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Shanghai Composite Drops To Four Year Low As China Says Over 1 Million Jobs Per Month Created

Tyler Durden's picture





 

Lately it seems that the entire world has become a complete basket case of economic data and market manipulation. On one hand, as we reminded yesterday, the disconnect between US economic fundamentals and the market has hit levels that imply the S&P is rich by 200 points. On the other, this morning the Chinese stock index, the Shanghai Composite, closed at a level of 1991: this was the first sub-2000 close since 2009 so early one can make it 2008.

Why is this happening? One simple reason: for all its talk, the PBOC has refused to intervene in the market by cutting wholesale rates, and while Overnight Reverse Repos are enough to fool the naive Americans that the Chinese economy is better (it isn't), the locals know better. The locals also know that without any major monetary injection from within, stocks just won't go up (confirming that in the New Normal one can throw away all fundamental data once and for all and focus simply on where easy money is coming from).

Yet the punchline in today's data is the report from the People's Daily, that in the first ten months of the year, a total of 11.2 million urban jobs have been created, or about 1.1 million per month on average (in context, the US has a problem with creating 150K jobs/month). Ignoring for a fact that this data is total manipulated garbage, is it now safe to say that no news has any impact whatsoever on the global monetary policy playing field once known as stock markets?

 


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Tue, 11/27/2012 - 11:11 | Link to Comment mrktwtch2
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where is godzilla?..opps sorry that is japan..

Tue, 11/27/2012 - 11:17 | Link to Comment vast-dom
vast-dom's picture

SP rich by 200 points? Don't believe the fake fundamentals...

Tue, 11/27/2012 - 11:18 | Link to Comment Dr. Engali
Dr. Engali's picture

200?......rich by about 800 points seems more like it.

Tue, 11/27/2012 - 11:23 | Link to Comment vast-dom
vast-dom's picture

exactly. but Tyler is basing his richness of validity of ECRI chart he posted. And he's also speechless on the low volumes. All I can say is look at volume in 1982 when the banking industry in America lost more money that year than the made since inception. In other words, we are in a much more freightening place today as all big banks are insolvent but propped up by the very QE that has goosed ECRI and SP WAY OVER 200 mere points.

Tue, 11/27/2012 - 11:28 | Link to Comment Dr. Engali
Dr. Engali's picture

Agreed, but I think it's the insurance companies that will break first. Zirp is killing them and that's not about to change.

Tue, 11/27/2012 - 11:33 | Link to Comment vast-dom
vast-dom's picture

i don't know nor care what is first to break this ponzi chimera, but what i do know is that the longer this goes on the worse it will be when it all finally caves in. the one factoid that I am speechless about is the NYFED coming out with a paper that concluded the SP would be no higher than 600 if not for QE. That alone should have ended this central charade, in a normally functioning free marketplace... 

Tue, 11/27/2012 - 11:34 | Link to Comment redpill
redpill's picture

 

Are these the "jobs" where you live in the factory, and work 30 days straight or until you kill yourself, whichever comes first?

Tue, 11/27/2012 - 11:38 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Job = sitting on a Foxconn factory worker's shoulders making sure she doesn't loaf.

"You miss spot!  You shine again!  Quit nodding, you give me wedgie again!"

Tue, 11/27/2012 - 15:12 | Link to Comment RopeADope
RopeADope's picture

Krugman went to China and taught the Chinese the "Broken Worker Theory". Kill one worker, make a new job!

Tue, 11/27/2012 - 11:37 | Link to Comment fonzannoon
fonzannoon's picture

I hate to sound selfish but I very much care what part of this ponzi breaks first. Although admittedly, when it does break, no one will be able to sufficiently get out of the way.

Tue, 11/27/2012 - 11:43 | Link to Comment Dr. Engali
Dr. Engali's picture

My target has been and remains S&P 400 for a buying bottom, all the 90s leverage needs to be take out ,then settling out around 600.

Tue, 11/27/2012 - 11:52 | Link to Comment vast-dom
vast-dom's picture

here is an interesting article on China's attitude to QE and such:

 

http://uk.reuters.com/article/2012/11/26/uk-wto-currencies-idUKBRE8AP0X8...

 

and

 

http://www.scmp.com/business/money/markets-investing/article/1076500/yua...

 

Re SP 400 target -- thought i was doomsday....my target is 600....but what's 200 points these days?

 

 

Tue, 11/27/2012 - 13:02 | Link to Comment Augustus
Augustus's picture

Vast,

 

A link or some searchable description for that paper would be appreciated.

I don't know if the botom is 400. 600, or 800.  It sure as hell seems overpriced relative to the deleveraging that has to come.

Thanks

Tue, 11/27/2012 - 12:23 | Link to Comment slaughterer
slaughterer's picture

SHCOMP: BTFD at 1850.  

Tue, 11/27/2012 - 11:12 | Link to Comment buzzsaw99
buzzsaw99's picture

the bernank could fix that in <= 15 minutes

Tue, 11/27/2012 - 11:17 | Link to Comment Dr. Engali
Dr. Engali's picture

Obviously their central banks didn't get the memo that stawks are only suppose to go up. They need the wealth effect so their  consumers out buy cheap Chinese crap..... Er I meant to say high quality domestically made products.

