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Biderman On Bad Data And China's Recession

Tyler Durden's picture




 

"The next big financial crisis we will face will not come from Europe", Charles Biderman of TrimTabs notes, "but rather from China." In a brief but thought-provoking clip, Charles takes on the corruption in the 'manufactured' GDP data and outlines three more critical real-time (hard-to-fake) data points (electricity consumption, railcar-loadings, and bank-loans) that suggest China is potentially already in a recession. "Most investors do not even think this is possible", he adds, as China is the hope that so many market participants hold on to as the engine of global growth. Add to this the collapsing real-estate bubble, on which the TrimTabs-Truthsayer provides some interesting color - relating to private-public relationships and demand (and prices) are dropping rapidly. This dismal (and somewhat shocking) conclusion that China could already be in recession only stokes the fires of money-printing-expectations of course - though Charles does add (and in keeping with our 'there's no such thing as decoupling' meme) - "What a mess this world is becoming as Europe and now China is contracting - leaving very little to justify global stock prices to be as high as they currently are" and while collapse may not be imminent, Biderman ends by stating that "The Central Banks cannot levitate asset prices forever" - leaving the question of when not if the drop occurs.

 

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Wed, 05/23/2012 - 13:28 | 2455673 GeneMarchbanks
GeneMarchbanks's picture

"The Central Banks cannot levitate asset prices forever" - leaving the question of when not if the drop occurs.

Is that why you bought FB at 40 Chucky?

Wed, 05/23/2012 - 13:33 | 2455704 veyron
veyron's picture

Where's that post-FB rally Biderman?

Wed, 05/23/2012 - 13:34 | 2455711 redpill
redpill's picture

OT but interesting:

OKLAHOMA CITY, OK. – May 22, 2012 – APMEX Precious Metals Management Services, Inc. today announced that APMEX Physical – 1 oz. Gold Redeemable Trust (the “Trust”) has filed a registration statement in the United States and a preliminary prospectus in Canada. The Trust will be managed by APMEX Precious Metals Management Services, Inc., a wholly owned subsidiary of APMEX, Inc. The Trust expects to invest in and hold substantially all of its assets in 1 oz. American Gold Eagle bullion coins and 1 oz. Canadian Gold Maple Leaf bullion coins.

The APMEX Physical – 1 oz. Gold Redeemable Trust intends to provide investors with access to the gold market while providing the liquidity of an exchange-traded security. A feature of the Trust is the option for the owner to redeem a minimum interest in the Trust of US$10,000 for a proportionate share of the gold coin assets of the Trust.

Wed, 05/23/2012 - 13:38 | 2455727 veyron
veyron's picture

Is APMEX the best party for this?  I've heard some really negative things about them ...

Wed, 05/23/2012 - 13:41 | 2455753 JackT
JackT's picture

I can only imagine the premium one will pay for redemption. 

Wed, 05/23/2012 - 13:44 | 2455772 RacerX
RacerX's picture

I'm sure it will be "nominal"

Wed, 05/23/2012 - 14:14 | 2455916 Pladizow
Pladizow's picture

Hmmm, Gold & TIPS - a tad of Cognotive Dissonance?

Wed, 05/23/2012 - 19:36 | 2457053 Michael
Michael's picture

There is nothing in the known universe that can stop a mega housing bubble like China's from bursting. I know I studied the US/European housing busts and the conclusion is mostly the same except China's housing bubble is bigger than all others combined.

Wed, 05/23/2012 - 21:19 | 2457328 TwoShortPlanks
TwoShortPlanks's picture

Perth, Western Australia welcomes Black Swans; the state flag says so!
Which is ironic, since the greatest impact of a Chinese implosion/slowdown will be felt in the same place...Pop goes the Real Estate bubble.
http://en.m.wikipedia.org/wiki/Flag_of_Western_Australia

Wed, 05/23/2012 - 13:44 | 2455771 DosZap
DosZap's picture

redpill

Uh Huh, and with JPM as their Banker...................I'll steer well clear of them, and any TRUSTS.

Rehypothecated/just a new word for SEIZED.

Wed, 05/23/2012 - 13:55 | 2455833 ATG
ATG's picture

All securities suspect thanks to Allen Stanford, Bernie Madeoff, Jon Corzine 0MFG et al.

