China Manufacturing PMI Drops To 32 Month Low

Tyler Durden's picture

China Manufacturing PMI prints at 50.4, down from 51.2, when consensus was expecting an increase to 51.8. This is the lowest print in 32 months, and the lowest since February 2009. But wait, before concluding that this is very bad news, uh, ahem... well, sorry, we haven't taken the CNBC spin school yet. It's bad news and the hard landing is coming. We leave the spin to the professionals. Oh wait, yes, China will go ahead and ease immediately if not sooner. Because the PBoC has surely completely forgotten how much fun it was to see pork prices rise by triple digits year over year, and because it knows all too well that no matter what it does the Fed will never, ever print, and thus export metric tons of inflation straight across the Pacific. How's that for spin?

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Cult_of_Reason's picture

PMI 50.4 vs 51.8 expected -- a huge miss.

China growth continues to slow down -- bad news for commodity bulls.

It explains heavy XLB and XME puts buying activity today.

"Early in Monday's session, an opening investor purchased 11,000 $55-strike December put options in the XME, contracts that profit from a 5.7% decline in the ETF over the next month and a half. The investor paid $3.15 apiece for the bearish contracts, and would profit should shares of the ETF fall below $51.85 by December's expiry. The ETF fell $3.87, or 6.6%, to close at $55.01.

The XME, which has its biggest holdings in names such as RTI International Metals Inc. (RTI) and Titanium Metals Corp. (TIE), climbed 23% this month. Daily volume in the XME's put options was three times the daily average, as put options outpaced calls at a rate of 37-to-1, according to options data provider Trade Alert LLC."

Cynical Sidney's picture

pmi lowest in 32 months? does that translate to the lowest levels of pollutants and toxins in their air, soil n water in 32 months? i guess being the world's slave labor manufacturing foundry indeed has its benefits.

(as a part of the ongoing financial world war)china knows its renminbi cannot obtain the world reserve currency status unless it could marginalize the petrol dollar and replace it with petrol-yuan. thusly i offer the following analysis of china that i dub the ''Zemin Memorial", which depicts how a financial war turns into an actual one.

1. In order to keep growing China needs more petroleum.

2. In order to obtain petroleum China needs to conquer the South China Sea, and

3. China needs to import energy from Russia

4. Establishment of bases in South China Sea and subsequently the Indian Ocean


moskov's picture

When Dollar reaches the devaluing tipping point. There would be a massive bank runs from all the Central banks around the world away the FED. Which surely led by China. 

TruthInSunshine's picture

I've been on an (admittedly) annoying off topic sequence (3 straight posts now) today/tonight, but I wouldn't be doing it if it weren't noteworthy 411 and regarding things I thought you'd all find highly interesting, if not downright incredible.


From tonight's New York Times (essentially, the New York Branch of the Federal Reserve Bank disregarded higher ups and refused to insist on haircuts for counterparties to insolvent entities such as AIG and others, putting taxpayers on the hook for far more than should have been the case [assuming the bailouts were legal, ethical - given conflicts of interest -, or prudent, in the first place]).

What the New York Fed could have gotten for 10 cents on the dollar, they refused, and insisted on using tax dollars to pay full face (inflated wildly) value for toxic sludge to ensure their VIP friends such as Goldman and JPM got fully paid on their CDS bets with the likes of AIG.

Sweet deal for banksters. No shame. No ethics. No limits in the ways and manner in which they shaft the taxpayers and grease the cronyistic, nepotistic, kleptocratic revolving door between the New York Fed and the Chosen Wall Street Investment 'Firms' doing such a great national service for the economy.

And who was the head of the New York Fed when this all took place? Why none other than Timmmmay Geithner, of course, of course.

Report Says New York Fed Didn’t Cut Deals on A.I.G.

New York Times 37 minutes ago

In paying the full amounts A.I.G. owed financial companies, the New York Fed disregarded the expectations of senior Fed officials in Washington.

WASHINGTON — The findings of a federal investigation released Monday raised new questions about the Federal Reserve Bank of New York’s handling of the 2008 bailout of American International Group.

