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Chinese Stocks Are Surging On Weak Macro Data BTFD-iness

Tyler Durden's picture




 

Having dropped over 10% in the previous 2 days, what better way to get the speculative frenzy of Chinese housewives levered up and buying stocks again than terrible macro data. With China HSBC Manufacturing PMI printing 49.2 (the 3rd monthly contraction in a row) and China's official Services PMI tumbling to its lowest since Dec 2008, the 'bad' news seems to have been greeted wondrously as Chinese stocks are up 2-4% on the news. CHINEXT back to fresh highs, Shenzhen is outperforming, and Shanghai and CSI-300 are all pushing higher. Add to this the news that the CSI-300 its rebalancing some positions and the 'correction' in China is now old news...

 

Bade news is good news for dip-buying Chinese housewives...

 

Not only is the bad news bad enough to be good, but the rumors of moar stimulus are also present...

China’s Ministry of Finance may set additional quota of 500b-1t yuan for local governments to swap debt into municipal bonds,  according to people familiar with the matter.

 

Plan needs State Council approval, according to the people, who asked not to be identified because deliberations are private

 

Finance ministry said March 8 govt would permit as much as 1t yuan of high-yielding debt to be converted into municipal bonds

However, while the market is juiced on the apparent weakness, Goldman sees pockets of strengths (for bulls to be worried about)...

China’s official May manufacturing PMI headline inched up, although it was marginally below market expectations. The breakdowns of the sub-components were more positive than the headline with the two most important components (based on the past correlation with hard data such as IP)--new orders and production--showing more meaningful rebounds (up 0.4 and 0.3 points respectively). These rises were mainly offset by a move in the supplier delivery time sub-index (which we do not generally regard as a particularly useful indicator); the employment sub-index also inched up and the raw materials inventory index held up.

 

Markit/HSBC manufacturing PMI May final reading was also released this morning. The May final reading was 49.2, up slightly from 49.1 in the flash reading, and also improved compared with April final reading of 48.9.

 

 

Official non-manufacturing official PMI (which covers the construction and service sectors) moderated to 53.2 in May, from 53.4 in April, the weakest reading since the global financial crisis: Service sector PMI decreased to 52.0 from 52.4 in April, while construction PMI increased to 57.9 from 57.5.

 

 

Today's data showed early signs of a recovery in the economy amid continued policy loosening. However, we do not believe these are enough to change the overall policy direction and believe the government will likely release further loosening initiatives in the coming months until there are consistent signs of a significant growth recovery. The recent repo operation by the PBOC (which drained liquidity) likely reflected a fine-turning in controlling the degree of looseness as opposed to a change in policy direction.

*  *  *

Meanwhile, in Yunnan Province...

  • CHINA TO HOLD LIVE-AMMUNITION DRILL IN YUNNAN PROVINCE: XINHUA

During the exercise, all types of aircraft without approval shall not enter the airspace, into Gengma county, vehicle Zhenkang border exercise area, please obey traffic control personnel. Exercise does not affect normal production and life of the masses. To listen to local people and local governments participating troops command, exercise control without approval shall not enter the area. Exercise until further notice.

 

 

In accordance with international practice and the relevant agreements between China and Myanmar armed forces, I informed the Myanmar authorities to matters I organized military exercises.

*  *  *

So... bad data, more stimulus, and warmongery... BTFD!

 

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Sun, 05/31/2015 - 23:37 | 6150844 petroglyph
petroglyph's picture

BTFD-iness, now that right there, that's funny.

Sun, 05/31/2015 - 23:49 | 6150865 remain calm
remain calm's picture

Markets are just going to keep going up until one day they won't and the trend will be down, and down a lot. But nobody knows when that day comes. My personal thought is this BS can go on for a couple more years. When all CB are playing the same game the insanity can last a lot longer than anyone thought.

Mon, 06/01/2015 - 00:37 | 6150943 Laowei Gweilo
Laowei Gweilo's picture

repeating the chinese house wives meme over and over doesn't make it more true

 

retail investors increasing 20x doesn't mean quite that much when they were less than 1% of the market previously

 

vast majority of assets are still held by trusts or funds set up for company debt or leveraged by debt

Mon, 06/01/2015 - 06:43 | 6151247 negative rates
negative rates's picture

Doesn't make it less true, but the housewife STILL won't be able to administrate herself out of this one, could 2 sisters start WW3?

Mon, 06/01/2015 - 00:38 | 6150945 Oh regional Indian
Oh regional Indian's picture

That picture of Police Chief Shing Dong Wong is totally gratuitous.

China officel rook rike sirry sirry boy.

That said, clearly the world needs to Buy the Fucking CHINESE dip.

Hunan Hot sauce dip that is.

The markets? Heh....

Listen...

https://www.youtube.com/watch?v=lk1TSBW_368

Mon, 06/01/2015 - 00:57 | 6150970 Laowei Gweilo
Laowei Gweilo's picture

Chinese don't have problems with 'R's... 