After the FB IPO fiasco, are ETFs next up or Treasuries?

http://richcash8tradeblog.blogspot.com/

Wed, 05/23/2012 - 13:29 | 2455680 Stackers
Stackers's picture

You know its just not the same when he doesnt wear purple.

Wed, 05/23/2012 - 13:30 | 2455686 SheepDog-One
SheepDog-One's picture

Biderman youre a dick.

Wed, 05/23/2012 - 13:40 | 2455744 Dr. Engali
Dr. Engali's picture

Why do you say that? He is only saying what most of us had said here. I didn't junk you btw....just curious about your statement.

Wed, 05/23/2012 - 13:48 | 2455793 Bay of Pigs
Bay of Pigs's picture

I don't know, perhaps pumping Facebook?

Wed, 05/23/2012 - 13:50 | 2455806 Dr. Engali
Dr. Engali's picture

I didn't hear him pumping Fakebook...surely he isn't that stupid?

Wed, 05/23/2012 - 13:53 | 2455813 SheepDog-One
SheepDog-One's picture

Uh yea he did. Great call a few days before FB IPO here, Biderman's Daily Edge 5/14/2012: Stocks & Gold Should Rally Post Facebook IPO - YouTube Nice one Biderman ya schmuck.

Wed, 05/23/2012 - 13:57 | 2455830 Dr. Engali
Dr. Engali's picture

I'll be damned. That pisses me off. I thought he was one of the good guys. I've been kind of busy lately and missed that post. Thanks for the link.

Wed, 05/23/2012 - 15:01 | 2456100 Temporalist
Temporalist's picture

Not defending Biderman but it could be a cynical kind of call.  And certainly he didn't know there'd be investigations.

Wed, 05/23/2012 - 16:29 | 2456487 BandGap
BandGap's picture

To be a good liar you have to tell the truth on occasion.

He is what he is, never take advice like his at face value on first pass.

Wed, 05/23/2012 - 18:36 | 2456892 SPAREPARTS
SPAREPARTS's picture

I think the guys alright, a source of mostly good info, just my thinking

Wed, 05/23/2012 - 13:52 | 2455819 john39
john39's picture

stupid? or something else...  everyone apparently has a role to play in this game.

Wed, 05/23/2012 - 13:34 | 2455713 francis_sawyer
francis_sawyer's picture

Poor Biederman is looking like the portrait of Dorian Gray everytime his face pops up...

Wed, 05/23/2012 - 13:38 | 2455728 PivotalTrades
PivotalTrades's picture

Nominal $ Prices will levitate all right.. They will blast off!

Wed, 05/23/2012 - 13:38 | 2455731 fonzannoon
fonzannoon's picture

This guy is just a shmuck.

Wed, 05/23/2012 - 13:39 | 2455740 JackT
JackT's picture

Rut Roh

Wed, 05/23/2012 - 13:40 | 2455746 ATG
ATG's picture

Well if +7% Chinese economic growth is a financial crisis,

there are always 12 African Nations growing faster...

http://richcash8tradeblog.blogspot.com/

Wed, 05/23/2012 - 13:50 | 2455804 DosZap
DosZap's picture

As I posted yesterday, the Chinese are refusing to take Commodities on contract!!!, and pending orders are being cancelled like CRAZY.

Someone is taking it in the ass, and its not the Chinese.

Wed, 05/23/2012 - 14:12 | 2455906 laomei
laomei's picture

Yep, why bother continuing to buy them up when there is already a stockpile and prices are still falling?  No real need for excessive amounts of coal right now either as China had a very light winter.

It's not the buyer who gets screwed when they stop buying. It tends to be the seller.

Wed, 05/23/2012 - 14:23 | 2455954 john39
john39's picture

indeed, and good luck trying to collect from Chinese buyers who default...    mission impossible.

Wed, 05/23/2012 - 18:38 | 2456902 SPAREPARTS
SPAREPARTS's picture

Hey the price of everything going up, I might buy a load of coal to throw in the old boiler

Wed, 05/23/2012 - 13:43 | 2455768 Conman
Conman's picture

Forget Biderman, look at the PPT go. Takeoff!

