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What Does China Know (Again) That The Rest Of The World Doesn't?

Tyler Durden's picture


Yesterday we noted the fact that China's Shanghai Composite was now red for 2013 as inflationary fears once again raise the odd specter of a central bank suggesting less than orgasmic expansion of its free money. While the 'Pisani's of the world see the relative outperformance as some 'rotation' in the smart money, we humbly suggest he take a trip down memory lane and note how rapidly the so-called 'smart money' reverted to China's lead in the last few years as the lack of an inflation shock absorber led the PBoC to pull back and implicitly drag on the world's equity market-based linearly-extrapolated economic growth hopes. As a reminder, it's never different this time.

China's Shanghai Composite vs the S&P 500... Deja Deja Vu


And while we won't be seeing inflation showing up in any government data in the US, the inflation genie is starting to creep out of its bottle here too (how are those margin expansion expectations going to cope?)


Chart: Bloomberg


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Thu, 03/14/2013 - 10:36 | 3329411 arm50
arm50's picture

that looks like the a "river of dead pigs" formation 

Thu, 03/14/2013 - 10:44 | 3329436 McMolotov
McMolotov's picture

Me Chinese, me play joke. Me put dead pigs in the fucking river.

Thu, 03/14/2013 - 10:47 | 3329445 transaccountin
transaccountin's picture

Until uncle ben stops printing there will be no plunge. So stop the obvious.

Thu, 03/14/2013 - 10:51 | 3329463 MillionDollarBonus_
MillionDollarBonus_'s picture

Look guys, the technicals on the four-year chart of the S&P 500 are some of the best I've seen in years. This chart is a screaming buy. No matter how many doomer articles claim that we are due for a correction, the fact remains that the chart continues to make new highs. Pay attention shorts - THIS IS TELLING YOU SOMETHING.

Thu, 03/14/2013 - 11:03 | 3329502 malikai
malikai's picture

Just what are the technicals telling my shorts?

Thu, 03/14/2013 - 12:45 | 3329819 dog breath
dog breath's picture

deja vu all over again!

Thu, 03/14/2013 - 13:34 | 3329991 Metalhead
Metalhead's picture

Im so glad i finally have my ZH account, so i can vote down milliondollarbonus and his stupid comments

Thu, 03/14/2013 - 13:57 | 3330078 El Viejo
El Viejo's picture

Has China finally got a domesticated economy???

Thu, 03/14/2013 - 15:39 | 3330447 Crash Overide
Crash Overide's picture

metal/sarc..? no?

Thu, 03/14/2013 - 21:34 | 3331429 Fiat Envy
Fiat Envy's picture

I joined so I could vote him up.

Thu, 03/14/2013 - 11:21 | 3329540 Fidel Sarcastro
Fidel Sarcastro's picture

Hey Million$FuckTard - I'm short both US Steel and Redhat and both are deeply profitable.  So you & your info tell me nothing.

Thu, 03/14/2013 - 11:20 | 3329541 I am more equal...
I am more equal than others's picture

When I clicked MDBoner's red arrow the number when up by two.  That's fun.  Need to create new personas to do that again and again.

Thu, 03/14/2013 - 11:35 | 3329596 medium giraffe
medium giraffe's picture

+1 :D lol!

Thu, 03/14/2013 - 16:27 | 3330621 mumbo_jumbo
mumbo_jumbo's picture

now i know it's time to short.

Thu, 03/14/2013 - 10:52 | 3329465 Sheeple Shepard
Sheeple Shepard's picture

Once people lose con-fidence in the con Uncle Ben can press the zero button on his FED keyboard as many times as he likes. Hamster in the wheel.

Thu, 03/14/2013 - 11:37 | 3329602 Rip van Wrinkle
Rip van Wrinkle's picture

What have 'people' got to do with this market?

Thu, 03/14/2013 - 11:41 | 3329620 azzhatter
azzhatter's picture

And this is why the pumpers are saying the market rise has nothing to do with that cocksucker Bernanke. Can't lose the CONfidence of the sheeple.

Thu, 03/14/2013 - 15:40 | 3330457 Crash Overide
Crash Overide's picture

So wait, you guys are saying printing fiat is bad? What if I am holding the paper in my hand?

