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China Manufacturing Continues To 'Contract-And-Expand' Even As April PMI Misses Expectations

Tyler Durden's picture




 

The topsy-turvy world of Chinese macroeconomic data continues to provide the Schrodinger-prone unreality that we have come to expect in this keep-'em-guessing Central Bank-driven fiat-fest we are experiencing. For 9 of the last 10 months, HSBC's China Manufacturing PMI has been in a contraction (sub-50) regime, while China's own Manufacturing PMI saw only 1 dip below the apocryphal 50-level (in Nov11) and has miraculously expanded for the last six months. The latest data from China (HSBC reports their final number tomorrow - as opposed to the Flash data already reported) showed the highest level of expansion for Chinese manufacturing in 13 months but missed economist's expectations - notably the first miss since November 2011 - as the divergence between HSBC and China remains near record levels. Of course, this makes perfect sense given this evening's 2nd worst three-month plunge in Australian Manufacturing since January 2009 (which seems to fit with the HSBC data as opposed to the 'strength' of the Chinese data). It seems tough for anyone to try to justify expectations of a Chinese stimulus given the country's own indication of its performance - check back to you Ben.

HSBC Manufacturing PMI vs China's 'special' version...

The first miss of expectations (lower pane) for China's version of the Manufacturing PMI since November 2011 (when the two series started to diverge)...

And perhaps tonight's dismal miss and plunge in Aussie PMI is a better reflection of a real-time sensitive-to-China growth indicator...

 

Charts: Bloomberg

 

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Mon, 04/30/2012 - 21:52 | 2387184 The trend is yo...
The trend is your friend's picture

China is starting to decouple from europe too i guess

Tue, 05/01/2012 - 00:49 | 2387456 Mentaliusanything
Mentaliusanything's picture

Australian Reserve Bank Cuts interest rate 0.5 % to 3.75%.

Oppsy I feel a cold cold chill from an Ill wind.

Basically .... something is not right downunder

Tue, 05/01/2012 - 03:37 | 2387553 TwoShortPlanks
TwoShortPlanks's picture

Yeah, there's a ranga wife of a fucking hairdresser at the helm.

Mon, 04/30/2012 - 21:59 | 2387192 LetThemEatRand
LetThemEatRand's picture

I don't get it.  China has no labor laws, no minimum wage, no environmental laws, virtually no regulation of any kind, and extremely low taxes.   If a Chinese product blinds your child, you can't sue the product manufacturer, meaning the manufacturer need not waste money on insurance or lawyers.  There is no pension system, and no national health care.   Isn't this an obvious recipe for endless growth and wealth for all?

Mon, 04/30/2012 - 22:16 | 2387223 A Nanny Moose
A Nanny Moose's picture

Yeah. China is the last bastion of unregulated free markets. I'm sure that's it.

/sarcasm -off -again

Mon, 04/30/2012 - 22:18 | 2387227 LetThemEatRand
LetThemEatRand's picture

What regulation exactly holds back the producers there, grasshopper?  Any specifics or just ideology?

Mon, 04/30/2012 - 22:35 | 2387254 adr
adr's picture

Payments to Chinese government officials, payments to Triads when a factory kills a relative, bribes to multinational corporate executives for manufacturing contracts, etc.

Have you ever been to China? Or ever dealt with a Chinese corporation? Probably not.

I deal with them every day. It is an absolutely cutthroat environment. Profits in Chinese factories are not measured in dollars, but pennies. Every factory will offer you a bribe if you say you will go elsewhere. $20 retail items in American stores are manufactured for less than $1 and sold for a few pennies higher than manufacturing cost. The multinationals go long on the profits, as do the big box retailer. Wages even where they are at, would bankrupt most factories if they increase 1%.

They don't need regulations to hold them back. They have the greed of the US multinational corporation for that job. Apple does a far better job at suppressing Chinese corporations than a government regulator.

Mon, 04/30/2012 - 22:44 | 2387265 LetThemEatRand
LetThemEatRand's picture

"They don't need regulations to hold them back. They have the greed of the US multinational corporation for that job. Apple does a far better job at suppressing Chinese corporations than a government regulator."