The report, by the Government Accountability Office, says that New York Fed officials have offered inconsistent explanations for their decision to pay other financial companies the full amounts they were owed by A.I.G., and that some of the explanations were contradicted by other evidence.

The report also asserts that the decision to pay the full amounts, rather than seeking concessions as the government later did in other cases, disregarded the expectations of senior Fed officials in Washington and the expressed willingness of some of the companies to accept smaller payments.

In one case, when a company offered to accept a smaller amount of money, officials at the New York Fed responded that they had decided to pay the full amount of the debt, the report said.


Report Says New York Fed Didn’t Cut Deals on A.I.G.

trav7777's picture

can you stop reposting this?  jeez

TruthInSunshine's picture

It's significant enough that I believed posting it twice had merit.

In fact, it warrants a headline from ZH.

That the Government Accountability Office has essentially accused the New York Fed (headed by Geithner, at the time) of lying with respect to the reasons for paying the amounts it did to counterparties of AIG, during the largest bailout and backstop of Wall Street in American History, is highly extraordinary.

Raskolnikoff's picture

why would a slave, our gov,  complain about one of its masters, the fed...? guess that kind of thing happened often enough on the plantation. Did the masser ever listen? 

Caviar Emptor's picture

@Truth: I think the anger and frustration over this never went away. The pain of poor financial decisions always becomes worse later on when it turns out you need the money even more urgently. 


TruthInSunshine's picture

I couldn't agree more.

As things on Main Street disintegrate more, there seems to be a proportionate awakening by many more (despite nearly non-existent Main Stream Lame Ass Media coverage) as to how badly the New York Fed screwed the taxpayers, with the benefits of said screwing accruing to the chosen few on Wall & Broad.

The financial sector has hijacked every issue, imperative, initiative and policy of the United States Government.

The financial sector is calling the shots.

The parasites are bleeding the nation to death.

Raskolnikoff's picture

one good thing about the financial crisis, many finally woke up to the fact that there never really was a 'free' press, in's always been bought and paid for, like the every other so called elected office. it's like some kind of bad movie, like Jim Carey waking up and realizing there are a lot of cameras monitoring the daily minutia that is his life.

chaartist's picture

I have posted it on if you dont mind, I like your posts! keep them coming. thank for insights

s2man's picture

-1 for hitting Reply to the first post, instead of making a new post, just to get your "incredible" message at the top of the page.

BTW, do you know what incredible means? (hint: in = not)

Cynical Sidney's picture

with respect moskov, these speculations would not merit reasonable basis for concern; there is 0 chance china will be leading the charge against the US. should the US default it'd destroy over half of china's spare capacity, ensuring their manufacturing culture will collapse overnight, not a likely scenario china should be contemplating. china would much rather be leading the charge against regional nemesis india, and china have had been consistently undermining india's labor potentials and they could underbid for so long. besides US made growth possible to the chinese, they'll likely to keep milking the cow

moskov's picture

I think you should NEVER ever make any speculations about 0 chance, but 0.00001 if you really wish to demostrate a realistically critical thinking. a US default would be the default on its own people, the banks, the and even the military industral complex. It's the worst consequence can happen to the US credibility in the world as well as domestically to its own citizens unless US fully turns into military dictatorship in high gear. considering most of the 3rd world countries using Dollars as their domestic currency.  China's manufacturing culture is currently based on the illusion that USD can be and will be traded as a hard asset for meaningful goods with the rest of the world besides the US. US doesn't export much to China and what US can produce China can always produce cheaper and faster and it's not for the sake of American consumerism that China can and cannot consume themselves. The rest of the world would not accept a failing hegemony system that produces nothing but eventually destroying their own economic bodies. It's not about US, China or India. It's about the law of nature and economics. Prodcution is always the key to the demand, not the political sugarcoat, illusional propaganda and false reality.

