China Flash PMI Plummets As New Export Orders Collapse To Lehman Lows

Tyler Durden's picture

It was the best of times (US equities); it was the worst of times (the world's growth engine - China). HSBC-Markit just announced the Flash PMI for August and it's not pretty - printing at a nine-month low (47.8 vs 49.3 in July). Of course, China's own version remains in the Schrodinger-like >50-expansion state for now but with all 11 sub-indices in this evening's data pointing to weakness, we suspect not even the Chinese can sell that data for much longer. So what next - RRR? Massive stimulus? - don't hold your breath given the recent reverse repos and the already creeping-inflation in food and energy prices. The piece-de-resistance of the data-dump though has to be (in line with Japan's trade data last night) is the New Export Orders slumped to 44.7 - lowest since March 2009 when trade finance collapsed post-Lehman.


China Flash PMI lowest in 9 months - almost back to 2009 lows...


as all 11 sub-indices suggest pain...


Source: Markit

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ebworthen's picture

Hey wait, holiday shopping season is almost here!

iPhone 5!

Black Friday will save China and the world!

President (insert choice here) will turn everything around!

And, just when it is least expected, QE3 to ring in the New Year!

2013 is going to be lucky!

I can feel it in my bones!

(/dripping sarc)

Michael's picture

Riddle me this.

What in the known universe can stop the 64 million empty vacant real estate property housing bubble in China from bursting and blowing super nova style?

sunaJ's picture

At this point I ask myself, why it cannot go on given CB control? It comes down to psychology, and the need for people to stop believing in the system. It has been used against them. No clothes found on this emperor.

schatzi's picture

A growing population? (They're not India though). The Chinese tend to plan ahead (unlike our politicians and central bankers). With luck those vacancies might actually fill up within the next few years. Pure speculation on my part though as I lack any on the ground knowledge of what's happening over there.

FreedomGuy's picture

There are enough people in China to buy the units but I am not so sure that incomes, demand and even locations line up that well. I have been there and seen it. In China there is a strong desire to replace the subpar inadequate housing of the communist era with better modern units, too.

There is this feverish push to bulldoze and build around the old stuff and make new stuff almost independent of any market forces. They will build new roads in lots of places and never come back to repair defects because they push onwards for the new.

From what I have read provincial governors have to hit GDP targets. Because they use the same flawed formulas we do they just build anything and everything...everywhere. It is still a top down system run by the party. I personally believe these charts are right and that it will implode badly. There are no substitutes for long term real markets.

DoChenRollingBearing's picture

Yet, our company in Peru still buys Chinese bearings (though much less $ value than Korean)....



As opposed to American bearings...  Timken (ticker: TKR) has NO interest in selling to us, bitchez!  And I have STILL have no reasonable explanation of why (even for CA$H on the barrel)...  KOREA has been decent to us, the American manufacters have not, the hell with 'em...

Investment recommendation: Sell TKR.  Buy, uh, whom?  KBC and Iljin are both owned by SINGLE INDIVIDUALS!  Hmm...

midtowng's picture

I have a prediction: the first reports about Black Friday and post-Thanksgiving sales will be very bullish.

I have another prediction: the sales numbers will be revised down to negative after Christmas.

Phroneo's picture

Yet futures are up and rising as this bad news is good news. I won't go on as its repetitive. But I will ask whether its almost certain that with so much of QE3 and possibly QE4 priced in, would more stimulus cause a rally or sell-the-news event?

Fidel Sarcastro's picture

When the news hit the tape, ES futures fell quickly from 1417.25 to 1414.50...then quickly back up 1416.00, which is still +pos after the afternoon close.  

Didn't the FOMC say that it will initiate QE3 no matter what today?  Perhaps it will try to "save" China too.

Phroneo's picture

I'm seeing the SP reaching for 1420. It should touch it soon. I don't quite get it, even if stimulus is guaranteed, surely real growth should be better than contract + stimulus. SO why do stocks rise on bad news? In a rational market, they should just fall, but by a moderated amount. 

Fidel Sarcastro's picture

Because the whores on Fraud Street don't care about anything but a rising market - period. If it's QE1, 2, 3, 4, 5, 6...they do not care - it's all bullish to them.  