Thu, 03/14/2013 - 10:52 | 3329470 spanish inquisition
spanish inquisition's picture

Only printing up the US markets isn't working...

Uncle Ben: "Note to self, get more helicopters"

Thu, 03/14/2013 - 10:55 | 3329480 tarsubil
tarsubil's picture

Unless! ... he isn't printing fast enough to prevent a plunge. You want to gamble with that one, be my guest, friend.

Thu, 03/14/2013 - 10:59 | 3329491 Stoploss
Stoploss's picture

Here's what i know..

I know that when the jobless rate drops...

WTI goes up..

Thu, 03/14/2013 - 13:51 | 3330053 El Viejo
El Viejo's picture

And the morning commute traffic goes up.

Thu, 03/14/2013 - 11:42 | 3329625 GubbermintWorker
GubbermintWorker's picture

I heard you can make pork soup by boiling the drinking water.

Thu, 03/14/2013 - 12:24 | 3329749 johngaltfla
johngaltfla's picture

I thought my cheap bottled water tasted funny.

Thu, 03/14/2013 - 13:48 | 3330038 Wile-E-Coyote
Wile-E-Coyote's picture

Those were GMO pigs, Lemming DNA spliced into the pigs genome. The pigs had an insane urge to jump into the river, but they just couldn't explain it!

Thu, 03/14/2013 - 10:45 | 3329438 duo
duo's picture

Let's see, 2007 was year of the pig, and pigs are floating down the river in 2013 (unlucky year?).  That means next year rats will be floating down the same river, and the year after that cows.

See, it's all very predictable.

Thu, 03/14/2013 - 11:18 | 3329538 thewhitelion
thewhitelion's picture

Not sure I buy it.  Can you chart it for me?

Thu, 03/14/2013 - 12:03 | 3329679 waterwitch
waterwitch's picture

Sounds like a chart WB7 could concoct. Banzai?

Thu, 03/14/2013 - 13:05 | 3329874 duo
duo's picture

I was just using the order of the Chinese calendar.  Usually (not always), the unlucky year is 6-7 years after the lucky year.

Thu, 03/14/2013 - 19:51 | 3331177 StychoKiller
StychoKiller's picture

By that reckoning, look forward to dragons in 2018...

Thu, 03/14/2013 - 21:42 | 3331436 WmMcK
WmMcK's picture

+1 - The Romans head a pig's head formation, but it wasn't a technical indicator.

Thu, 03/14/2013 - 10:37 | 3329417 asierguti
asierguti's picture

Don't panic, this time is different!!!

Thu, 03/14/2013 - 11:05 | 3329485 TheSilverJournal
TheSilverJournal's picture

It is different. The global fiat monetary ponzi that has been expanding for the last 100+ years is reaching its end. This will be the first time that the entire world will go through fiat / credit collapse simaltaneously.

What ZeroHedge and many others calling for a drastic dive in equities are failing to consider is that price is a ratio, and the denominator is the value of FRNs. This is not to say that equities won't dive in the very short term, but in the medium term, very few things will be plummeting faster than FRNs, meaning prices across the board will soar.

I'm just saying be very careful betting that anything will fall faster than FRNs.

Thu, 03/14/2013 - 10:41 | 3329424 spastic_colon
spastic_colon's picture

please dont tell me we suddenly trust china

Thu, 03/14/2013 - 10:43 | 3329432 Dr. Engali
Dr. Engali's picture

I trust China about as much as I trust leadership in the U.S....I think we have an edge on them in the corruption category.

Thu, 03/14/2013 - 10:50 | 3329458 MillionDollarBonus_
MillionDollarBonus_'s picture

Look guys, the technicals on the four-year chart of the S&P 500 are some of the best I've seen in years. This chart is a screaming buy. No matter how many doomer articles claim that we are due for a correction, the fact remains that the chart continues to make new highs. Pay attention shorts - THIS IS TELLING YOU SOMETHING.

Thu, 03/14/2013 - 10:53 | 3329474 Sheeple Shepard
Sheeple Shepard's picture

Your the best! While your here, did you write "DOW 36000"? Will you sign my copy?

Thu, 03/14/2013 - 10:55 | 3329478 adr
adr's picture

mmm charts. Don't need to produce anything, don't need to buy  anything other than stocks. The charts shall show us the way. Don't need anything on the X or Y, just a squiggly line going from bottom left to top right.

