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China Manufacturing PMI Jumps To Highest In 2014; What's Wrong With This Chart?
Despite all the shadow banking system hand-wringing, macro-data-collapsing, real-estate-bubble-bursting, stock-market-tumbling reality facing the China; somehow, China's official government manufacturing PMI just printed 50.8 - its highest in 2014 and the 20th month of expansion in a row. Given the mini-stimulus efforts of the government, perhaps it is not surprising that the official (more SOE-biased) data signals all-clear (when HSBC's PMI is still in contraction for the 5th month in a row). The employment sub-index fell to a 3-month lows and the Steel industry's output and new orders has cratered... So what's wrong with this chart?
Charts: Bloomberg
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Just change the financial formula model. Everything looks healthy.
That's what I was thinking. Looks perfectly fine. Just another chart.
What's wrong? It doesn't have the official BLS (Bureau of Lying Statistics) stamp of bullshit.
No BS. All that manufacturing is going to build a new city called MoDangMteeSpace.
Heard about that. Supposed to be very exclusive. Early reports say population of 10.
You guys have got it all wrong. It's not China Manufacturing PMI, it's China Manufactured PMI. See makes more sense now, doesn't it?
Bullish?
No. Bullish is what's right about this chart.
<Spoos open up 5 points on monday and close the week over 1950
<Spoos open up 10 points on monday and close the week over 1950
So if China has to someday admit like the USSR that 80% of their domestic economic numbers are fake, take a 1 time "charge" and take a leap forward via RNB currency deflation: what will the army think who gets their wages in RNB ? Who will the standing party blame when they can no longer deflect or supress Urghur and blue collar unpaid wage riots on random terrorists ?
If China is indeed buying up a bunch of treasuries via Belgium, as suggested by the FinancialTimes, why would they be going long 30-year? If the US Gov, like Japan before it can not hope to afford a 3% yield let alone a 4.8% Yield then what objective would they have for this "bear hug" strategy ? Taking this inductive thought 1 step further, is the US Treasury or the Fed aware of this market cornering ? Will it affect their rate decisions ?
If China is not the buyer of treasuries (a more probable scenario), what will any tightening do to the non-OECD ? Will Yellen consider any tightening is on the table if the economy is starting to stall (and likely is down 1.5% GDP again in 2Q14 by leading indicators) ?
I don't disagree that the long term rate of US growth is going to be around 2% going forward, but that may actually help the US as large-corps like IBM & HP are going to be forced into a new "Junk Mania" era which was critical to financing new growth vehicles trapped in dead weight conglomerates and warped labor contracts/labor allocations.
Recall, improper policy adjustments were what killed the recovery in the early 1980's and in 1930's.
This week is going to be fun. It's not anymore about the Secular bull, it's about the Secular growth of non-OECD and realitive prices to inflation indexed Absolute trades. Which is more important ? Think carefully in how you answer "10s30" is not the right answer, in my view. But I suspect I am wrong.
Edit (to the Parachute account below, with a very refined prose not unlike a host at CNBC Singapore desk):
- MW/h data was found to be misreported about 5 months ago. China standing said themselves at the last 5-year plan rollout that certain statistics such as MW and concrete production are so horribly fucked up the party itself no longer uses it. As such, most shops like GS or HSBC no longer see it as a leading indicator for Chinese demand. A GS Econ can dispute this if incorrect (post-March).
- Copper price tightening is not related to increase in demand but more to the slack caused by the black/backroom Copper repo's being shut down and that warehouse glut finally being dispersed back into the Chinese economy. Same thing happened in the mid 1970's when the Carter oil trade repo's were corrected.
- The debt is actually understated. May want to review the many reports or Tyler/Bloomberg (Tyler is not Tom Keene) which prove Citic and Agribank are hiding bad muni loans off sheet, much like Citigroup in 2007.
If China devalues it's to surpress internal debt levels, not to make them more competetive ... they can simply afford to increase the wages for the army.
In fact they want consumption higher and lower investment (in real estate development). High wages are the opposite of their problem.
It doesn't matter. The stock market is going up. Nothing else matters.
That’s right bitch, Uncle Yellen is going to print until we take out the treasuries identical during Rome times.
Hope, change and run the FORWARD bitch into the ground. We have a new monetary idea. Fuck you Obama!
