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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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....

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.”

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

flacon's picture

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

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

hoos bin pharteen's picture

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

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.

TruthInSunshine's picture

Credit sell-side knows way ahead of time.

Warning their sucker clients would work against their book.

disabledvet's picture

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

Wait What's picture

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

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. 

Oldwood's picture

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

Goldilocks's picture

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

chump666's picture

China collapse v's the money printers.

F*cking death match

NOZZLE's picture

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

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.

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.

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

disabledvet's picture

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

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.

TruthInSunshine's picture

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

Or the equivalent of rubles (RUB)?

lolmao500's picture

China obviously needs to print moar.

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?

Colonel Klink's picture

The former, as it's always been?

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.

Rising Sun's picture

Build more empty cities - stupid fucking communists

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.