That's my fucking point.  Welcome to the world that Ayn Rand -- hero to legions of posters here -- wants.

Tue, 05/01/2012 - 03:03 | 2387535 AldousHuxley
AldousHuxley's picture

multinational corps are beasts capitalism created.

large and un-innovative with employees more than some governments, they take all of your 401k money, waste it on executive managers who are so removed from day to day workers that they basically have the role of politicians.....give speeches and approve someone else's decisions.

 

Middle class is stuck because their pensions and 401k are invested in it

Executives are stuck because their careers are invested in it.

Politicians are stuck because multinationals are more powerful and better financed than governments

 

 

Mon, 04/30/2012 - 22:29 | 2387244 silverdragon
silverdragon's picture

Let them eat rand

For your ref:

China has labour laws, I am paying my workers 300% of salary today as I need them to work and its a public holiday.

There is a minimum wage but it is irrelevant and we pay way above that to get good workers.

There are shitloads of environmental laws some of which have impacted my businesses.

There is a shitload of regulation, the question is implementation of that regulation which is sporadic. Large cities have serious enforcement and smaller cities less enforcement.

Taxes are high especially if you are importing foreign goods into China. It costs me +55% to get my goods into China, then there are turnover and profit taxes and the list goes on and on.

And if a Chinese product blinds your child sue the western company that had the goods produced to the lowest quality specifications. The western company provided specs when it had the goods produced. 

Any there is a health care system as one of my workers is using it today.

If you know nothing about a subject its best not to comment or you look silly and lose credibility.

Mon, 04/30/2012 - 22:47 | 2387256 LetThemEatRand
LetThemEatRand's picture

 

Let them eat rand

For your ref:

China has labour laws, I am paying my workers 300% of salary today as I need them to work and its a public holiday.

What is the salary?

There is a minimum wage but it is irrelevant and we pay way above that to get good workers.

How much?   And how much do you make in comparison?  Less than 100 times?

There are shitloads of environmental laws some of which have impacted my businesses.

Versus Western countries?

There is a shitload of regulation, the question is implementation of that regulation which is sporadic. Large cities have serious enforcement and smaller cities less enforcement.

So more regulation and consistent government function is good?

Taxes are high especially if you are importing foreign goods into China. It costs me +55% to get my goods into China, then there are turnover and profit taxes and the list goes on and on.

If you are paying more to build in China, why are you there?

And if a Chinese product blinds your child sue the western company that had the goods produced to the lowest quality specifications. The western company provided specs when it had the goods produced. 

You sue the western company in the U.S. because we still have the ability to do so. The Chinese company goes on its merry way, yes?

Any there is a health care system as one of my workers is using it today.

How much is your health insurance cost for your workers?

 

Mon, 04/30/2012 - 23:31 | 2387373 LetThemEatRand
LetThemEatRand's picture

Silverfish,

Where are the answers to my questions?  You post below and respond to me, but you don't answer my questions.  Why?  Oh, I think I can guess....

Mon, 04/30/2012 - 21:59 | 2387195 chinaguy
chinaguy's picture

Take the Party spin numbers & multiply them by 200% - 300%

Tue, 05/01/2012 - 08:52 | 2387790 dbomb12
dbomb12's picture

Of course, everyone seems to forget China IS a communist country. If we cant believe the numbers put out from a so-called free market, how can we believe numbers from a completely controlled news agency and government.

Mon, 04/30/2012 - 22:04 | 2387198 FinalCollapse
FinalCollapse's picture

About half a year ago the world's combined export was several hundred billion bigger than its combined import. Hence we must be exporting to Mars. 

I would argue that most of that error came from the Chinese data. Their BS is reaching new highs every month as the Ponzi scheme is collapsing there: real estate + export. Their newest statistical spin is that 75% of their growth comes from consumption - what a wonderful way to cover up the lies. The electricity usage in China is going up 1% yoy and yes, the Australian data seems to be confirming China's collapse or serious slow down.