Exchange and pretend, thats the name of the game. Keep the bubble going until it all comes crashing down.
http://ericsprott.blogspot.ca/
For gosh sakes, you people, put down the statistics, charts, graphs and number-crunching and GET OUT THERE IN THE STREET AND LOOK AROUND YOU. R-E-C-E-S-S-I-O-N
There are still more innings left in this ballgame than most on here want to believe.
Without EBT, Walmart would be defunct.
without ebt we would be the walking dead.
Batter up? It’s not right. We don’t have any innings left.
With ebt we are the walking dead.
Agree, I'm surprised we get even somewhat accurate data and not continual 5%-7% GDP growth reports from the US, and 12% from China.
I'm in Canada and it's going down here too, people losing jobs, businesses failing, but you won't hear a word of it from "leaders" and the public is only too happy to make believe unicorns and rainbows all around.
Because of this, I believe we will see this delusion continue until it simply cannot any longer. Too many disgruntled people marching on political buildings, too many empty storefronts, taxes rising too high, etc,
The desire of men to delude themselves is even more than I imagined.
Are you saying the very same government that we give infinite power to regulate all of life and make us all "good" could be lieing to us...via economic charts, no less!?!
My world is crushed.
extra innings began in mid - 2011....this could go on like Pawtucket vs. Rochester
http://en.wikipedia.org/wiki/Longest_professional_baseball_game
but 33 might not be enough...using each inning for a "month", we're approaching 40 innings fonz....
Let's play two.
Lets get Sudden Aging Disease, only 3 people walk out of here alive, the rest of you are orphans. Lets get that much clear.
cherry picking data... why not use the electricity output anymore?
actually, ironically, one of the best reasons why is actually typically a favorite measure of ZH to show how bad things are becoming in China, but recently hasn't seemed to be focused on as much because it's been evening out. i talked about this yesterday actually. we often like to look at electricity in China, but I haven't seen reference on it in a while
http://www.stats.gov.cn/tjsj/zxfb/201405/t20140513_552377.html
the 8th table down is electricity growth up until april and as seen in the bottom bars the average daily outputs have begun to stabilize and bottom out. most of you cannot read chinese so either you can trust me or you can try google an english article that's referenced it. that "bottom out" was reinforced yesterday by Credit Suisse when they issued a note also saying they think China may be bottoming out based on electricity, railway, etc data showing a 'bottom' (though they also said this last year too and it did go down a bit more). so, you can google that if you want confirmation. further, with electricity and railway volume bottoming out (at least over a few quarters), copper is also stabilizing (which isn't to say things couldn't get worse; but it's at least taken a breather). copper is back up about 10% from its YTD lows and china's stockpiles are down almost 13% YTD (and the two are correlated). which isn't to say these things are going to get good -- but it is to say the collateral value is at least stabilizing, if not improving slightly, and will likely continue to improve at least in the short run as demand increases from the relatively quick (compared to the huge stock up last year) depletion this year.
and "wealth management products" really affect a very very tiny percentage of consumers. it'll hurt banks for sure and any institutions involved, and sure consumers will face their own headwinds, but it certainly won't be from any investment products. there's a fundamental difference with how loans, investments, business, etc work in the mainland... buying investment products there is like buying a business here, maybe; and buying a business, land, or real estate there is like how we buy stocks. they buy and sell like trading cards; and loans OBS between friends and family is almost just as liquid. these are small factors that i mention not because they're particular relevant to the economy (again we're taking fractions of a percentage) but it's important to know to begin to understand some fundamental differences in liquidity and asset/liability eco-system there.
underappreciating the willingness of the politiburo to accept a tumbling yuan to prop up banks. if anything, this would be good for the economy. chinese goods being 'cheap' again is exactly what a lot of the industrialists, who already moved their millions into CAD or USD at sub-6/1 FX, would gladly accept 7/1 or higher again if it meant they moved more exports again. especially now they the russian oil deal, most of the canadian and oil company acquisitions, vancouver real estate, stashing cash offshore is all done. basically, 2008-2011 round two, lots of folks would welcome that.
misunderstanding of how their IS and BS actually work. actually when they cook the numbers it means the bad debt is also exagerated... problem is a lot of westerners don't really understand the formula they're using for bad debt. individual banks are not reporting bad debt. the CRBC is (which is like our FDIC and FRB combined). they use growth rate of defaulted debt and what the banks report internally to the regulator (not to shareholders).