Wed, 05/23/2012 - 14:24 | 2455818 FinalCollapse
FinalCollapse's picture

Clearly the PPT in action. These morons think that they can destroy the pricing mechanism without any consequences. The stock market wants to find equilibrium. But noooooo - we need to protect our friend and gambler at JPM....

Wed, 05/23/2012 - 13:45 | 2455777 suckerfishzilla
suckerfishzilla's picture

Soft landing or crash landing it's no scales off my back.

Wed, 05/23/2012 - 13:46 | 2455782 geewhiz190
geewhiz190's picture

this is not new news. have to wonder how much already priced in. Chanos was talking about China 2 years ago.

Wed, 05/23/2012 - 13:47 | 2455786 FinalCollapse
FinalCollapse's picture

Biderman is right: China is either on the edge of recession or already in one. I wonder what they can do to stimulate the economy: stock market is down, real estate is down, infrastructure grossly overbuilt and already crumbling. They will be pushing on the string...

Wed, 05/23/2012 - 18:42 | 2456910 SPAREPARTS
SPAREPARTS's picture

Tell the people to buy, grow, improve if they want to have a job. Plenty of unfullfilled needs in China, especially in the outback

Wed, 05/23/2012 - 13:47 | 2455789 RockyRacoon
RockyRacoon's picture

The facade is crumbling.   

Here is an emblematic photo from about 1913 or so.   The caption reads, "Washington, D.C. "Storm damage. Between 1913 and 1918." Somewhere under all this rubble, I suspect, is a narrative waiting to be unearthed by a Shorpy history detective. Harris & Ewing Collection glass negative."

Here's the link: http://theautomaticearth.org/images/afterthestorm.jpg

Note the building facade is propped up with a few lengths of lumber.   The entire building is destroyed, but the "image" must be maintained.

It's the story of the U. S. since the 1913 era -- Federal Reserve System established.

Wed, 05/23/2012 - 13:49 | 2455796 Nachdenken
Nachdenken's picture

Central banks can levitate prices for a long time, at least since 1988 or 1994, pick either. Since they allow a reasonable rate of inflation, they can let prices rise at that level for as long as they can.

Wed, 05/23/2012 - 13:50 | 2455807 q99x2
q99x2's picture

When is Now. Markets are down today. The Day is Happy.

Wed, 05/23/2012 - 13:58 | 2455845 Winston Smith 2009
Winston Smith 2009's picture

Who the hell knows the exact sequence of events?  One or more of the PIIGS,  EU, then China, then US or any mix thereof.  It's gonna' happen eventually because that which cannot continue indefinitely won't.

Wed, 05/23/2012 - 14:12 | 2455899 pcrotty41@hotma...
pcrotty41@hotmail.com's picture

I wish someone on zero hedge would report on China's coal consumption per annum to get the real picture of what is going on ...it was 3.2 billion metric tons in 2010..is it going up or down?   Zero Hedge seems to be fixated on concrete consumption...lets get some numbers on coal consumption.

Wed, 05/23/2012 - 14:28 | 2455971 FinalCollapse
FinalCollapse's picture

Electricity consumption would be an excellent proxy for the coal consumption. Electricity usage is up 0.7% yoy. IMHO - this number indicates contracting economy.

Wed, 05/23/2012 - 14:34 | 2456000 pcrotty41@hotma...
pcrotty41@hotmail.com's picture

Increased usage=contraction in a developing country?  Not sure I agree with that..maybe things are slowing down but contracting?

Wed, 05/23/2012 - 14:20 | 2455912 williambanzai7
williambanzai7's picture

There are many kinds of mainlanders who visit Hong Kong to spend money. Some super rich, others not so. Nearby me is an area where they are brought by the bus load to buy what I call knock off brand goods. Not faked, but second or third tier.

These people appear to be middle to lower middle class workers. I assume they come from Shenzen. The traffic is unbelievable and they are blowing their dough just like those in the high class shopping districts. Causeway Bay has apparently surpassed Fifth Avenue as a retail revenue generation venue.

Meanwhile, people who have been in Shanghai tell me that the softening of real estate there has not dampened the business environment. real estate is also flattening in Hong Kong, but it has not cratered and I'm not sure it will since the debt artifices we used to finance our mania are not being used here. It's all cash at the high end.

I imagine life in the rural areas is about the same as its always been. Tough.