 

Mon, 04/30/2012 - 22:06 | 2387211 Desert Irish
Desert Irish's picture

The BS will go into overdrive the closer we get to the 18th Party Congress - everything is fine here move along.....

Mon, 04/30/2012 - 22:03 | 2387203 Griffin
Griffin's picture

I think the Chinese will be rather cautious in how they invest in the near future, favoring investments where there is at least hope of getting some of the money invested back.

That would be bad news for Europe i would believe.

Off topic but interesting.

http://blogs.reuters.com/david-cay-johnston/2012/04/12/taxed-by-the-boss/

http://www.reuters.com/video/2012/04/27/reuters-tv-corporate-socialism-alive-and-well-in-am?videoId=234103054&videoChannel=117851

Mon, 04/30/2012 - 22:55 | 2387299 silverdragon
silverdragon's picture

Griffin

Exactly, the Chinese will continue to cry poor so they can minimize how much US and Euro bonds they buy. Commodities and infrastructure will be where they put their bucks.

Mon, 04/30/2012 - 22:05 | 2387209 nmewn
nmewn's picture

Dragon Shoots!!!

Mon, 04/30/2012 - 22:19 | 2387217 ekm
ekm's picture

One of my financial pleasures are chinese data particularly when japanese porn stars get involved.

Bribery = Get any data you want.

Even the chief statistician of China does NOT believe his own data.

It's a joke.

Mon, 04/30/2012 - 22:15 | 2387221 TheFourthStooge-ing
TheFourthStooge-ing's picture

"The topsy-turvy world of Chinese macroeconomic data continues to provide the Schrodinger-prone unreality that we have come to expect in this keep-'em-guessing Central Bank-driven fiat-fest we are experiencing."

Mmmmmm, twice-cooked books in spicy ginger sauce.

Very citizenish...both Chinese and US.

 

Mon, 04/30/2012 - 22:20 | 2387229 carbonmutant
carbonmutant's picture

AUD/JPY unchanged...

Mon, 04/30/2012 - 22:23 | 2387231 chump666
chump666's picture

ASX200 on auto pilot.  Equity liquidity fix.   Despite the Aussie economy going to the wall.

Mon, 04/30/2012 - 22:25 | 2387236 chump666
chump666's picture

nasty bulltrap

Mon, 04/30/2012 - 22:29 | 2387245 ekm
ekm's picture

I literally detest horror movies, but sometimes I feel that the best way to visualize this madhouse called market is to watch a horror movie at 7am and be INSANELY READY at 9.30 when the madhouse opens.

Mon, 04/30/2012 - 22:38 | 2387258 chump666
chump666's picture

I hear ya ekm

But for me it's doomsday movies, I love'em.  watched Dante peak the other night.  Y'know the maverick scientist saying 'the sh*t is about to blow' (cause his gut telling him something is not right)....and well the sh*t blows and the whole thing goes south into a massive FUBAR situation.

The market is just that, it's about to blow, QE or whatever... something big is coming, could be the derivative meltdown, China bank/local council bailouts (on mass), Europe exploding rather than imploding, the whole system collapsing, bonds, FX, CDS with oil going bid.

Mon, 04/30/2012 - 22:44 | 2387274 chump666
Mon, 04/30/2012 - 22:49 | 2387284 ekm
ekm's picture

Quite impressive.

Thx a lot.

Mon, 04/30/2012 - 22:51 | 2387290 chump666
chump666's picture

:)

gotta love youtube

Mon, 04/30/2012 - 23:05 | 2387304 ekm
ekm's picture

Timing of events belongs to the prophets. We haven't seen any of those it's been few hundreds of years.

Think about it: TIME is the only factor that is out of anybody's control.

All humans can do is recognize events, be crudely realistic and:

1) Wait

2) Be solvent

However, the way I see it, it all depends on CONSUMABLE LIFE RELATED COLLATERAL. Central Banks will print reserves and they will always do. That's the only thing they can actually do. If it affects, gold, or treasuries it wouldn't matter. But when it affects FOOD AND GASOLINE, we're talking hungry people,we're talking revolution. That's the clue, that's the only clue: Consumable Life Related Collateral.

