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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arm50's picture

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

McMolotov's picture

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

transaccountin's picture

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

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.

malikai's picture

Just what are the technicals telling my shorts?

Metalhead's picture

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

El Viejo's picture

Has China finally got a domesticated economy???

Fiat Envy's picture

I joined so I could vote him up.

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.

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.

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.

Rip van Wrinkle's picture

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

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.

Crash Overide's picture

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

spanish inquisition's picture

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

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

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.

Stoploss's picture

Here's what i know..

I know that when the jobless rate drops...

WTI goes up..

El Viejo's picture

And the morning commute traffic goes up.

GubbermintWorker's picture

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

johngaltfla's picture

I thought my cheap bottled water tasted funny.

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!

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.

thewhitelion's picture

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

waterwitch's picture

Sounds like a chart WB7 could concoct. Banzai?

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.

StychoKiller's picture

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

WmMcK's picture

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

asierguti's picture

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

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.

spastic_colon's picture

please dont tell me we suddenly trust china

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.

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.

Sheeple Shepard's picture

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

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.

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.



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.

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. :)

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...

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".


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 late...it will be all over but the crying.

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.

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.

StychoKiller's picture

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

Smegley Wanxalot's picture

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

johngaltfla's picture

China knows one thing for certain about the United States:


We're F*cked.