If a nuclear bomb was detonated over a major city in the USSA, some jackass would be on CNBS within five minutes claiming it was bullish and to buy, Buy, BUY Coppertone; after all, it's gonna be hot in that area.

hedgehog9999's picture

Buy coppertone and don't forget Uranium and anything that has a long half life, should be bullish for healthcare stocks too given the effects of spread radiation.... while you are at it, bullish for defense stocks and security stocks and oil also as the risk of shortages will increase, food stocks should also go up and all commodities , I could see S and P 2000 if that happened.....

HaroldWang's picture

Seriuosly, do you really need to ask this?? Where have you been for the past couple of years? It's like telling a little kid that they'll get cake in five minutes. They don't care how long five minutes is, they just care about getting cake and will run around jumping up and down excited for cake. That's how it works.

Fidel Sarcastro's picture

EDIT: the ES just popped back to a new swing-high...why would horseshit MANUFACTURING data from CHINA anything?

Muppet of the Universe's picture

all bad economic data is now good...  the worse things get, the greater the chance of QE.  The greater the chance of QE, the more ppl want to front run the Fed.  Stock Market to 100000000000. ??

HaroldWang's picture

Seriously, do you really need to ask that?? This is the best news these market junkies could ask for. Throw in a worst than expected claims and Bingo! a 3-digit gain on the Dow tomorrow!

chump666's picture

With China slowly down rapidly into a full blown crash and Bernanke unleashes QE3 sends oil over 100...he best stay in his bunker.  For real. 

and Obama will not get back in.

Chaos reigns.

Bernanke needs to be flipped for real:

Dr. Engali's picture

I can guarrantee you that Obummer will be back in. By hook or by crook he will be the president in 2013. If we have an election I will be amazed, but if we do there is no way Mittens ( the back up plan bt TPTB)is going to get in. Not that it makes much of a difference anyway.

chump666's picture

you are probably right.

Doesn't matter anyway who gets in...Just Obama is f*cking awful, thinking the oil price nails him. Hoping.

Michael's picture

There's not a cunt hair's worth of difference between Romney and Obama!

This is Carroll Quigley's vision come true;

The argument that the two parties should represent opposed ideals and policies, one, perhaps of the Right and the other of the Left, is a foolish idea. Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy.

—Carroll Quigley[1]



Disenchanted's picture


"Instead, the two parties should be almost identical, so that the American people can ‘throw the rascals out’ at any election without leading to any profound or extensive shifts in policy."


And that's exactly what has been happening for decades. Not many in the status quo establishment 'reality' seem to be able to figure that out. This site in my experience seems to have the most commenters/participants who have.

Of course in the "status quo establishment 'reality'" those who have figured out the scam are labeled 'conspiracy theorists/nutters' or just plain crazy.

How many 'man in the street' interviews would you have to do before you found someone who had even heard of Carroll Quigley and Tragedy and Hope?


BTW the Protocols of Sion(and I don't really give a shit who wrote them originally) tell the same story as that Quigley quote, all sides of any issue will be controlled by the same shadowy power behind the curtain. Stop listening to all the BS about the Protocols and just read them for yourselves and see if you don't discover many parallels with what is happening today. Here's an example:


The administrators, whom we shall choose from among the public, with strict regard to their capacities for servile obedience, will not be persons trained in the arts of government, and will therefore easily become pawns in our game in the hands of men of learning and genius who will be their advisers, specialists bred and reared from early childhood to rule the affairs of the whole world. As is well known to you, these specialists of ours have been drawing to fit them for rule the information they need from our political plans from the lessons of history, from observations made of the events of every moment as it passes. The GOYIM are not guided by practical use of unprejudiced historical observation, but by theoretical routine without any critical regard for consequent results. We need not, therefore, take any account of them - let them amuse themselves until the hour strikes, or live on hopes of new forms of enterprising pastime, or on the memories of all they have enjoyed. For them let that play the principal part which we have persuaded them to accept as the dictates of science (theory). It is with this object in view that we are constantly, by means of our press, arousing a blind confidence in these theories. The intellectuals of the GOYIM will puff themselves up with their knowledge and without any logical verification of them will put into effect all the information available from science, which our AGENTUR specialists have cunningly pieced together for the purpose of educating their minds in the direction we want.


s/ nah...I don't see anything there that could apply to today's world. /s 


Since this is ZH, here is a most important point to consider from Protocol I #7:


In our day the power which has replaced that of the rulers who were liberal is the power of Gold.