I remember the Japan bubble very well and to tell you the truth, I'm not shaking my head as much now as I did when the Japanese went hog wild. I know it's subjective, but I don't feel like it has reached that level yet....

Wed, 05/23/2012 - 14:27 | 2455967 kahunabear
kahunabear's picture

I have a Chinese friend who says all the stuff they have built in the last few years is terrible cheap crap that will fall apart. Hmm, where have I heard that before?

Thu, 05/24/2012 - 11:59 | 2459099 Shizzmoney
Shizzmoney's picture

I work for a company that buys 85% of its stuff from China to resell.

For one instance of product, out of 100 pieces, 8 come back defective.

Wait, you mean to tell me that workers in a corrupt Communist state aren't going to be happy in the long term, affecting the output and quality of their exported goods? 

I'm shocked!

Wed, 05/23/2012 - 14:33 | 2455994 junkyardjack
junkyardjack's picture

Oil under $90, I'm going to stock up on gasoline....

Wed, 05/23/2012 - 14:39 | 2456027 reader2010
reader2010's picture

Hugh Hendry quotes his future Confucius saying a "wise man not invest in over capacity."


Wed, 05/23/2012 - 14:40 | 2456030 earnulf
earnulf's picture

Given the BS that is coming from every government, it behooves everyone to have the three metals, Gold for wealth, Silver for medicinal purposes and lead to keep everyone you don't want, away.    It also is good to rely on the tried and true Land and potable water stores and a few extra packets of seed to go with the food larder.    You still have time to build slowly and store properly, but if you can't make it or grow it yourself, you probably will have the time of it when this ship comes apart at the seams.     How can you make investment decisions when the data being provided is BS?     If we can't be truthful in the data, it literally is every man for himself.

Wed, 05/23/2012 - 15:31 | 2456225 dbomb12
dbomb12's picture

Does everybody forget the FACT that China is a COMMUNIST country. if this Govt reports false stats and fudges numbers? how much more will a communist lie about facts and figures. The POTUS is a prime example of a liar

Wed, 05/23/2012 - 17:11 | 2456628 Oldrepublic
Oldrepublic's picture

All governments lie: to give an example,Argentine President Christina Kircher

fined a private analytic company $125000 for publishing the

true inflation rate of 25% instead of the official rate of 10%

http://argentinagringos.blogspot.mx/2011/09/playing-tough-with-argentina...

Wed, 05/23/2012 - 14:43 | 2456038 Harry Paratestes
Harry Paratestes's picture

Take a look at a Daily Gold Chart.  I would say the Chinese have been in recession since Sept of 2011

Wed, 05/23/2012 - 14:45 | 2456045 slewie the pi-rat
slewie the pi-rat's picture

yup, VERY possibly, mrB_man!

this is the same point i tried to make here a few daze ago myself, writing about and praising  the new PBOC 'access' to the FED

china could be hitting the fan, big-time, 0R:  we have a "slighly-bigger-than-normal"  GLUT in raw materials in china and it will work itself out in a few months...

hard to tell b/c well, of the "data" being handled by the same/similar peeps who give us our weekly emplyment, unemplotment, underemployment, no longer looking4employment, people getting born and dying-adjusted cuntryCrock

either way, short-term sinoBux may no longer be coming via "emerging markets" and thankMao that china has all thoseTreasuryIOUs, to get them thru this!

Wed, 05/23/2012 - 14:53 | 2456074 Temporalist
Temporalist's picture

I think the next big financial crisis will come from Asia but it will be India:

http://english.alarabiya.net/articles/2012/05/23/215915.html

 

Wed, 05/23/2012 - 15:21 | 2456186 slewie the pi-rat
slewie the pi-rat's picture

"..but who knows where or when?"

you may be correct, spy_v_time-oralist!

india is a possiblity to need "rehab by re-hypothecation", plus they have all that freaking gold and free cattle, too!

if you have nailed it, intel-meister, tyler can do a special feature: "ori meets christineL";  hopefully, they would both update their immunizations, first...

Wed, 05/23/2012 - 15:00 | 2456092 lasvegaspersona
lasvegaspersona's picture

explain why the central banks can't levitate prices forever...OK forever is a long time...but I bet they can do it for a long time

Wed, 05/23/2012 - 15:04 | 2456109 MrBoompi
MrBoompi's picture

The cartel is able to sell into any gold or silver "rally", and any goddamn time they feel like it.