Remember Arab Spring? If they continue Cocainated Easings, we may have American Spring pretty soon, hence no QE until gasoline, crude oil and food prices go way, way, way, way, way, way lower.

Hence, no QE = no Flow. With the current vacuum below the market, Biderman's feeling of 1987 style elevator shaft crash, could become reality, quite quite soon.

2000-3000 dow pts drop in day, quite soon. Commodities are in backwardation right now, hence the market will have to follow the real collateral, follow into backwardation.

Mon, 04/30/2012 - 22:36 | 2387251 disabledvet
disabledvet's picture

next up: Aussie interest rate cut. With "worries of an output plunge" courtesy of Reinhardt and Rogoff...which if correct would be devastating.

Mon, 04/30/2012 - 22:36 | 2387253 silverdragon
silverdragon's picture

The reality is that Chinese data is just like western data, a pile on nonesense. 

The US data is trying to con the masses that everything is OK.

The China data is trying to con everyone into believeing that business is tough and they are struggling so that they dont have broke bums knocking at their door asking for a handout. The broke bums being the US and Europe.

 

 

 

Mon, 04/30/2012 - 23:34 | 2387376 LetThemEatRand
LetThemEatRand's picture

The Chinese is trying to convince the masses that the word "data" are singular.

Mon, 04/30/2012 - 22:39 | 2387262 Caviar Emptor
Caviar Emptor's picture

Biflation contagion: China one of the last big economies to feel it. Now with the housing bust unfolding, and hot pockets of inflation still flaring it's setting its teeth into the flesh

Mon, 04/30/2012 - 22:50 | 2387285 chump666
chump666's picture

Spot on.  And this contagion is coming out of Asia.  Should rip into NZ, Australia and Canada.  Hedge funds short positions will start to pile up.  Be watching aust bonds to see if yields really fall that much after their rate cut, if they don't...Asia/pacific countries will start to look like the PIIGS

Mon, 04/30/2012 - 22:46 | 2387280 adr
adr's picture

I just got back from visiting a chinese factory making a part I need. I sensed desperation as thier input costs are rising but they are unable to pass this cost on. There are too many factories that can make the same items, making it very easy for western corporations to find other sources. The owner of the factory told me he is very worried about his workers since he doesn't have enough work to give them overtime.

The Chinese workers want overtime and ask to work the long hours. Honestly it passes the time better than sitting in the factory dorm. Many workers are trying to make enough money to get relatives to the city, then they find jobs with less work.

Mon, 04/30/2012 - 22:57 | 2387305 LetThemEatRand
LetThemEatRand's picture

But Americans have been told for years that our lazy workers are to blame for all of our economic woes.  Are you suggesting it is the oligarchs and their fucking unabashed greed that is the problem?  Say it ain't so.

Mon, 04/30/2012 - 22:51 | 2387289 chump666
chump666's picture

Nasty Australian house prices slammed:

Q1 house prices -1.1% q/q (consensus exp. -0.5%)
Driven by price declines in Sydney, Melbourne and Adelaide
Fifth consecutive month of price declines
House prices 4.5% lower y/y

Mon, 04/30/2012 - 23:01 | 2387315 silverdragon
silverdragon's picture

adr

One of my assistant managers in China just went from five days a week to six doing the maximum amount of overtime. He then asked if he could work seven days a week and have the seventh day at the part-time rate.

They are all working their arses off to provide for their respective families. Its great to see a work ethic like that.

Mon, 04/30/2012 - 23:48 | 2387394 LetThemEatRand
LetThemEatRand's picture

To have an assistant manager, you need to be a senior manager.  You are neither.

Mon, 04/30/2012 - 23:08 | 2387332 silverdragon
silverdragon's picture

Let them eat rand,

Post on subjects you know something about.

 

Mon, 04/30/2012 - 23:19 | 2387353 LetThemEatRand
LetThemEatRand's picture

And what can we surmise about silverqueen?  You are a shill for a large corporation, correct?   You "earn" more than 100 times what your employer pays the lowest paid worker in your plant, while you bitch about overtime, yes?  You are not yourself a business owner, true?  Show me I'm wrong and give specifics, otherwise fuck off.