Tue, 11/27/2012 - 11:17 | Link to Comment suteibu
suteibu's picture

They have failed to see the wisdom of hiring an ex-Goldman to run the bank.  No worries, though, they will learn soon enough.

Tue, 11/27/2012 - 12:24 | Link to Comment Vince Clortho
Vince Clortho's picture

Tend to agree.

The CPs cannot tolerate a big economy like China to be independent of the great charade.

Tue, 11/27/2012 - 11:16 | Link to Comment fonzannoon
fonzannoon's picture

Looks somewhat like China is taking the pain. Not providing any major monetary injections.... Buying gold with both hands (scratching head)......

Tue, 11/27/2012 - 11:31 | Link to Comment ebworthen
ebworthen's picture

Talk is cheap.

CNBC running a "road to recovery" special to try and convince people we still aren't in a depression.

Rick Santelli this morning noted the Shanghai Composite as an important indicator despite all the "recovery" talk.

Tue, 11/27/2012 - 11:40 | Link to Comment poor fella
poor fella's picture

Damn, starting to believe this roundabout piece-of-shit road is a giant endless loop. It's so long we forgot we already paid the bankster's toll last time around.

Tue, 11/27/2012 - 12:28 | Link to Comment vato poco
vato poco's picture

That's been how it's worked (spectacularly, BTW) for the last 100 years, my son.

Tue, 11/27/2012 - 11:23 | Link to Comment GolfHatesMe
GolfHatesMe's picture

One million jobs - Austin Powers reporting

Tue, 11/27/2012 - 11:24 | Link to Comment Jason T
Jason T's picture

1 Ben confetti gets you just 6.22 RMB today.  Used to buy 8.12 RMB.

Their wages are quickely catching up to ours too.  China is spending over $1 trillion more per year now on gross capital formation.  

guess we're better though cuase our stock markets are higher.

Tue, 11/27/2012 - 11:37 | Link to Comment caimen garou
caimen garou's picture

thats about right, how many chinese does it take to install one door knob? answer, 4, one to hold knob, one to hold screws, one to install scews, and one to tell them how. was on oil rig 250 mi off shenzen 1997. of course they are creating that many jobs when there is a case 580 E parked and 25 chinese in their underwear at 2 am digging foundation for new building. watched them before i departed from the Ming-Wah hotel shekou. they dont maintain anything,build it,use it,throw it away,build another one!

Tue, 11/27/2012 - 11:59 | Link to Comment pragmatic hobo
pragmatic hobo's picture

... I hope they aren't getting that job number from the Onion.

Tue, 11/27/2012 - 12:22 | Link to Comment Vince Clortho
Vince Clortho's picture

What is "fundamental data"?

Is this something that affects the economy?

Tue, 11/27/2012 - 13:00 | Link to Comment loveyajimbo
loveyajimbo's picture

China (and Obunga)... they wouldn't LIE... would they??

Tue, 11/27/2012 - 13:04 | Link to Comment lunaticfringe
lunaticfringe's picture

What qualifies as a "job" in China? Are you talking those buck an hr gigs? Part time gigs? Shovel ready jobs?

I will tell ya this much. If we ever want to get serious about stalling and killing the Chinese job market- all we gotta do is export Obama. He knows a lot about capitalism and business. Within months the Chinese will be begging for mercy. 

Tue, 11/27/2012 - 14:42 | Link to Comment Glass Seagull
Glass Seagull's picture

[looks up from his Highlights magazine, shrugs, then returns to his Apple front-month OTM call purchase <pogrom> program]

Tue, 11/27/2012 - 18:57 | Link to Comment chump666
chump666's picture

ZH,

China buys stocks, ETFs whatever, they sent out a rumor (last bounce of 2000 a week or so back) that compulsory dividends have to be paid out.  The problem is China is leaking cash i.e Yuan denominated assets are becoming untouchable.  It is a liquidity squeeze which may morph into something far worst.

China most likely has rampant inflation that is forcing companies to buy USDs, this has been happening for over 6mths, in turn causes a liquidity squeeze eg stock collapse.

Tue, 11/27/2012 - 19:21 | Link to Comment bankerbackbacon
bankerbackbacon's picture

I trust the job stats of a nation with a one child policy. They are probably employing more "abortion artists" to produce sandwiches, why stop at dogs, cats and rats? 

 

 

 

 

Tue, 11/27/2012 - 21:51 | Link to Comment Gimp
Gimp's picture

I will take  #6 with an egg roll and wonton soup..

Tue, 11/27/2012 - 21:52 | Link to Comment Herdee
Herdee's picture

The Chinese now need the monies that they've got sucked into investing in the U.S. Government.But, because of withdrawal restrictions,they can only withdraw very slowly.But here's the catch,even if they wanted to remove all their monies and were allowed that option to withraw it all,their currency would collapse and plunge China into depression.What foreign reserves would they have to back their system?So,who's got'em by the nuts?The FED.Don't worry,they'll do as they're told.

Wed, 11/28/2012 - 03:33 | Link to Comment nastaking
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