Wed, 05/23/2012 - 15:09 | 2456129 Spigot
Spigot's picture

You sound like a jilted lover. He stated his reasons: the long term. I appreciate his macro sensibilites. I'm not sure of his trading abilities. IMO his approach to FacePlant buys was ... ummm ... premature. However, he did not say how much he would be buying, so there is that.

Wed, 05/23/2012 - 15:10 | 2456131 QuietCorday
QuietCorday's picture

What I don't understand is why anyone trusts any Chinese economic data at all. It will be massaged right from source all the way up to publication. Even the "hard-to-fake" stuff will be subject to this process (a round-up here, a revision there, up or down, whatever is needed).

I mean, even British GDP data is a pile of wiggle-wort. I have known businesses just make shit up for the forms because they can't be arsed to reference their own data. For that reason alone, basing any kind of policy on "GDP" gumf is, well, a bit bizarre.

It's all Oz, man. The whole shit is Oz. On steroids. Take off the glasses, and you shall inherit the earth.

Yeah.

Wed, 05/23/2012 - 15:18 | 2456175 onebir
onebir's picture

" I have known businesses just make shit up for the forms because they can't be arsed to reference their own data. For that reason alone, basing any kind of policy on "GDP" gumf is, well, a bit bizarre."

This doesn't follow at all. It just means there's more noise in the GDP data than there would be ideally...

Wed, 05/23/2012 - 15:51 | 2456316 QuietCorday
QuietCorday's picture

Yes, but at what point does "noise" become so distorting as to render a note on another scale entirely?

Wed, 05/23/2012 - 15:16 | 2456166 onebir
onebir's picture

What I never understood: why they don't just fake the 'hard to fake' data too. Cos nothing's *that* hard for the CP to fake in China, when there's a CP secretary in every corner (room).

It's like they want to get caught...

Wed, 05/23/2012 - 15:30 | 2456219 lordbyroniv
lordbyroniv's picture

IN A FIAT OR PAPER CURRENCY REGIME, YOU CAN ALWAYS GENERATE POSITIVE LEVELS OF INFLATION.

Wed, 05/23/2012 - 15:46 | 2456295 ArrestBobRubin
ArrestBobRubin's picture

Naaah... Chuck is slipping.... Imo his wrong take on FB and this China piece have taken some luster from him... I mean, GARTMAN as your go-to guy???

Bidey was wrong about FB and is telling us absolutely nothing we didn't already know about China... I like Chuck, but this is not his best week....

So Chuck, where is your analysis of the recent power shift in Beijing and what it means?

Wed, 05/23/2012 - 16:03 | 2456377 world_debt_slave
world_debt_slave's picture

china envy

Wed, 05/23/2012 - 18:41 | 2456908 ptolemy_newit
ptolemy_newit's picture

copper sept spot 2450 lb.  

Thu, 05/24/2012 - 09:41 | 2458551 silverdragon
silverdragon's picture

Most data in most countries is nonesense.

China is intentionally slowing down the property market and has its foot on the break, it can lift is foot at any time.  Additionally it has told the banks to not lend so there is less liquidity around, to reduce inflation.  These are both good things for China. Add to that, "inadvertently" crashing commodity prices, is a bonus for a country that makes everything.

China's economy is still growing nicely, we all still need more employees and they are hard to find.

Thu, 05/24/2012 - 09:53 | 2458601 silverdragon
silverdragon's picture

China is still growing nicely, they have so much cash its silly. They have just started enjoying its pleasures. If it wasn't for Guangdong tourists the poor expats in Hong Kong would all have to sell their Ferraris and buy Mercedes Benz and BMW's. As the Chinese consumer is encouraged to live a little their domestic economy will take up the slack as the US and European economies slip into depression. They will continue to buy dirt all over the world to grow stuff on and dig the goodies up under the ground. It is the Chinese Century.

So buy Silver and enjoy the ride.

Thu, 05/24/2012 - 10:05 | 2458660 silverdragon
silverdragon's picture

It isn't just that it is easy to fake data, its also that the economy is growing at such a crazy rate and that no one has any idea what reality is. Everything is so underdeclared or overdeclared that looking at the data is pointless.  The perfect example of this is Sole Proprietership businesses.

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