Damn this economics thing is easy.

Thu, 03/14/2013 - 13:38 | 3330005 YHC-FTSE
YHC-FTSE's picture

Reckon these charts show that they are avid readers of ZH. 

The only person I've ever met who was a genuine genius was a mainland Chinese girl studying in London. She could absorb a year's worth of reading list in a week then recite vast sections of it with references, then write a cutting analysis in less than an hour. Would have begged her to date me if I had been 10yrs younger

Clever chaps those Chinese,  though obviously not clever enough to dispose of livestock discretely if someone wanted to corner the pork market.

Nice job on the 1936 redux post.



Thu, 03/14/2013 - 10:57 | 3329484 Dr. Engali
Dr. Engali's picture

Shorts? There are no shorts left in this market...the only shorts I see are on the SNORGTEES blond on the left of my screen.

Thu, 03/14/2013 - 11:02 | 3329499 Cognitive Dissonance
Cognitive Dissonance's picture

The only blond on the left side of my screen is that cute little number on the one ounce Gold Eagle. :)

Thu, 03/14/2013 - 11:07 | 3329508 SillySalesmanQu...
SillySalesmanQuestion's picture

Are you shorting? There's no shorting in investing! I shorted a trade one day and lost money on it. Did I cry? No, my manager(I think his name was Jamie Blankturd) told me to never short again and to go back in there, and GO LONG!!!! BTFD!!! There's no shorting in investing...

Thu, 03/14/2013 - 11:06 | 3329512 fonzannoon
fonzannoon's picture

Doc the higher we go, all it takes is a whiff of bad news and a bunch of shorts come in thinking they nailed the top perfectly, only to get their balls squeezed again. It is fascinating how many times people are willing to get their balls shocked but it seems to be never ending.

My favorite contradiction fwiw is watching some msm guest talk for 5 minutes about how the market is a "forward looking mechanism" and that is why it is up so high...because it is pricing in the future economic growth a year from now.

Then they are asked about the fed exiting QE and they say "yeah but that is not for another year so the market won't price that in yet".

The interviewer nods their head like the dumb fucking assclown they are and says "that makes a lot of sense, sounds like equities are the best place to be based on that".


Thu, 03/14/2013 - 11:12 | 3329519 Dr. Engali
Dr. Engali's picture

I hear you Fonz. This ten day rise on the DOW and the low yeild in junk in awfully reminiscent of 07. My guess is that when the time comes to short this market it will be too will be all over but the crying.

Thu, 03/14/2013 - 11:19 | 3329539 fonzannoon
fonzannoon's picture

I completely agree. The only thing I wonder about, which may differentiate 07 from today is the Bernak. Specifically that he is in proactive mode now as opposed to reactive back then. European bank may blow up? Bernak was there early with swaps. Spain about to blow up? Swaps. High yield bubble? POMO almost daily buys anything and everything to keep something from cracking.

It seems to me that can drive this market to insane heights. People are thinking triple top, so we top out right here. But I think the numbers may be substantially higher, especially if people give up and start chasing.

We all know how it ends though.

Thu, 03/14/2013 - 12:29 | 3329747 eclectic syncretist
eclectic syncretist's picture

You can short this bullshit by buying 2015 calls in silver or gold.  I'd say jan 2014 but there's a lot of accumulation going on there already and it pays to take a contrarian viewpoint sometime.  They might know something, but they might also be getting set up to get fleeced, so look beyond all them by buying an insurance premium (time) with the jan 2015 calls.  The crescendo of media calls for gold to fall is a clear indicator by itself that one should expect it to go up.

Before all this counterfeit money central bank business model bullshit crashes the notes they've printed are going to attempt a flight to safety.  They may be chasing yield right now, but when they shift to a flight to safety things are going to happen quickly.

Buy gold, buy silver. They are your short position here.

edit: miners and junior miners are beaten down hard here too.  It might be a good time to accumulate.  Anyway, I'm gambling on them here a little bit and intend to keep accumulating until and unless my outlook changes for any reason, but I don't think that is likely now.