Disenchanted's picture



Speaking of Capital and Markets - Protocol III numbers 7, 11 and 12(not my capitalization):


7. We appear on the scene as alleged saviours of the worker from this oppression when we propose to him to enter the ranks of our fighting forces - Socialists, Anarchists, Communists - to whom we always give support in accordance with an alleged brotherly rule (of the solidarity of all humanity) of our SOCIAL MASONRY. The aristocracy, which enjoyed by law the labor of the workers, was interested in seeing that the workers were well fed, healthy, and strong. We are interested in just the opposite - in the diminution, the KILLING OUT OF THE GOYIM. Our power is in the chronic shortness of food and physical weakness of the worker because by all that this implies he is made the slave of our will, and he will not find in his own authorities either strength or energy to set against our will. Hunger creates the right of capital to rule the worker more surely than it was given to the aristocracy by the legal authority of kings.




11. THIS HATRED WILL BE STILL FURTHER MAGNIFIED BY THE EFFECTS of an ECONOMIC CRISES, which will stop dealing on the exchanges and bring industry to a standstill. We shall create by all the secret subterranean methods open to us and with the aid of gold, which is all in our hands, A UNIVERSAL ECONOMIC CRISES WHEREBY WE SHALL THROW UPON THE STREETS WHOLE MOBS OF WORKERS SIMULTANEOUSLY IN ALL THE COUNTRIES OF EUROPE[and now the USA]. These mobs will rush delightedly to shed the blood of those whom, in the simplicity of their ignorance, they have envied from their cradles, and whose property they will then be able to loot.




Protocol V Numbers 7 -11:




7. Capital, if it is to co-operate untrammeled, must be free to establish a monopoly of industry and trade: this is already being put in execution by an unseen hand in all quarters of the world. This freedom will give political force to those engaged in industry, and that will help to oppress the people. Nowadays it is more important to disarm the peoples than to lead them into war: more important to use for our advantage the passions which have burst into flames than to quench their fire: more important to eradicate them. THE PRINCIPLE OBJECT OF OUR DIRECTORATE CONSISTS IN THIS: TO DEBILITATE THE PUBLIC MIND BY CRITICISM; TO LEAD IT AWAY FROM SERIOUS REFLECTIONS CALCULATED TO AROUSE RESISTANCE; TO DISTRACT THE FORCES OF THE MIND TOWARDS A SHAM FIGHT OF EMPTY ELOQUENCE.


8. In all ages the people of the world, equally with individuals, have accepted words for deeds, for THEY ARE CONTENT WITH A SHOW and rarely pause to note, in the public arena, whether promises are followed by performance. Therefore we shall establish show institutions which will give eloquent proof of their benefit to progress.


9. We shall assume to ourselves the liberal physiognomy of all parties, of all directions, and we shall give that physiognomy a VOICE IN ORATORS WHO WILL SPEAK SO MUCH THAT THEY WILL EXHAUST THE PATIENCE OF THEIR HEARERS AND PRODUCE AN ABHORRENCE OF ORATORY.




11. The second secret requisite for the success of our government is comprised in the following: To multiply to such an extent national failings, habits, passions, conditions of civil life, that it will be impossible for anyone to know where he is in the resulting chaos, so that the people in consequence will fail to understand one another. This measure will also serve us in another way, namely, to sow discord in all parties, to dislocate all collective forces which are still unwilling to submit to us, and to discourage any kind of personal initiative which might in any degree hinder our affair. THERE IS NOTHING MORE DANGEROUS THAN PERSONAL INITIATIVE: if it has genius behind it, such initiative can do more than can be done by millions of people among whom we have sown discord. We must so direct the education of the GOYIM communities that whenever they come upon a matter requiring initiative they may drop their hands in despairing impotence. The strain which results from freedom of actions saps the forces when it meets with the freedom of another. From this collision arise grave moral shocks, disenchantments, failures. BY ALL THESE MEANS WE SHALL SO WEAR DOWN THE "GOYIM" THAT THEY WILL BE COMPELLED TO OFFER US INTERNATIONAL POWER OF A NATURE THAT BY ITS POSITION WILL ENABLE US WITHOUT ANY VIOLENCE GRADUALLY TO ABSORB ALL THE STATE FORCES OF THE WORLD AND TO FORM A SUPER-GOVERNMENT.