 

Can't say the same for Indians with 'G's and 'GL's

Mon, 06/01/2015 - 01:16 | 6150987 Oh regional Indian
Oh regional Indian's picture

Is that Tlue?

But India's english problem is not g and gl's.

It's with V's and W's.

 

Wery nice veather, vhat?

 

Mon, 06/01/2015 - 05:28 | 6151202 Dindu Nuffins
Dindu Nuffins's picture

Reminds me of the problems that Greeks have when they try to speak German.

They end up getting a lot of D's in their A's.

Mon, 06/01/2015 - 03:08 | 6151118 PartysOver
PartysOver's picture

But nobody knows when that day comes.

Exactly.  But when some people have an emotional committment to financial destruction they can not see this.  For me the sign that it is getting serious is when the Banksters, including CB's, start to turn on each other.  Then I will no longer BTFD.  If you recall things got serious when some Banksters turned on Lehman and Bear.  I will be watching for the same thing or possibly the CB's start to turn on each other.   Or these new Pluck It Out the Arse banks, AIIB, get testy with each other.

Mon, 06/01/2015 - 08:52 | 6151386 TheGreatRecovery
TheGreatRecovery's picture

I'm thinking it might go on until State Pension Managers buy the stocks from the Hedge Fund Managers they play golf with at their Country Clubs.  :-)

Sun, 05/31/2015 - 23:39 | 6150845 TruthInSunshine
TruthInSunshine's picture

Markets will only return to reality when ZeroHedge throws in the towel on hyperbolic, doom porn, with Doom! TEOTWAWKI titles not posted every 1/1 hour on the 1/2 hour.

Mon, 06/01/2015 - 00:38 | 6150946 Soul Glow
Soul Glow's picture

Dude all central banks bought toxic debt upwards of a quadrillion dollars and we can think it'll end badly?

Mon, 06/01/2015 - 00:54 | 6150967 TruthInSunshine
TruthInSunshine's picture

Central banks across the globe are acting in coordination to create the new skittles & unicorns, forever higher (in financial terms), guilt-free (thanks to Mainstream Media Propaganda Proxies), MARK-ITS.

Sun, 05/31/2015 - 23:39 | 6150849 davidalan1
davidalan1's picture

with that pic, may i be the first to say...How iong is a china man

Sun, 05/31/2015 - 23:51 | 6150868 This is it
This is it's picture

Gou hom, whyte boy! Bee a man!

Sun, 05/31/2015 - 23:40 | 6150850 davidalan1
davidalan1's picture

long

how long...

Sun, 05/31/2015 - 23:45 | 6150859 Ness.
Ness.'s picture

I buy, you buy.  ok den.

Mon, 06/01/2015 - 00:19 | 6150900 q99x2
q99x2's picture

BTFD. Its Red Flag software stupid.

Mon, 06/01/2015 - 00:19 | 6150903 ebworthen
ebworthen's picture

Bad news is good news!

War to push the markets to the moon!

Bad is good!  Slavery is Freedom!  Ignorance is sweet bliss!

BUY!!!

Mon, 06/01/2015 - 00:23 | 6150910 pachanguero
pachanguero's picture

The Fed and CIA are ramping up the Chicom market to then crash it leading China to falling on it's face.  Classic set up....

Mon, 06/01/2015 - 00:32 | 6150933 Yen Cross
Yen Cross's picture

 Someone also dropped this "tape bomb" earlier Tyler.

 China said to mull doubling to 1trln yuan debt swap programme: BBG @ Forex Factory

Mon, 06/01/2015 - 00:33 | 6150936 q99x2
q99x2's picture

I followed IBD for around 12 years and they were very precise at determining market tops. I don't know how they would do since the Central Banks have jacked into the markets but I think that their methods would still apply. It might be fun to try to catch the market on the way down just for fun. I'm so negative at this point that I believe markets might just stop trading and that there is a chance you'd never get anything out. It would still be fun to play around with.

Mon, 06/01/2015 - 00:35 | 6150940 Soul Glow
Soul Glow's picture

China can print like the rest.

Mon, 06/01/2015 - 01:12 | 6150984 Mini-Me
Mini-Me's picture

Who has the contract for building airstrips in the Spratly Islands?  I'm buying that stock.

Mon, 06/01/2015 - 07:24 | 6151274 Ghordius
Ghordius's picture

Mini-Me, ask Doctor Evil, he will explain to you that most of the key suppliers of any MIC are not on the stock market

Mon, 06/01/2015 - 07:18 | 6151271 all in capital
all in capital's picture

last week they didn't know about BTFD now they do - watch out! ATHs!

Mon, 06/01/2015 - 09:06 | 6151417 fremannx
fremannx's picture

Market peaks are in everywhere but the US. That peak should be in this week (if not last)...

http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-w...

Mon, 06/01/2015 - 09:26 | 6151482 falga
falga's picture

When a Hainanese spicy food Restaurant can change their stock market name to some sort of techno language name to raise stock value, you know something is wrong

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