Mon, 04/30/2012 - 23:26 | 2387359 silverdragon
silverdragon's picture

Let them eat rand,

You made an idiotic post, where every single thing you said was made up, I called bull shit.

Fuck off back to where morons like you can make idiotic statements and not be mocked for being an idiot.

Mon, 04/30/2012 - 23:35 | 2387367 LetThemEatRand
LetThemEatRand's picture

Silverqueen,

It is clear to me that English is your first (only?) language, yet you don't use it well.   So we know you are not well educated.  The likelihood is that you are a low  to mid-level manager at a large company that does business in China, or you are simply spouting bullshit.  Which is it?   And double fuck back to you.

Mon, 04/30/2012 - 23:35 | 2387378 silverdragon
silverdragon's picture

Let them eat rand,

lets not lose track of the fact that you posted an idiotic post where every single thing you said was a lie and I called bullshit.

I stand by my position, you are a fucking idiot and should not be posting on subjects you know nothing about.

Please admit that you intentionally lied and tried to decieve the people on this site or alternately that you are a moron and post idiocy.

Mon, 04/30/2012 - 23:41 | 2387386 LetThemEatRand
LetThemEatRand's picture

Silverfish,

lets not lose track of the fact that you posted an idiotic post where every single thing you said was a lie and I called bullshit.

I stand by my position, you are a fucking idiot and should not be posting on subjects you know nothing about.

Please admit that you intentionally lied and tried to decieve the people on this site or alternately that you are a moron and post idiocy.

That was fun!  It didn't mean anything, but how fun!!!!

Tue, 05/01/2012 - 08:14 | 2387714 TGR
TGR's picture

silverdragon, I've had a clueless tosser like lethemeatspam get on my back too before after being shown up for what they are: armchair spammers who profess to be experts on a country they have never been too. They're a dime a dozen.

You are right, letthemeatspam was wrong on virtually all his BS assertions. As usual it's the ill-informed who get all shirty like he is when shown up for trolling and casteing ignorant statements.

Mon, 04/30/2012 - 23:48 | 2387395 silverdragon
silverdragon's picture

Let them eat rand,

You are a moron and should not post on subjects you know nothing about.

Tue, 05/01/2012 - 06:36 | 2387605 Lednbrass
Lednbrass's picture

It really isnt worth wasting time on that one. You are correct, but a complete lack of understanding and experience certainly wont shut it up.

Tue, 05/01/2012 - 00:39 | 2387444 chump666
chump666's picture

50% cut by the RBA. 

Aussies a wave of inflation is headed your way.  Check oil/pump costs, double check your 10yr and short dated bonds.  Yields may go the other direction.

I love it central banks are now panicking.

 

Tue, 05/01/2012 - 00:48 | 2387454 chump666
chump666's picture

AUD is now bid again.  ASX has lost the plot completly, as you would expect. 

Tue, 05/01/2012 - 01:12 | 2387469 FinalCollapse
FinalCollapse's picture

AUD is falling again. This is going to be a long day down under. How about that carry trade in AUD? If AUD falls quickly it may rock the boat all over the world. 

Tue, 05/01/2012 - 01:33 | 2387479 chump666
chump666's picture

Yeah I see that..,

yes you are right if the AUD crashes should effect Australian bonds and equities.  Any butnut rushing to buy on a liquidity rally in Australia will be raped. 

Could be mass outflows about to take place.

Tue, 05/01/2012 - 06:19 | 2387599 LikeClockwork
LikeClockwork's picture

Maybe, but TLS still pays close to 8% and safer than some sovereign bonds. Dependant on timeframe of course.

 

Tue, 05/01/2012 - 01:14 | 2387470 FinalCollapse
FinalCollapse's picture

I wonder what Japanese are thinking now. The USD/JPY  cross is below 80. Paging BOJ...

Tue, 05/01/2012 - 05:19 | 2387577 valley chick
valley chick's picture

and UK PMI misses? 

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