In place of the rulers of to-day we shall set up a bogey which will be called the Super-Government Administration. Its hands will reach out in all directions like nippers and its organization will be of such colossal dimensions that it cannot fail to subdue all the nations of the world.



s/ Nope, don't see anything like those happening currently.../s


Michael's picture

I'm voting for Obama directly. Romney invented Obamacare for crying out loud.

Reason #1: Revenge on Fox/MSM/GOP for not playing fair just like the McCain/Obama election in 2008, except I'm not writing in Ron Paul this time.

Reason #2: To get a liberty candidate elected in 2016.

Reason #3: To tell Mitt Romney/Wall Street to go fuck themselves.

Reason #4: To let the MSM know they don't get to pick our presidents anymore, the alternative media and internet does.

Reason #5: So the democrats get to preside over the complete and total economic collapse of the USA.

I could go on.

azusgm's picture

You'd be voting to keep Eric Holder too.

Might be worth reconsidering.

Totentänzerlied's picture

There willl never be a liberty candidate. Bet on it.

Disenchanted's picture




The administrators, whom we shall choose from among the public, with strict regard to their capacities for servile obedience, will not be persons trained in the arts of government,and will therefore easily become pawns in our game in the hands of men of learning and genius who will be their advisers, specialists bred and reared from early childhood to rule the affairs of the whole world.






dexter bland's picture

I am struggling to understand the mechanism by which QE stimulus (or talk) makes the markets go up.

-its not via improving the real economy as is patently having little effect there

-its not via inflation (at least the CPI kind), that's virtually non-existent

-it can't only be that speculators are using cheap money to buy stocks - they still need to find an investment that will provide a return

-It runs counter to the notion that bond and stock prices tend to be inversely correlated

Is it just that we collectively believe stimulus should make share prices rise that they do just that?

Or am I missing something?

adr's picture

If someone said everyone owning a Chevy Sonic would have it bought from them by the government at any price, everyone would try to buy one nomatter the price. If you actually owned one before the madness, you would probably try to run the price as high as possible. The buyers wouldn't care because they are guaranteed someone else will pay a higher price.

There's the market. Reality doesn't matter, only the promise that there will always be the next buyer in line.

Just like there will always be a buyer willing to pay more for your house.

infinity8's picture

lol. . . yup! just like that. and then everybody is rich!

dexter bland's picture

Yes but they are buying bonds, not stocks.

If the government went around buying up Chevy Sonics, should that make the price of a bus fare rise? There's a connection but pretty weak. I wouldn't be hoarding bus tickets on the back of such an announcement.

And then there's Japan. What has a decade of easing done for their stock market?

dexter bland's picture

I guess my point is this...

Markets have become fixated on whether or not stimulus will happen, rather than whether or not it will work. Its become a Pavlovian response. In China they have had multiple attempts at stimulus now and a return to growth is always another quarter away. Meanwhile there is the growng probabilty of a debt crisis, thanks to all the stimulus attempts that failed.

It doesn't makee any sense for markets to rise, but then again (as someone earlier pointed out) you don't make money on the stock market if you believe that things have to make sense fundamentally all the time.  At some markets will get tired of listening to talk about stimulus and just head south, even if stimulus is implemented on a massive worldwide scale. The reality of stimulus will have no effect because the anticipation will be gone - that's all it had going for it. Ben Bernanke is just like the Wizard of Oz.

Good article on China's probability of going the way of Japan. Only strictly for the purpose of economic discourse, not to time a trade by...

Catflappo's picture

Imagine if the Chinese data had been even more implosive!   We'd see the S&P500 at 1,500 tomorrow...

Mentaliusanything's picture

BHP pulling the $30billion expansion at Olympic Dam in Australia would have to confirm that somethings rotten in China.