Cynical Sidney's picture

appreciate the reply. with regards you are naively blunt perhaps with a mindset of a revolutionary. "as well as domestically to its own citizens unless US fully turns into military dictatorship in high gear" no and yes: US default and the ensuing restructuring will add to 'US credibility in the world' due to its unrivaled 'military industrial complex'. what i'm saying is that it's not in anyone's interest to propel the US toward endgame, at which time guns will be doing the talking just as US and its allies will still be talking.

china has transformed its slave labor into a national absolute advantage there are only about 2 billion chinese they can afford to do labor intensive manufacturing, can you compete against them? The chinese exports cheap craftsmanship while they import creativity and technology, food and energy. in effect the chinese rely much more on the globalized trade than the US, and they have much more to lose in the event of US default. hegemony global ponzi yes, however in the absence of a cataclysmic event humans lack the will to break up the unsustainable all in one day. crazy world we live in, but i have to confront these 'false reality', embrace it for the lack of a better alternative...

Mike2756's picture

SYDNEY Nov 1 (Reuters) - Australian miner Kagara Ltd said on Tuesday it was talking to potential buyers for its nickel mine, the latest in a series of sales which could lead to further consolidation in the local sector as global prices for the metal falter.

nmewn's picture

"Because the PBoC has surely completely forgotten how much fun it was to see pork prices rise by triple digits year over year..."

Pofied wicce...ROR!!!

X.inf.capt's picture


Manthong's picture

Roh Roh..

-Scu Bi Doo    (Didn't know he was oriental, did you?)


Stoploss's picture

I think Bernie Lo just shit himself.

Ahmeexnal's picture

Panda stew back on the menu on many chinese tables.

peekcrackers's picture

less and less people  buying cheep crappy china made products.

DormRoom's picture

China pegs its yuan to the USD so the US indirectly controls its monetary policy.  So more QE -> hyperinflation in China, and more capital is redirected to the shadow banking industry, to front run inflation, thus more bad loans. 


Less USD printing => than China enters a mild-severe recession, depending on how severe Europe's recession is.

Hard landing near-medium term.  can't escape it.

Let's not forget the cuts by the supercommittee in 2012, a large part will likely be pushed to the State & local governments.  So public expenditures (local & state) will likely fall off a cliff, putting a sizeable drag on growth.



RobotTrader's picture

The time to buy stocks is after many months or weeks of weak data like we just saw in China.

Bad times don't last forever, expecially in emerging market countries.

Don't forget Tyler mentioned huge shorts are still in the Euro.

And Cult in his post above noted that everybody and their dog were buying XLB and XME puts today.

I noticed that Asia indexes are not cratering in response to the U.S. index drop today.

And hey, don't even get me started on how SPG is at world record highs during a period where we have the highest vacancy rates in history and many shopping centers are ghost towns.

X.inf.capt's picture





to physical PM's.........BITCHEZ!

kito's picture

one doesnt run to pms when deflation is knocking on the door. 

Bunga Bunga's picture

I hope your money was not in an MF Global account.

homersimpson's picture

The word "Robotrader," translated in a very ancient Chinese dialect, means "bankrupt advisor."

Bunga Bunga's picture

Didn't we have months of weak data in September 2008?

Carlyle Groupie's picture

Why so much ignorance here about China?

lotusblue's picture

Prolly just the timing gives it the pop

Mark123's picture

The greatest ignorance about China is that they have a piggy bank full of real money. They don't.


China has issued massive loans to combat the collapse in consumption world wide....and a massive amount of these loans are a complete waste of money and will never be repaid.  When those loans are written off, they will have to consume their reserves to prop up their bankrupt country.


For them the really shitty part will be that all they have is paper promises.  No gold in fort Knox....


My concern is that when things fall apart they will turn to militarism to keep the people working.  Just like everyone else has done throughout history.

moskov's picture

I think you are really talking nonsense here.

Fort Knox has Gold?

I beg they havn't been audited for years and FED rejected in a straight manner that this will never happen. Who knows they still have gold there? Former IMF chief was arrested for raping a ugly New York maid in fact he was informed that there's no gold left in Fort Knox, then CIA got him and destroy him completely overnight.


