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Chinese Money Markets Spooked Despite Slight Beat (And Miss!) In GDP

Tyler Durden's picture


UPDATE: China overnight repo rates just spiked to 6% - the worst since June...


and the Shanghai Composite is back under 2000...(7-month lows)


Chinese overnight repo rates were already on the rise (several trades at 5.5%: 200bps above Friday's close) as contagion concerns over wealth management product default spreads and the Chinese Business Climate Index tumbled to its lowest since June 09. Equity futures were sliding also with JPY strength and the Shanghai Composite was testing down towards the 1-handle once again. Then, amid the glorious nashing of spreadsheets and in the face of missed manufacturing and services PMIs, Chinese GDP (according to the Chinese government) came in at a better-than-expected 7.7% YoY (7.6% exp.) and handily above the all-too-crucial-to-hit 7.5% target GDP growth - but in keeping with the Schrodinger plan missed QoQ expectations (+1.8% vs +2.0% exp.). Industrial production also miraculously met expectations of 9.7% perfectly; and (shocker) Retail Sales perfectly matched expectations of 13.6% YoY. The results of all this 'meeting expectations' - JPY weakness (back down to 104 instantaneously) and implicitly US equity futures regain some momentum and scramble back close to unchanged.


Chinese money markets are concerned...


China's 4Q Business Climate Index dropped to 119.5 from 121.5 (lowest since June 09); and the Entrepreneur Index also fell to 117.1 from 119.5 (also the lowest since June 09)


But GDP beat expectations on a YoY basis...


But misses on a QoQ basis - QoQ annualized growth only 7.4% down from 9.1%


The response - JPY weakness and US equit yftures picks up

For a sense of just how well "managed" (or how well "trained" the analysts are) the Chinese economy is - by that we mean goal-seeked -

  • US Q4 GDP "guess" at 3.3% has a +/-0.4% error... (about a 13% standard error)
  • China's Q4 GDP "guess" at 7.6% had a +/-0.1% error... (about a 1.3% standard error)

So does that mean China is 10-times better at Central Planning?


As Bloomberg's Michael McDonough ( @M_McDonough ) pointed out, here are the countries most dependent on Chinese demand for their exports...


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Sun, 01/19/2014 - 22:27 | Link to Comment humblemechanic
humblemechanic's picture

buckle up your seat belts, coming up is a downhill ride...good for PM stackers..Sea of liquidity is getting saturated... Also today PBOC to announce the gold reserve data....

Sun, 01/19/2014 - 22:50 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Anyone who believes that the numbers the Chinese Government is reporting regarding economic activity, money supply or GDP are even REMOTELY accurate is a sell-sider's wet dream client.

I would triple down bet that China is and has been in real economic contraction for some time.

In the interim, cascading waterfalls, landslides & avalanches -

1/19/2014 @ 8:08PM |300,455 views

Mega Default In China Scheduled For January 31

"On Friday, Chinese state media reported that China Credit Trust Co. warned investors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse."

"The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers in inland Shanxi province.  THiS BANK, THE WORLD'S BIGGEST BY ASSETS, on Thursday suggested it will not compensate investors, stating in a phone interview with Reuters that “a situation completely does not exist in which ICBC will assume the main responsibility.”

Mon, 01/20/2014 - 00:46 | Link to Comment QE49er
QE49er's picture

Sum ting wong

Sun, 01/19/2014 - 22:47 | Link to Comment y3maxx
y3maxx's picture

...America should vote to amend the Constitution allowing Obama an extra term or two. He'll fix all that's wrong with the world. sarc off

Sun, 01/19/2014 - 23:17 | Link to Comment flacon
flacon's picture

"If you like your president, you can keep your president."

Sun, 01/19/2014 - 23:35 | Link to Comment TruthInSunshine
TruthInSunshine's picture

PBoC is printing so much money that it rocked New Zealand's capital:

News Headline Summary

New Zealand capital Wellington shaken by quake; Magnitude 6.1 earthquake shakes the capital

Reaction details:
- NZD/USD immediately moved lower by 14 pips to 0.8241 from 0.8255, trades 0.8243 (-11 pips) last.

Print 02:54 - Asian News - Source: RTRS/BBG

Mon, 01/20/2014 - 11:16 | Link to Comment hoos bin pharteen
hoos bin pharteen's picture

To the other nations of the world: If you like our President, you can have our president.

Sun, 01/19/2014 - 22:38 | Link to Comment NoDebt
NoDebt's picture

"nobody could have seen this coming"

Amazing how credit markets only react shortly before things come off the rails.  Credit guys are smarter than equity guys?  Doubtful.  Neither have a clue what's coming until it's staring them in the face.