On the bright side Marus Kloppers, for once has it right... 1 out of 4 is an improvement on his dismal record

To the ALGOS bitches 

chump666's picture

Actually there are two markets where liquidity is as tight as hell: Australia and Canada.

Hedge funds will brutalize those markets on short positions.  Until they print and cut rates, China is already neg real rates, so they are f*cked.  Plus, oil inflation will wipe out all three in one go, sans Canada if they can suck oil out of sand at a cheap cost.

Element's picture

This article is ridiculously unrealistic, and just tawdry Canberra political BS for the most part. 

The $270 billion in resource investment, since the 2008's GFC collapse, has only just begun to bare fruit.  While $270 billion is 20% of Australian GDP, so that's what the economy has been struggling to swallow, spend and absorb, since 2008.  That money was for massive new long-term productive construction projects on a grand scale, with many having years left still to run just for their construction phases.

Then, and only then will the actual minerals go to markets, and revenue streams and royalties will flow.  And many of these projects won't do this until 2014-2016 FY timeframe, when they are finally completed sufficiently within enough of their construction phases to commence initial export of product.  Mining and resource sector investments are a 30-year cycle, and people who don't realise this, or understand it, should not be involved in the sector.

Meanwhile so many other major countries and economies have been pretending to be engaging in 'austerity', but have not likewise not been building new long-term productive revenue raising capacity, as fast as they possibly can, as Australia has been, and continue to do.

This resources boom will be over when the current long-term supply contract projects expire, in about 25 years from now.

Martin Ferguson knows all this very well.  He's playing pure politics, and it's INTERNAL Labor party politics, at that.  In other words, his plainly false BS about the minerals boom being over is a calculated statement to destabilise Gillard so that she can be replaced, before the next election.


From the link:

" ... Minerals Council of Australia chief executive Mitch Hooke said the boom was not over; “it's just different”.  “The developing world transformation continues to deliver sustained demand growth, but capturing this means growing volumes the free kick from higher prices is over,” Mr Hooke said. ..."

And that's all that is now happening (but Martin Ferguson actually knows this already, he's just playing a game).

q99x2's picture

I hope the Social Security Administrations recent purchase of 178,000 rounds of ammo was meant for old people. But I'm pretty sure the DHSs recent 750,000,000 40 caliber purchase was for the general public. The 1000 tanks that were on the train that ran through Burbank two weeks ago were probably for the general population too. The 30,000 drones and training of foreign nationals in the US might help the banksters kill us as well so they probably won't bother to bail out the banks this time and just implement marshall law after the foreign nukes go off as the final shakedown by the NWO takes place.

How pleasant life has been. Oh well.

dbomb12's picture

See you in the next one, and dont be late

Harbanger's picture

"How pleasant life has been. Oh well."

Boy you're easy, are you French?

infinity8's picture

Dead men don't pay - these are just scare tactics, relax.

El Tuco's picture

With all the spare production they will need to put those people to work.

I guess they could build a few more cities until this blows over....

rosiescenario's picture

Makes sense for both Japan and China given Europe's problems.....but of course our economy is doing just fine.....give us another month or two of our great recovery and we'll fill Europe's gap (in a manner of speaking).

ekm's picture

One explanation only:

Crude oil price.

dbomb12's picture

The collapse is imminent QE 2.0 is the final nail in the coffin. Place your bets " Go Shorts"

Wm the Shrubber's picture

Futures solidly in the green despite this latest inconvenient data print.  Fundamentals have absolutely no bearing for algos attuned to any hint of CB largesse.  This will go on until a crisis erupts the likes of which we have never seen.  It's a tough spot knowing the end point but being suspended in limbo awaiting the day and the actual manner of our comeupance.

dbomb12's picture

I am betting before the election

Wm the Shrubber's picture

The sooner the better.  Let's just get on with it!

San Diego Gold Bug's picture

Gold is speaking......over the 200 day moving average.  A quick jump to $1700 in gold and $33 in silver looks to be in the works!

Pack em stack em and rack em!!

Dr. Engali's picture

What's next? The build up of the military industrial complex and the creation of a boogie man followed by war. It works for the U. S. it will work for China.