Thu, 03/14/2013 - 19:56 | 3331186 StychoKiller
StychoKiller's picture

Ever rewind a tape deck with no takeup reel?  That's what's gonna happen to The Bernank!

Thu, 03/14/2013 - 10:53 | 3329473 Smegley Wanxalot
Smegley Wanxalot's picture

please dont tell me we suddenly trust anything that comes out of DC or New York.

Thu, 03/14/2013 - 12:24 | 3329753 johngaltfla
johngaltfla's picture

China knows one thing for certain about the United States:


We're F*cked.

Thu, 03/14/2013 - 10:41 | 3329425 falak pema
falak pema's picture

why does ZH subcontract its charts to the wrong people?

ALL you have to do is call Citi bank or Morgan Stanley to get the Bull lowdown that sings "HOPIUM" IS BACK!

Thu, 03/14/2013 - 10:41 | 3329426 Cognitive Dissonance
Cognitive Dissonance's picture

"What bubble inflation? There is no bubble inflation." - Uncle Ben

Thu, 03/14/2013 - 10:45 | 3329442 Jason T
Jason T's picture

"I have one of the best records of inflation of any Fed Chair" (SIC)  Sic as in sick arrogent bearded man.. yet poor guy, in his defence, he's got a tough job.  

Thu, 03/14/2013 - 19:58 | 3331194 StychoKiller
StychoKiller's picture

What, lying to people?  "It's not a lie if you believe it."

Thu, 03/14/2013 - 10:41 | 3329427 Dr. Engali
Dr. Engali's picture

But Ben is so close to pushing us to an all time high on the S&P...Damn you China don't ruin this for the Bernank.

Thu, 03/14/2013 - 10:44 | 3329433 Jason T
Jason T's picture

Money is definitely flowing into the US despite every indicator pointing downward.  WTF is all I can say.

Thu, 03/14/2013 - 10:46 | 3329439 Sheeple Shepard
Sheeple Shepard's picture

Currency, not money ; ) Money is going the other way.

Thu, 03/14/2013 - 10:44 | 3329437 Sheeple Shepard
Sheeple Shepard's picture

You know how far we've entered the Twilight Zone when the Chinese seem to be frontrunning reality.

Thu, 03/14/2013 - 10:47 | 3329448 astoriajoe
astoriajoe's picture

China's started doing some fracking right?


(this should have been in with the dead pig comment above)

Thu, 03/14/2013 - 10:48 | 3329452 eclectic syncretist
eclectic syncretist's picture

They know we are trying to counterfeit our way to prosperity and it isn't going to work.  That's about all you really need to know.

Thu, 03/14/2013 - 10:49 | 3329453 Confundido
Confundido's picture

"...Indeed thus much may undoubtedly be asserted, that in artifice, falsehood, and an attachment to all kinds of lucre, many of the Chinese are difficult to be paralleled by other people...I may not be thought too severe in ascribing to this nation a fraudulent and selfish turn of temper, so contradictory to the character given of them in the legendary accounts of the Romish Missionaires..."

Admiral George Anson, "A Voyage around the world in the years MDCCXL, I, II, III, IV" (published in 1780)

Thu, 03/14/2013 - 10:58 | 3329455 Dr. Engali
Dr. Engali's picture

Bond bubble?  What bond bubble?



Yield-to-worst in junk bond market hits record low



Thu, 03/14/2013 - 10:51 | 3329466 adr
adr's picture

The world says, "We don't need commerce when we've got central banks."

The Fortune 500 could shut every building and close every store and their stocks would soar. Think of the cost savings.

When a P/E of 700 becomes normal and a singal that the stock is underbought, real business no longer matters.

Thu, 03/14/2013 - 10:52 | 3329467 shayneals shayneals
shayneals shayneals's picture

amercia trying to create inflation, china trying to stop inflation.

isnt this the way the market is meant to look?

Thu, 03/14/2013 - 10:56 | 3329481 Sheeple Shepard
Sheeple Shepard's picture

Correct!(YAY) It ends with War(BOO)

Thu, 03/14/2013 - 10:54 | 3329476 BaggerDon
BaggerDon's picture

Pisanti reminds me so much of nervous BARNEY FIFE,,,who the hell would listen to him???

Thu, 03/14/2013 - 10:56 | 3329482 apberusdisvet
apberusdisvet's picture

To MDB:  You depend on charts?  In the most rigged and manipulated market in the world?