Sun, 01/19/2014 - 22:56 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Credit sell-side knows way ahead of time.

Warning their sucker clients would work against their book.

Sun, 01/19/2014 - 22:38 | Link to Comment Goldilocks
Goldilocks's picture

The Girl From Ipanema (8:11)

Sun, 01/19/2014 - 22:40 | Link to Comment disabledvet
disabledvet's picture

Mongolia isn't going anywhere...although that is definitely a flashpoint. Should be an interesting "duck and cover" Olympics as well.

Sun, 01/19/2014 - 22:43 | Link to Comment Wait What
Wait What's picture

meh. boring Asian monday. nothing to see here, move along.

Sun, 01/19/2014 - 23:43 | Link to Comment Grande Tetons
Grande Tetons's picture

Ancient Chinese proverb says when numbers are in doubt chase Euro yields.  What a fucking sham this market is.  Fuck it, long Euro. 

Sun, 01/19/2014 - 22:50 | Link to Comment Oldwood
Oldwood's picture

I'm sure the Chinese know better than anyone the validity of the economic "numbers"

Sun, 01/19/2014 - 23:07 | Link to Comment Goldilocks
Goldilocks's picture

What a wonderful world - LOUIS ARMSTRONG. (2:19)

Sun, 01/19/2014 - 23:20 | Link to Comment chump666
chump666's picture

China collapse v's the money printers.

F*cking death match

Sun, 01/19/2014 - 23:20 | Link to Comment NOZZLE
NOZZLE's picture

Solomon Islands,  what the hell are they exporting, Cannibals. 

Sun, 01/19/2014 - 23:28 | Link to Comment Caviar Emptor
Caviar Emptor's picture

This is shaping up to be the year of grave disappointments across the globe. The 'grand monetary experiment' has had it's chance and the results are piddling and uneven. Modern Capitalism can't endure frugal consumers, risk averse banks, austere govies and cash-rich-capex-poor corporates. The only thing loose money is pushing is cost of living and making things.

Sun, 01/19/2014 - 23:33 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Paul "When Mars Attacks" Krugman wants everyone to realize the FACT that only much higher inflation, fiat printing and much more massive deficit spending and larger debt black holes (fiat vortexes) can save the global economy.

Sun, 01/19/2014 - 23:50 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Yup. They'll push the negative trends deeper and push prices higher. The productive segment of each economy will narrow further while the underclass will swell even more. And the uber rich will get uber-er

Mon, 01/20/2014 - 03:30 | Link to Comment disabledvet
disabledvet's picture

"capitalism was saved...but all Governments now must fail." move along...

Sun, 01/19/2014 - 23:31 | Link to Comment nbsharma
nbsharma's picture

Those countries are not as important as countries / regions who are key trading partners, such as: Australia (lots of iron ore / mining), US (lots of US corporations sell consummables in China - something that ZH has covered - e.g. CAT), EU (deflationary EU environment + stalling China demand is going to hurt even more).

When this bubble bursts, and it will, the aftermath will leave rubbles.

Sun, 01/19/2014 - 23:49 | Link to Comment TruthInSunshine
TruthInSunshine's picture

"When this bubble bursts, and it will, the aftermath will leave rubbles."

Or the equivalent of rubles (RUB)?

Sun, 01/19/2014 - 23:39 | Link to Comment lolmao500
lolmao500's picture

China obviously needs to print moar.

Mon, 01/20/2014 - 00:41 | Link to Comment mobydick
mobydick's picture

The Jews own America and Chinks own the ROW. So which bunch of greedy cocksuckers is going to blow us all up?

Mon, 01/20/2014 - 00:42 | Link to Comment Colonel Klink
Colonel Klink's picture

The former, as it's always been?

Mon, 01/20/2014 - 00:51 | Link to Comment thefirstabomb
thefirstabomb's picture

George Soros is trumpeting what ZH has been saying for a while 

Mon, 01/20/2014 - 03:34 | Link to Comment disabledvet
disabledvet's picture

the US does have strategic goals in Northwest Asia...nothing we're going to go it alone on however. I wouldn't mess with the Phillipino Navy either. it's small...but they do have one.

Mon, 01/20/2014 - 07:04 | Link to Comment Rising Sun
Rising Sun's picture

Build more empty cities - stupid fucking communists

Mon, 01/20/2014 - 13:58 | Link to Comment Dr. Bonzo
Dr. Bonzo's picture

Nothing to do with this little nuggest by any chance?



Curious title... but it was on Forbes, usually not known to throw around frivolous drivel. Took a look. Good read. Highly recommended. Set your alarms for January 31... let the gold bull begin.

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