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About That China PMI Number...
Submitted by Sean Corrigan via Diapason Commodities,
In general, in functioning economies with a solid financial architecture and reasonably reliable data, it is clear that PMI responses (excepting the occasional flush of stock market-inspired enthusiasm) can be matched to developments in corporate revenue with these in turn tending to look something like the track of the supply of that money in which invoices ultimately are to be settled.
A moment's thought will reveal why this might be the case. The immediate and most obvious indicator to a businessman of whether trade is picking up is the sound of his cash register ringing more frequently. He will perceive this more readily and more tangibly than he will his count of orders, his stock of inventory, his plans for hiring and firing, and certainly than his eventual, quarterly or semi-annual reckoning of profits - themselves not always the most accurate reflection of whether he can actually continue to pay his way, remember.
It is thus VERY unusual to see large, sudden divergences between receipts and survey responses such as the one which has just miraculously appeared in China.
How to explain this? Well, given that ALL data in China are political constructs and given how anxious the regime has become in recent months to show up their nugatory achievements in the best possible light, is it entirely beyond the bounds of credibility to suggest that they might have exercised a degree of - shall we say - 'moral suasion' on either those ticking the boxes in this bellwether release or even, possibly, on some of those charged with its interpretation?
Such is the commercial sensitivity of the PMI franchise that it is of course unlikely the fault would lie there, for though not utterly inconceivable, one struggles to imagine that a sufficient amount of pressure (threat) could have been brought to bear so as to persuade those involved at that end of the process to undergo the considerable reputational risk entailed in any doctoring of the results.
However, it is surely not too difficult to imagine that a gentle reminder could have been issued to China's loyal business executives to the effect that it would be appropriate for their answers to reflect more closely the dramatic improvement in climate which has already miraculously resulted from Li and Xi's masterly series of 'micro-stimulus' announcements - even before some of these have even had a chance to be put into practice and certainly before the next ‘corruption’ inspection team sweeps down to give them the once over.
Caveat emptor!
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Thank goodness the U.S. doesn't fudge their PMI numbers.
. . . . or their inflation figures !
It's all Chinese to me
Accounting just isn't what it used to be....
If other professions were to become as debased as Accounting, we would have railways where the tracks don't connect, Heart surgeons who put two hearts in some people and 0 in others, engineers who build bridges without on ramps, etc....
I'm so sick of "survey results". They're such utter horseshit. Easiest to manipulate, least likely to correlate with reality.
The Nielsen Company would like to have a word with you.
The russian roulette of globalization trading partners.
PMI = Pick Me Imbecile.
lulz. It's ironic that the MSM is just starting to talk about the USD losing its "reserve status", when the PBoC balance sheet makes the Feds look like pikers.
Go visit your local coin shop ASAP Bitchez...
This is what happens when you have dimwit 'finance analyst' types that never worked a day in a real physical business such as retail/trade/manufacturing, totally unaware that most businesses have cycles.
The chart just proved the seasonal cycle of manufacturing activity, and this horseshit moron cries it proves a conspiracy.
This is the same type of deal that happens when you have academics analyzing economics and coming out with bullshit because they never participated in any real economic or business activity in their daily lives.
When you know shit all about what you are trying to look at, all you are doing is just 'air-charting' - because you have no fucking clue on what grounds to base your analysis on.
Thank you for only calling names instead of doing an alternate analysis with real world examples to prove a point.
You mean I still need to TELL people, step by step, how to read a chart?
ok,
Look at when the dips are occuring in the chart? and when the peaks are occuring? notice how those times are occuring at roughly the same time of the year, every year?
now go draw your own conclusions.
This reminds me of when the Chinese PMI collapsed last year and the market crashed up 30%.
Does this mean S&P 2500 by DEC14?
it's what the communists do - who gives a shit - just laugh at them
the pathetic part is Barry doing the same thing here
Your statements seem to be redundant - "what communists do" and "barry doing the same".
Similar pattern in Aug 2012,dREVexACRec going down when PMI starts going up - then it follows.
Remember China has to prepare for Christmass early. They have to factor in six weeks shipping time from China to US. Meaning mid july is early september for chinese companies shipping christmass good to the US. It doesnt matter if they cant sale goods they have already made they still have to make the new hot trendy items that people will be looking for this christmass.
So chinese are getting a christmass reset regardless of the fact they are sitting on mountians of unsold goods. This is why US companies used to take unsold goods and simply bury them in the desert. Because they had to move on to the next new thing every few months regardless of if they had sold the stuff they had made last cycle are not.
The circular firing squad is loaded and ready, someone just needs to pull the trigger.
Look. Any numbers coming from the Chinese are manipulated. They know the game as well as anyone.
That is why China is experiencing capital flight and increasing unemployment. Everyone who dumped their money and factories into that shit hole are eyeing the exits and wondering how much they can get out and how fast they need to be to get it out.
China is holding a Tiger by the whiskers, not the tail. It is only global interconnectedness and correct fear of blow-back on the super investors that keep this charade marching along. It is one more reason to clean up corruption and stop the power of big money in directing public policy.
stuffing the channel, chinese style. production is the key to a successful economy. the product is just the means. now they will have to build warehouses to store the stuff. bullish
"We are just doing what the Americans taught us to do... 'If you can't Dazzle Them With Brilliance, Baffle Them With Bullshit'"