Thu, 03/14/2013 - 11:01 | 3329498 Winston Churchill
Winston Churchill's picture

Ignore what MDB says, follow his actions.

He already admitted that he is a stacker.

Thu, 03/14/2013 - 10:58 | 3329488 adr
adr's picture

This is getting scary, without a dip to buy, who is going to jump in now?

Thu, 03/14/2013 - 11:00 | 3329496 fonzannoon
fonzannoon's picture

the idea is everyone jumps in once they realize there is no dip to buy and then we go exponentally higher.

Thu, 03/14/2013 - 11:00 | 3329495 Zola
Zola's picture

What this shows is that the LEADING market setting up the direction of trade for ALL other markets is becoming the SHCOMP. This used to be the S&P500/ DOW for a very long time. DOWNFALL.

Thu, 03/14/2013 - 11:05 | 3329505 magpie
magpie's picture

Spooz was tracking Shanghai in 2009 already

Thu, 03/14/2013 - 11:06 | 3329510 scatterbrains
scatterbrains's picture

Another view tossing in some basic industrial metals for comparison and just pretending that Benny and his banksta niggas arn't relevering paper with the peoples money to enrich their little club and in fact things really are better how do you explain this ?


Thu, 03/14/2013 - 12:07 | 3329690 SmallerGovNow2
SmallerGovNow2's picture

Telling.  Thanks for the link...

Thu, 03/14/2013 - 11:52 | 3329614 Kirk2NCC1701
Kirk2NCC1701's picture

I think that some Supply Chain analysis helps.  Whenever the orders are falling back, China (the factory of the world) is the first to get wind of it.  They are the canary in the coal mine.  While they and their execs are adjusting, our execs and 'stock pushers' are still skimming profits and bonuses as long as possible.

Their execs are far more rooted in reality than ours.  80% of ours are rooted in being self-serving snake oil salesmen:  IPO's, stock options, bonuses, golf.  Our execs and the useless board of governors have a "happy ending", while the average shareholders get screwed.  /Ask me if I'm holding any of their miscreant stock. /sarc.  

I put my FRN cashflow into rental property and PM -- the former to generate FRN/fiat cashflow that's independent of me punching a clock, and the latter to preserve the buying power of the FRN/fiat.  And neither has many middle-men trying to screw me.  Eventually I'd also like to have a few acres and have a mini/hobby farm for more food self-sufficiency.  In the US if possible, elsewhere if need be. 

So, fuck you Wall St, you den of vipers, crooks and thieves!  /Now ask me how I really feel./ sarc

Thu, 03/14/2013 - 11:52 | 3329653 yogibear
yogibear's picture

Inflation in the US is already starting to show with a .7 increase last month.

Bernanke and the Fed will just keep buying and printing to handle the debt. Double digit inflation

is finally showing up whil the Fed trashes the US dollar.

Thu, 03/14/2013 - 11:52 | 3329654 smartstrike
smartstrike's picture

It's deja vu 2007: Jimmy Rodgers is screaming to buy China and says if the market goes down he is going to buy some more; Peter Schiff is screaming about decoupling on CNBC every day which leads to shortage of  workers in coastal China as more Chinese quit jobs to trade stocks. It was hillarious!

Thu, 03/14/2013 - 12:36 | 3329792 judejin
judejin's picture

china's real estate fueled ponzi finance could be as bad as the subprime crisis.

a lot 10% per num guaranteed investment trusts are funnelled into real estate projects or govt-sponsored infrastructure projects.

given the murky nature of govt finance, who knows whether any of the proceeds of the investment trust are used to pay off earlier expired trust holders.

i'm sure govt projects can't return 10% an average.

tianjin's ambitious manhattan project is destined to become another ghost. the size of project is as big as the entire shanghai financial district, with facade of the building imitating manhattan's.

man, china's good at copying anything, including real estate bubbles.


Thu, 03/14/2013 - 17:26 | 3330771 constantine
constantine's picture

Seems to me that China's central planners only protect the SCI at the 2,000 level while the US central planners are ready to blaze guns up to a 20 pe level. So based on the all-important unfundamentals, the S&P/NYSE is the better buy.

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