I beg if any country is sensible about their own gold reserve. they will never ever put their gold into the US as they know US will nationalise them and they won't get them Germany and France

Saxxon's picture

"Why so much ignorance here about China?"

Are you surprised?  The board is mostly American wiseasses whose overseas experience amounts to about 3 days 2 nights in Playa del Carmen.

jcaz's picture

Pretty gay with the avatar, dude-  feel inferior much?

mynhair's picture

China?  The porn star?


My guy is blacker than your guy.

No Cain, no Gain.

Pure Evil's picture

How's that for spin?


Well, to tell the truth, I feel like Linda Blair after the Exorcist.

Pure Evil's picture

Hopefully she's received all of her Gardasil shots.

Ahmeexnal's picture

China spits on Merkozy's face:


Klaus Regling, the head of the European Financial Stability Facility, was dispatched to China last week after the EU unveiled its plan to rescue Greece, shore up the banking system, and increase the size of the bailout fund.

It was hoped that China may pump around £60billion into the fund, which is expected to be boosted to 1trillion euro (£877billion). But after a series of meetings, Mr Regling admitted there will be no quick deal with China.

China’s pile of around £2trillion in foreign exchange reserves is the biggest in the world and keeps growing.   

Analysts estimate that China holds about a quarter of its foreign exchange in euro assets and there are few other places for it to park investments of such a scale

A prominent member of Mr Sarkozy’s centre-right party, former prime minister Jean-Pierre Raffarin, said that making a stand against China was pointless.     

‘We cannot go it alone. China has taken over the baton and become banker to the world. That’s the new deal of the 21st century,’ he said.

Mr Sarkozy was also criticised by Left-wing political opponents in France who claimed his enthusiasm for a deal with China showed ‘European weakness’.


At classrooms all over china, laughter erupts when economics professors mention the euro project.

Pure Evil's picture

Jean-Pierre Raffarin, said that making a stand against China was pointless.     

‘We cannot go it alone. China has taken over the baton and become banker to the world. That’s the new deal of the 21st century,’ he said.

Mr Sarkozy was also criticised by Left-wing political opponents in France who claimed his enthusiasm for a deal with China showed ‘European weakness’.



No wonder they call them surrender monkeys.


Hey Jean-Pierre, try not to gag when smokin' the hung lo wonton.

drivenZ's picture

not that I dont believe the economics but does anyone really believe PMI data coming out of China? HSBC? ehh. if i were China I'd be keeping those numbers soft for some time giving easy cover for a weak yuan. The data works both ways.... people on ZH are always quick to dismiss US stats that dont validate their views but as soon as the stats are in their favor they're ok.

qussl3's picture


China has loads of BS paper from the US and EZ, what it most wants to do is convert the crap into hard assets and ownership of corporates.

If it wasnt for the inconvenient happenstance that China still needs her export markets, she would be "crashing" right now while buying overseas assets on the cheap.

Behind a smile, a knife.


earleflorida's picture

this ain't no soft number - it's hard boiled wonton soup coming our way,... take your medicine

kito's picture

there will be no hard landing for china

ben will not print before elections

deflation is upon us and cannot be stopped

--this is fact, not spin


qussl3's picture

I have Banana Ben down to print sometime early next year, just enough time for the equities halo to paint the elections the right shade of rose.

If the Greeks deliver as needed brent and crude should be sitting sub 100/80 by then, giving him the breathing space needed to go bonkers again.


Hephasteus's picture

Margin collapse in complex society production is upon us. All repaid by higher food clothing energy costs.

I don't think this one is going to make it. I think he's going to be a repeater. He's not even trying to figure it out.

tempo's picture

Maybe someone should mention that the tripling of pork prices in China is due largely to "hoof and mouth " diease not monetary policy. Let's not blame everything on global banksters.   However, the voiding of Greek bond CDS will make the global investment/hedge fund/banks much more conservative.  IMHO, not honoring valid contracts is a big deal since no one will  believe any hedging positions will be honored by the counterparties.