The Carnage Continues In Asia As China PMI Confirms Contraction Deepening

Tyler Durden's picture

Following last week's Flash PMI print of 49.6, the Final print for January China Manufacturing dropped further to 49.5 confirming the contraction is deepening. Japanese stocks were down the most since August in the early going as Nikkei futures extended the losses from the US day-session (and rather notably decoupled from USDJPY and breaking below 15,000). The Nikkei is heading for the worst month since May 2012 (-8.66% so far). S&P futures tracked USDJPY as 102.00 was defended aggressively. Chinese stocks are also tumbling (though not as hard as Japan and US) and the PBOC will not be adding liquidity today. Furthermore the blame is being shifted as Deputy FinMin Zhu warns that the "Chinese economy faces risks from overseas uncertainty." EM FX is drifting lower still.

 

The Final HSBC Manufacturing PMI print dropped from 49.6 Flash to 49.5 - its biggest drop since June and lowest since July 2013...

 

The Lowlights...

"Employment levels at Chinese manufacturers had quickest reduction of payroll numbers since March 2009"

 

"New export orders declined for the second month running in January, firms mentioned weaker demand in a number of key export markets."

 

Bad for Australia: "the rate of input price deflation was marked overall, amid reports of lower raw material costs."

 

"Reduced cost burdens were passed on to clients and marked the second consecutive month of discounting"

 

 

Japanese bank stocks are down 9% in the last 5 days and Real Estate stocks -12.5% in the last 2 weeks. But most concerning to Abe (and the rest of the carry-trade addicted mob) is the disconnect between JPY and NKY...

 

The Nikei is now down over 500 points from its post-Turkey-is-fixed euphoria.

 

EM FX continues its slide...

 

In other news, the Baltic Dry Index has now plunged 51% from its late December highs and has collapsed to 5-month lows...

 

Charts: Bloomberg

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HedgeAccordingly's picture

Well well well. SPooz melts up 6 handles then gets smoked into lows following CHina PMI miss.. 

Gankfest's picture

It's shitty everywhere... Welcome to Earth!

DoChenRollingBearing's picture

The economy is even bad here in Costa Rica, but at least there is no snow.

I'm glad that I was not in the US the past few days.  Pretty ugly sounds like.

Stay safe!  Caution!  Gold!

Harbanger's picture

Of course it's bad and guess what, it's gonna get worse.  I still keep in touch with some friends who moved to costa rica after they retired.  They have the check mailed directly to them.   They're Livin the good life while they can....haha!  Who's better than you I tell 'em.

TruthInSunshine's picture

I'm not saying "I told you so," since my opinion about the real health (or sickness, to be more precise) of China's economy is necessarily a derivative function of the well-reasoned hypotheses of a select few, credible (IMO) individuals who influence my thoughts, but I find it hard to believe that even semi-cogent macroeconomic analysts don't now deem the economic crisis in China as a severe, structurally rooted one - and not some form of cyclical affair that will respond well to more intelligent monetary policy.

I'll go further & state that Asian Contagion is now a severely virulent strain of economic influenza that is most likely to drag the global economy into the next episode of crisis.

p.s. - Anyone who believes that the actual Chinese PMI isn't far worse than the "official" print, just as is the case with so many such official economic numbers/stats in the west, or Japan, or wherever else, is hopelessly naive.

Harbanger's picture

So it's China's fault that the West is bankrupt?  Nice spin, but I don't think it makes a difference at this point.  They have the Gold, infrastructure and desire. we have blame, guilt and excuses.

TruthInSunshine's picture

I didn't interject an iota of moral judgment in what I wrote above.

I merely reflected upon what I view as the economic reality at present, on a relative basis, along with an opinion that the structural problems inherent in the present system are likely to hasten and make the next downturn far more severe than the world or any single nation would experience in a cyclical downturn.

Harbanger's picture

I think they're planning long term, beyond any financial crash and into the next economic phase.  The west is already past any standard cyclical downturn, any singular unexpected event could cause a collapse in our banking system.  China is different in many ways, it's a net producer/exporter and doesn't have the same level of unfunded liabilities and debt as the west.   But they have the same tools at their disposal as the western banks/govs.  If they chose to, they could tax producers and put their entire population on foodstamps/welfare to ride out a crisis and still be in the black.

Augustus's picture

Is there a real difference in loans to the various SOEs which will never pay it back or in just giving it away as is done in the US?  Both are financed by unpayable debt.  While the Chinese worker does have to do something, the benefits of the losses are used to subsidize the export sales.  Both methods are unsustainable, it just takes different analysis to determine when or how soon there will be a reckoning.

new game's picture

kinda simple-the best customer is tightening its' belt.

Leveraged Algorithm's picture

It's different this time. It is worse.

disabledvet's picture

that's what the bond market says to me. "QE works until it doesn't."

to the Fed's credit (and yes I know this goes over like a lead balloon) "they changed"(taper.)

No one who believes that there is an inflation problem can believe taper is a bad thing.

The Vineyard's picture

Manufacturing is dying in China?  Looks like we're all screwed with a capital S.  There's only one thing left to do.  Run to the hills.

roadhazard's picture

Stay the fuck away from my hill.

peace out

fonzannoon's picture

Facefart will carry a bounce tomorrow. Friday will be ugly.

Dr. Engali's picture

Hopefully it takes twitter down with it. If this thing falls apart I'm going to need all the free meals I can get.

fonzannoon's picture

i'm not sayin peep. i saw kito spike the ball on the 2 yard line. I saw they told all those people in the south in the ice storm to tweet for police. thats gotta be bullish.

TheMeatTrapper's picture

I saw they told all those people in the south in the ice storm to tweet for police. 

Living through it right now. 

It's been a fascinating experience. As a prepper, this has been a two day vacation from work, with some rare snow on the ground. A time for hiking through the snow woods in absolute silence. A really nice time. 

For most, it's been an unmitigated disaster. 

In my little city alone, we had 4500 kids spend the night in their classrooms because the roads were impassable. Thousands of cars wrecked. People spending the night in their cars on the side of the road. 

What has been fascinating is to watch the liberals, the yuppies and the minorities be utterly helpless and totally dependent upon others. They have been completely incapable of walking home, staying warm - anything. 

The 25-55 year old white deer hunters have saved their asses. The deer hunters put on their hunting clothes, their rubber boots and got on their 4 wheelers. They rode up and down the roads reuniting mothers with kids and ferrying people home. 

In every neighborhood the older men stood at the subdivision entrances and passed on information, helped people get unstuck, and handed out free coffee and soup to people attempting to walk home. The old Southern ways are still here - but they are aging - fast.

I spent the morning at the entrance to the local elementary school helping dig out stuck vehicles of parents desperate to get to their kids. 

The school teachers and lunchroom workers have done a great job. They are just now winding down after more than 48 hours on the job. Neighbors hand carried blankets, pillows, sleeping bags and toys to the schools for the stranded kids. 

The cops commandeered school buses and cruised the interstates rescuing stranded motorists and took them to shelters. Each school bus drove behind a sand truck to avoid getting stuck. 

The SWAT teams, MRAPS, drones and FLIR weren't so useful. Four wheelers were. 

We pulled urban blacks driving shiny new Mercedes out of the ditches. The Mexicans in beat up pickup trucks slid down icy roads happily bouncing off cars as they bounced their way along; not giving a shit about who they hit. 

My wife made it to the school to extract our son, and she signed out every child in the neighborhood as well. That's the only reason those kids aren't sleeping on the floor of their clasroom tonight. 

We've fed them, given them fresh clothes and showers. One of the kids is a little black kid. His mother was trying to make her way home and had to abandon her car a few miles from my house. She walked the rest of the way and slipped and broke her arm. When my wife put a plate of muffins on the table for breakfast this morning her kid grabbed the plate and started shoving muffins in his mouth whole. It was fascinating to watch. No concept of table manners, saying a blessing before eating - nothing. 

Our society is divided. It is divided between that ever dimishing segment that can not only take care of themselves, but take care of others - and that segment that is totally dependendent upon others to care for them. 

They outnumber us greatly. 

I'm enjoying a nice oatmeal stout. It's good to be prepared. 

Obama_4_Dictator's picture

Personally speaking - you sound like a bitter, white, racist, ole man, who is rich - you better share.  I think we should redistrubute your supplies to the needy since you cleary hoard things. Shame on you.

TheMeatTrapper's picture

you sound like a bitter, white, racist, ole man, who is rich..

You had me until the rich part. :) 

 

Edit: For all those who downvoted him - he was being sarcastic. 

disabledvet's picture

"the words that come out of our mouth only emanate as a dialogue between us and nature."

May God only hear out curses at the human race...and ourselves.

new game's picture

exactly what i would do: go to the woods with my .22 and see if a bushy tails was out...

the rest can have a nice day-i would not even tune in to hear the spin of heart felt lib-tard b.s.

i already saw the future-boston bomber and katrina. go to the woods, only bring the 308.

will i be stiffin, i mean stuffin muffins, well that depends:)

Obama_4_Dictator's picture

Very true - sarcastic. I thought it would be obvious

Offthebeach's picture

Definite American Kulak. Uncle Obama will show him

DoChenRollingBearing's picture

Plus one for fascinating story.  Those who pull the wagon, those who ride...

NoDebt's picture

That was a good read and a good first-person account.  Thanks for posting.  And.....

"The Mexicans in beat up pickup trucks slid down icy roads happily bouncing off cars as they bounced their way along; not giving a shit about who they hit. "

I don't care who you are, that's some funny shit right there!  I know EXACTLY what you're talkign about.  Mexicans get a bad rap (some of it deserved), but those sonsofbitches SHOW THE FUCK UP FOR PAYING WORK!  I used to hire them off the street corner when I ran my landscaping company a zillion years ago.  I was young, strong and motivated.  They could still work my ass into the ground on any average work day.  Sun-up to sun-down, pay in cash and they were ON IT.  If some rich kid's toy got a little dinged-up in the process, well, shit happens.  

TheMeatTrapper's picture

Here's a few pics from near my house:

 

Pic 1

 

Pic 2

Rednecks and snow don't mix. :)

In the second pic, notice the camo clad guys on the 4 wheeler in the background.

Augustus's picture

That looks to be about $500,000 in insurance losses, economic stimulus for Asian auto companies.

new game's picture

lol from minnesnowta. looks like insurance rates are going up a bit...

IridiumRebel's picture

I'm unable to give you a green for whatever reason so +1. This has happened before. It's like the ability to vote on your post is disabled. Strange.

Dr. Engali's picture

You can't give him a greenie because he started with italics.

Dapper Dan's picture

don't start a post in italics,  no vote possible.

See?

 

(sorry man,  didn't see your post, I'm in some sort of weird time zone)

Dr. Engali's picture

It's funny you tell that story. I was just telling my kids about a similar story about when I was younger traveling through South Carolina and it snowed. At the time I lived in Cleveland and didn't think anything of, but I've never seen more car wrecks in my lifetime. I was amazed at how what I considered to be nothing paralyzed a whole state.

TheMeatTrapper's picture

I was amazed at how what I considered to be nothing paralyzed a whole state.

Yep. On Twitter it is being called #Snowpocalypse. 2" of snow and some ice. 

People got stranded on I-20 near Leeds, AL. Some walked off the interstate to the local Bass Pro store, pulled out a credit card and bought $5,000 4 wheelers and rode them home. 

Amazing shit really.

It's getting serious here, though. I'm on my last Good People Oatmeal Coffee Stout. After that I'm down to Monkeynaught IPA. 

disabledvet's picture

I've been in an ice storm in Atalanta. The worst driving experience ever (and I live in the stuff.) Absolutely PURE ice. You could turn the steering wheel 100% left or right...did nothing.

Especially on the overpasses.

We literally "ice skated" through cars bouncing off bridge abutments. Somehow we got through the "ping pong game" without a scratch...and laughed out loud about it all the to our destination.

Dr. Engali's picture

The Bernank is laughing his ass off. He gives the world a a five year party and then takes his punch bowl and goes home. A shit ton of damage can be done before the next fed meeting. Good timing with the MyRas.

fonzannoon's picture

I've been considering that too. It seems like it's possible he wants the 10% dip and feels Kevin can handle it. Should be interesting.

Dr. Engali's picture

Seems to me like it would be pretty risky. Everybody is on edge as it is. Add to that fact all the leverage in the system, and things can cascade fairly quick.

NoDebt's picture

"Good timing with the MyRas."

Was thinking the same thing.  What better way to kick it off that to scare the crap out of everyone again and send them into the loving embrace of their trustworthy (guaranteed, full faith and credit) government?

Doesn't matter.  This is all small ball we're talking about.  The global economy IS slowing down.  Never seen such a disconnect between the talking heads and what the cold hard facts are telling me (at least not since the .com bubble).  Lie about the numbers all they want, a slowing economy, especially global trade-related, IS going to be a problem for debt-laden, highly leveraged companies (whose stock price is supported by debt-laden, heavily leveraged investors), even those with plenty of cash on hand.

Nothing to do now but wait for Yellen to show her true, unrequieted feelings for Wall St. and crank the presses back up.

Handful of Dust's picture

I don't know about the global stuff but my neighborhood mega mall is experiencing more vacant store fronts.  I stopped by the mall office and mentioned they might want to put ads or something lively in those empty store windows instead of those black curtains...

Also, retailers are biting the dust left and right esp some of the online small businesses. Orders down, revenues down and profits extremely slim especially now with another postal rate increase of a whopping 5%. The ripple effect is enormous from what I see. My friend went under and his entire family had to cut back on all spending...and I don't mean iCrap, I mean food, heating, etc. He, like millions of others bought into the 'recovery' and the fiction that 'house prices never drop' and and paid way too much for his McBox.  Unless you want to go on the Gubmint dole, the best advice is to have lots of skills as well as have a deep security blanket stashed away and very diversified imo.

new game's picture

if you look closely, you will see the cracks. all an illusion to hold er togerther for a while.

as long as everone worships the dolla for another day - all good...

but, something out of the blue yonder will start the cascade of dolla debt demise-it has all been written.

booboo's picture

Obongo's financial wizard believes they that they can turn a bastardized bunch of mutts called Americans into Japanese and hold all our debt internally in the hands of it's obedient masses........... Bwaaaaaahahahahaha, they are selling and no one has a spare dime to buy a bond if they wanted to, and that "first time saver" horse shit was just an envy play so the middle class can sit up and say, "WTF??, uh, I want some of those too" stupid mother fuckers.

20834A's picture

Could the MyRAs be way to unwind the FED's T-Bills?

disabledvet's picture

I just think the whole thing is stupid. Jack Lew went running to China even though the only asset they had/still have are massive quatities of treasuies.

They've already spent all those dolares on massive public works products.

You want to teach "savings" by saying "buy zero coupon bonds"?
This is the most ridiculous thing I've ever heard of in my life.

Cognitive Dissonance's picture

Who knew the entire nation of China was swimming naked when the tide went out?

<Warren....you left your swim trucks in Shanghai.>

q99x2's picture

I better plan on being stuck in Pittsburgh if the SHTF on Super Bowl Sunday.

Sell your house. Stock up on Hormel Chili and peanut butter.. The end is near.

Long live me.

Dr. Engali's picture

In the tweets of Matt Drudge..... "Have an exit plan".

surf0766's picture

What does he know and when did he know it?

FieldingMellish's picture

Oh yeah... and gold and silver are getting smacked...

Troll Magnet's picture

GOOD! I was wondering why they weee holding steady despite the tapering. I hope they drop like hell in the morning. My truck's empty and I'm ready to back it up.