but just as the banks 'cook' their earnings and bad debt, they also cook their good loans. so when the regs assume 5% bad debt on $100b good loans, the truth is the bank likely only has 60b or 80b good loans, so the 5% of bad debt is actually on 60 or 80 rather than 100, so the bad debt is in truth much lower than expected. but the 5% is also cooked, but when you even out the lower good loans but higher rate of bad loans, it means the real bad loans is actually a lot closer to this 'cooked' number that what you're suggesting.
further, most of these banks purposely under report liquidity because a lot of the cash has been moved to other shells for corruption purposes. but if the bank heads are going to liquidity concerns, they moved the cash back as OBS financial products onto the balance sheet as write-ups or write-downs, because the cash will do little good if their bank goes under and they lose their job. this is already common place in shenzen.
It's all lies and games and one day very soon we will wake up and a major economy will collapse which will bring down all economies,until then it's all lies and bullshit.
Glad to see you came back up for air. Mrs. Atomizer will translate the garbage dot cn link. She knows four languages. I'm blessed.
I don't care about electricity consumption (or PMI either).
I know there's no sustainable demand out there and I know China has to write off countless billions of crappy "investments"'.
Cleaning the slate before a new currency is introduced ?
They have plenty of FOREX to do exactly that.
Whats not to like ?
The numbers are as favorable as they
can be without losing the intended audience.
Electricity usage stats became less valuable once
it became known planners were using it to plan by.
Is coal usage stabilizing also? That would confirm electricity.
fools have the chart upside down..
Maybe they're buying more poontang?
I have tears of laughter pouring down my eyes.
Chinese love the color of red!
Must have have one of those Jack and the Beanstock green shoots festering beneath the surface.
BULLISH!
SO..come Monday...BUY BUY BUY BUY...fuckin.....BUY!
...and then....VOMIT.
Yep, buy, buy, buy the SM and dump your gold and silver. It's the American Neocon way you know.
Seems more and more to me that the Chinese and Russians are run by the same Neocon Rothschild scumbags as the US.
So here.s the operative question for non-traders like myself: where do you park money? Bullion is flat, interest rates are flat, stocks are on meth...?
I do need to buy more ammo and maybe increase the stored food to a 180 day supply, but what about the 410k?
A better question might be where "Not" to put your money.The modern economy that has evolved over the last several decades is loaded with interwoven contracts reeking of contagion. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar.
Never before has mankind diverted such a large percentage of wealth into intangible products or goods. I contend this is the primary reason that inflation has not raised its ugly head or become a major economic issue.Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply. The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing.
If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. Is this possible and if so where would that leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years. More in the article below.
http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....
Not a bad read, thanks for the link. I'll be reading some of his other stuff.
They switched it to a 401K, all fixed.
With dwindling 'easy accesses' of silver for manufacturing, China maybe repositioning in anticipation for a short squeeze.
Interesting. Will the Shanghai trade freely or are we in for the same bullshit manipulation that has just moved East? If the Comex and American banksters are involved then we're screwed.
Boondoggled White Elephants
As well as the usual massaged data perhaps some of this dichotomy is coming from high speed rail projects to nowhere, ghost cities and channel stuffing etc.
Perhaps we need to develop a Boondoggled White Elephants Index - being the difference between the blue line and the red columns.
China leads the world on the BWE index and it's rising! Forever.
That must be bullish. Go China Go !
According to John Mauldin, there are a lot of regional differences within China, and manufacturing is doing better than other sectors. Most debt is in the government sector.
http://d21uq3hx4esec9.cloudfront.net/uploads/pdf/140531_TFTF_3.pdf
Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. The quality of the recent growth in China is questionable.
Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.
http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html
paging captain obvious, the fin.yahoo board is calling
it's a good thing you don't reside in china
"Despite all the shadow banking system hand-wringing, macro-data-collapsing, real-estate-bubble-bursting, stock-market-tumbling reality facing China........the 20th month of expansion in a row.,"
Obviously a great climate then, never a dull day.....
[sarc.]
China's official government MANUFACTURED PMI just printed 50.8 - its highest in 2014 and the 20th month of expansion in a row.
THERE, fixed it for you.
I welcome my fellow travellers to the other side of the looking glass. Please take your super-strength anti-reality pills now.
Lol.
Figures lie and liars figure.
Red stuff must be backward looking.
Ha.