for yuh. It wont be long now. Oh, and you are going to die bitchez, eveyone does ...that's just the way it is.

P.S. It's amazing to hear the majority of flag waving Christians, and they supposedly know about the powers and principalities etc... that are conspiring to establish the mark of the beast global system and the false peace with Israel and the nations, yet when you tell them 911 is an inside job or that the banks and political circles that erected the World Trade Center and the U.N. etc... are the same old people, they just can't handle it. They continue to eat shit and die, having accepted the mark of the beast, thinking what they are doing is their Lord Blankfein's work. Paaaaathetic bitchez. They have no excuse, they should know better. This generation has all the information anyone needs to confirm or refute just about any ass that claims the Jeckyll Island boyz were just ''secretly'' pal'n around in Georgia etc... for kicks, or the Bilderberg Bitchez are just having tea before this Summers gathering at the Bohemian Grove ...where they burn a child on the flaming alter of Moloch.

Michael's picture

Nice rant BHD.

I just uploaded a new video. It's a hoot.

Retarded People Targeted by TSA, Takes Away Plastic Fisher Price Toy Hammer

qussl3's picture

Precisely what i have been thinking.

When i finally breaks look out below.

Real PITA watching it tho, very tempting to just jump in but it bounces like a superball.

Orly's picture

I put a sell limit at 1.06145 for the back half of the European market.

We'll see what happens.

Best of luck trading this crazy thing!


qussl3's picture

Looks like youve got your price, good luck.

Already sitting on a longer term position, the carry is a real pain, stupid strategy in hindsight.

slow_roast's picture

"Hey, that looks like a cliff in front of us...oh well, let's keep walking" - Lemmings

PsychicWebbah's picture

It is so much fun to watch the parade of idiots cloud up the comments before some of the more informed comments make their way onto the thread about 30 minutes later.

-Silver bichez-

Dirtt's picture

At least we don't need a book explaining how this all happened.

You know what.  To all you dick-happy book writers save it.  I don't need your book to tell me how...

No wonder we are a stoopid nation.  Everyone is running around exclaiming how brilliant they are because of the latest book.  Well. Newsflash folks. You can pitch bullshit anytime, anywhere.  The truth is a bucking bronco.

There isn't enough time in the day to read all of you. So instead I decided to make up my own mind. The same mind I had two decades ago.

And THAT mind told me that the BabyBoomers SUCK.  THAT was the only leading indicator that mattered.

TD & AB are kindred spirits. That is my soul.

Comrade de Chaos's picture

Thank you TD. It's been a while since I enjoyed reading ZH as much as in the two last weeks. 

jeff montanye's picture

nothing like an equity market reversal to bring a smile to the face.

Yen Cross's picture

  On the back of the ECB (BS) yesterday.

GFORCE's picture

China will say 9.9% GDP then. It's always been a crock. As the double dip gathers pace, yet another deluded 'miracle' will vanish.

A Man without Qualities's picture

China is stuck on it's inflationary path.  They cannot tighten, or the credit pyramid collapses. Headline efforts to do so merely disguise other forms of lending.  Real yielding assets are in short supply, resources especially food are constrained, export markets are flat to declining.  

They have created a housing bubble in their determination to overtake Japan as the second largest economy, but it still remains unaffordable for those who need the accommodation and any attempt to raise incomes merely destroys the razor thin profit margins and causes food prices to rocket, leaving no more disposable cash.

China's busts are always spectacular, horrific and alway come about as a result of food price inflation.  Failure to feed China has been the ruin of numerous dynasties and will be the ruin of this one.

Yen Cross's picture

  PBoC reserve requirements? TYLER was all over that last week.

qussl3's picture

Wonder when people will make the connection between 20+% RRs, yet still rampant inflation, what does that say about CNY print disciple.

Even without QE China will cause soon be exporting inflation and not deflation any longer.

AGoldhamster's picture

All Index rallies are to be sold. Since early May.

From next week on also commodities.


ivars's picture

Looks like these forecasts of DJAI 2011-2012 just get better :

April 26 with a link to Feb 6th forecast: