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China Services PMI Crashes As US Lags Not Decouples
After hours last night, when all but the most dedicated of market savants (or late stumblers home from a night out checking the Bloomberg one more time) are sleeping, China released its Non-manufacturing PMI data and it was a howler. The series is very cyclical but we note that the November print fell dramatically to its lowest level since the middle of 2008's global economic meltdown. Dropping below the 50 (deteriorating) line for the first time since Feb2011 and combined with the dismal manufacturing PMI print from earlier in the week, we are reminded of David Rosenberg's critical insight 'Don't confuse resilience with lags' when we hear further chatter about the US apparent miracle decoupling. It seems that this 'lag' is already impacting US firms, as we noted earlier, and with EM nations increasingly starved of credit via European bank deleveraging, it seems a game-of-chicken between the Fed and the PBOC may begin on who prints/QEs first to save the world from reality once again.
China non-manufacturing PMI is evidently extremely cyclical (the orange curves) but we note the huge drop off in the November print relative to previous years. Not only is the first November print below 50 in 3 years its only been worse than this level during the crisis meltdown of the global economy.
And from David Rosenberg's Friday Breakfast with Dave, OASIS OF PROSPERITY:
On September 4, 1998, Alan Greenspan famously said, "It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress".
Everybody talks about decoupling again, this time in reverse. The US economy will somehow not feel the effects of a European recession, even though GDP growth in America is 86% correlated with the pace of activity in the continent.
Don't confuse resilience with lags.
Be that as it may, it is interesting to see practically every country in the world with manufacturing diffusion indices below 50 and the US above 50.
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China can't save you. Sheeet China can't save itself...
http://usa.chinadaily.com.cn/business/2011-12/03/content_14207047.htm
bbbut...bbbut...the ISM print was so hot the other day?!?!?!?
http://www.hussmanfunds.com/wmc/wmc111003.htm
China will boom when it stops sending us real goods that took real resources and real labor to make in exchange for USDs from a printing press, and stops wasting its savings by stashing USDs and US Treasuries that will soon be worthless. China stashes these pieces of paper thinking that they are savings. The problems is that China is beginning to understand that it can never spend its savings or its savings will become worthless and savings that are never able to be used are not savings at all.
A ponzi is a scam which pays early investors out of the investments of later investors. In a sense, the world’s monetary system is one giant fiat ponzi scheme with the only question being when will the ponzi end, not if it will end. The problem is growth is no longer able to keep up with the malinvestments caused by cheap money (0% rates + QE). Either cheaper money is provided in order to cover up the malinvestment (more QE, or purchasing of MBS, or printing money to purchase anything) is provided at an ever increasing rate, or the malinvestments become exposed. Allowing the malinvestments to become exposed is politically unfeasible, so cheaper money will be provided in order to keep the malinvestments hidden. In a sense, the new investor is the new printed money..once the new money stops or even slows, the ponzi fails, but keep the new coming in faster and faster and hyperinflation is the end result.
I think you're a little hard on the Chicoms.....they're new to Capitalism 101 ! We've led the whole world on a merry little fiat chase for 100 years....including ourselves ! 1913-2013 FRB Centennial Celebration Collapse !
that "worthless debt" is worth a fortune right now. not only that but if you follow the logic of the intransigence presented here it will be worth even more.
Sure, but if China begins selling its US debt, then US debt will become worthless. So what's it really worth to China if China is never able to sell it?
it's hostage.
Schiff?! Is that you Pete?
That print means nothing until we see where the top is next report. If the top on the next report is way down then that a problem.
LOL -- does sound like it could be Schiff, doesn't it? Some emperically based valid points nonetheless.
SilverJournal: Right on, man.
Right. On.
Keynes, and all the the bullshit that goes with it, has gone the way of Phlogiston and the flat earth. The only people who are still worshipping this false god, are the asshats who control the government, bankers (who actually know better but in whose interest the truth isn't) and the crony media.
Truth may take a while to emerge, but it will emerge.
I relish the collapse, where we can finally find out the actual, nonmanipulated and centrally planned price levels of everything from pencils to sovreign bonds. The only part I'm not looking forward to is the emergence of all the various Hitlers, Stalins and Maos that usually accompany fiat collapse.
Relax, it's just the services PMI and not the production PMI
contrary to popular rumor, china will be the centerpiece of the world.
http://expose2.wordpress.com
On September 4, 1998, Alan Greenspan famously said, "It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress" when we Communist anti Nationlist Anti republic treasonous Outsourcing Greedy Who? bastards have every intention of destroying this economy as part of our greater Yersatz Shitsreal agenda.
Dec 17th.. it's all done... divest now... BLACK SWAN DAY...
EU is Go, or NO Go... reality is they must (all of EU) restructure their debt first or die... BYE BYE Greece... Japan to follow...
why dec 17? (i am traveling that day)
Germany must decide to bailout everyone in EU by Dec 17th, or let them all fail... Odds are for letting them all fail, as they must restructure their own debt first, or they themselves will eventually fail...
This has all been "feeding the sharks, in the hope they then eat you last"...
I'm long markets now, but I will be short by the 17th... The last 100 S&P points up will reverse and then some in the coming weeks... sorry... Feels like the "can" stops bouncing this month... The 17th is the logical last day, as they will not tell the world they are NOT stepping up before then...
Note: I've been re-reading "reminiscences of a stock operator" lately... same kinds of movements before the big crash then too... Secondaries getting the bigger push than the blue chips before the bottom falls out... erily similar...
The "last day" is when a large country (Italy) defaults. If Germany lets a large country default, its game over for all fiat because the banking system won't be able to handle writing off all of that debt. Germany won't allow a large country to default because Germany would then go bust and become much poorer. German bankers and politicians do not want to take the blame for Germany getting crushed and they are not ready to give up control over the printing presses, which they would lose. Plus, world will be pressuring Germany to allow Eurobonds to be printed because if Eurobonds aren't printed, all fiat goes down. Germany will allow Eurobonds. When German yields rise just a bit more, Germany will be begging for Eurobonds.
Doesn't the market have to end up so bonuses can get paid out on Wall St? I think collapse holds off until next year.
Dec 19 Greece has to rollover bonds trading at 30% of par. Is the Troika going to bailout the hedgefunds holding this worthless paper?
The Occupy Movement is going to bring the system down come Spring, count on it!
-John
http://johnu78.blogspot.com/2011/12/senior-iranian-lawmaker-predicts-ows-to.html
best wait till summer; school is out then....
Blue Pill or Red pill Bitchez?
http://www.youtube.com/watch?v=uGQF8LAmiaE
Neither, cyanide pill please.
Make sure it's colored red, white and blue, so you can give them to all your unenlightened friends.
They'll take it if you say it's to fight al-Qaeda....
or "associated groups". http://www.salon.com/2011/12/01/congress_endorsing_military_detention_a_...
So... stimulus?
When do we barrow money from the Chinese so we can give money to China in an effort to save them? /sarc
Hey China, if you lend us another $1 Trillion, thru the miracle of fractional reserve, we will lend you $10 Trillion, ok? Heck, lend us $2 trillion more, so we can use the other $10 Trilion to bailout Europe. Inflationary? Bah, we can crush inflation in 15 minutes if we want to.
No no no... we just buy $10 Trillion worth of Xmas decorations financed through 100 year Treasury Bonds at 3%.
i think long john had it with barrow (as in wheelbarrow) money.
will someone please explain why the phuck we have this huge illegal immigration problem while at the same time we have a massive outsourcing mania? i mean i'm totally convinced we've been living in looney toon labor land for so long that it really does...to paraphrase Hillary..."take a total collapse of your friggin' village." the one area i am still an uber bear is housing--and my sights are set on Washington DC itself. As this war winds down--prices are gonna fall.
Maybe because someone is ready to employ those illegal immigrants?
This is how you build propaganda and/or new government mystery novel chapters.
National Security and Homeland Security Presidential Directive
The 2010 United States National Security Strategy and the Obama Doctrine of ‘Necessary Force’
Gen. Jim Jones, Former National Security Advisor
We have another crisis!!! Ahhhhhhhhhhhh, run for the hills. LOL
Looks like your screwed. No hope for ya (if you stay around). Forget the red pill -- take the cyanide pill beatch.
china already has neg real interest rates. china prints, the outflows will be eye bleeding. if the FED goes insane and prints oil will hit 140+ and the US/world will explode.
We survived 143+. Let's raise the bar to 200+ this month. It will send every thinly margined multinational corporation (who doesn't pay US taxes) into the shitter. I pray we hit $5-$7/gallon and $10 for premium gasoline. It won't effect my lifestyle.
Atomizer, this is EXACTLY how I feel. Let gasoline hit $10 per gallon, I don't give a fuck, won't bother me in the least.
But it will wake the people up. It will shock them away from the Kardashians and into action on Fed printing and America's insane, idiotic energy "policy," which really is spending trillions on planes and bombing countries with oil.
It's at times like these I am so very disappointed in the U.S.A., fast becoming Idiocracy (if we're not already there).
In this video Chris Martenson, economic analyst at chrismartenson.com and author of ‘The Crash Course’, explains why he thinks that the coming 20 years are going to look completely unlike the last 20 years. In his presentation he focuses on the so-called three “Es”: Economy, Energy and Environment. He argues that at this point in time it is no longer possible to view either one of those topics separately from one another.
Since all our money is loaned onto existence, our economy has to grow exponentially. Martenson proves this point empirically by showing a 99.9% fit of the actual growth curve of the last 40 years to an exponential curve. If we wanted to continue on this path, our debt load would have to double again over the next 10 years. By continually increasing our debt relative to GDP we are making the assumption that our future will always be wealthier than our past. He believes that this assumption is flawed and that the debt loads are already unmanageable.
Martenson explains how exponential growth works and why it is so scary that our economy is based on it. In an example he illustrates how unimaginably fast things speed up towards the end of an exponential curve. He shows that an exponential chart can be found in every one of the three “E’s” for instance in GDP growth, oil production, water use or species extinction. Due to the natural limitations on resources, Martenson comes to the conclusion that we are facing a serious energy crisis.
This energy predicament is namely that the quantity of oil as well as the quality of oil are in decline. He shows that oil discoveries peaked in 1964 and oil production peaked 40 years later. Martenson also shows how our return on invested energy is rapidly declining – the “cheap and easy” oil fields have already been exploited. In 1930 the energy return for oil was 100:1 or greater. Today it is already down to 3:1 and newer technologies such as corn-based ethanol only provide a 1.5:1 return. Martenson predicts that the time in between oil shocks will get shorter and shorter and that oil prices will go much higher.
Not only oil but also other natural resources are being rapidly used up as well. At the current projected pace of use, known reserves for many metals and minerals will be gone within the next 10 to 20 years. The energy needed to get these non-renewable resources out of the ground is growing exponentially. So we live in a world that must grow, but can’t grow and is subject to depletion. The conclusion out of all this is that our money system is poorly designed and that we need to rethink how we do things as quickly as possible.
After finishing his presentation Chris Martenson answers questions regarding a rise in efficiency, alternative technologies and oil prices. He also responds to questions regarding electricity, shale gas, gold, silver, platinum, palladium, and uranium and the race for global resources.
This video was recorded on November 16 at the Gold & Silver Meeting 2011 in Madrid.
Gasoline is $9 a gallon in Briton. What have they done about it? Nothing except continue to pay it as they pump it into their vehicles.
well they use less than half the gasoline (or something) per capita vs. the u.s. (we're number one, we're ...,) if this is right: http://www.nationmaster.com/graph/ene_usa_per_per-energy-usage-per-perso...
nah, people will just start blaming "oil companies" and demanding that they GIVE them the gasoline they're "entitled to" at a "fair price."
Don't forget the "speculators."
all true but blaming and demanding will get you only so far and no farther, as many children learn to their dismay.
Are you a Robot powered by Dilithium Crystals? If not then you must eat food from farms dependent on Diesel Fuel and/or Gasoline.
Or grow your own food. Or buy your food from Mennonites. That's really all we need is more Mennonites, that'll keep food prices down as we move away from gasoline. If they let me have Internet access, I'd consider it.
And then it's like Bass says... The US will have a good seat for what happens to the EU in the next 1-3 years, and maybe will do something to avoid it in US... I love his line Thursday... paraphrasing
If the Dems and Repubs each had a 100 foot put with a 40 foot break and 20 mph winds... One of them will just say "Good, Good?" and they move on to the next election. No one raises taxes or cuts spending, and everything stays the same...
priceless
so having that good view of the EU may scare them into finishing the game... for all of our sake...
more like less than 1-3 months!
yeah I'll take the 200 bet. china slowing and oil at 100, looks like the hedge from hell.
LOLOL!!! =========BULLISH======>
Pump faster@! You're not pumping fast enough!
That's what she said.
as jack handey noted, as long as she doesn't say deeper. then she better mean philosophy.
http://www.goodreads.com/author/quotes/155677.Jack_Handey
how much stock can anyone put in china data #s - high or low? doesn't china report what they "want" or need
Right and they advertise to the high side so how much worse is the real number. Kinda like election year tabulation of unemployment rates. Hell by next Sept the UE % wil be around 7.5 but the labor participation rate will print 60 or lower. Bullish.....?
<=== keep your filthy resilience offa my lags!
<=== OMG, baby! don't decouple now!
It just goes to show you, how greed can blind!...
I guess the CRIMINALS, never thought far enough ahead, problems the U.S. economy would suffer, when moving manufacturing abroad!
Remember...NO PRISONERS!!
exactly... You export jobs for decades... your population dwindles, so you allow open imigration so there are still more people coming in than going out... If madhof could have kept it going that way, he would have...
Look at Japan... population dwindling, debt rising, PONZI fails... NEXT?
Social Security... population dwindling, mandate rising, PONZI fails... NEXT?
Who is worth more now? A banker or a farmer/rancher loaded with rifles lol.
Fuck you banker's!
and their kin!
wrong! this is how it was planned! rule #33 of the freemasons: order from chaos!!!
Hmm, I gotta ask: Who is aiding and abetting the chaos??
China is fine. Worry about yourselves. I assure you that when nations buckle over the next 1-3 years china wont be one of them.
change years to months, and there you have it!
No, this is good news. It means Chinese manufacturers will cut their prices in order to get orders--and this means that when we go to Chinamart (formerly known as Walmart) to buy, stuff will be cheaper!!!
PS. Although it wouldn't surprise me if some ZH malcontent responds to this by saying you can't buy if you don't have any money--because you don't have a job.
you can't buy if you don't have any money--because you don't have a job. there, happy?
pasttense I happy you feel so good about yourself today...........
No this means Chinese businesses go bust as their inflation squeezed margins evaporate to zero. Higher prices are coming....not lower.
Gold had more clout in the 1920's at $20 per trounce than it does at this moment ! Just saying Gold is still undervalued.....if you balk at these prices.....don't ! Monedas 2011 Comedy Jihad Ya Ain't Seen Nuttin' Yet Tour !
In addition, when comparing to the 1920's one ounce of gold should buy you much more today than one ounce of gold bought you back then because we are now much more productive. The supply of goods has increased much more than the supply of gold.
I liked it better when it was $20 for an ounce in 1860
If all else fails, we'll print it!
Green shoots..
I'm pretty cynical. In fact I only have complete faith in Chinese government economic reports.
QE3 should help bring back a lot of manufacturing jobs to the U.S. as the dollar slips. Now we wait until the Europeans figure out they need to bring back some jobs from China as well. I really don't see a strengthening RMB for years, even as we export inflation to China.
I was just thinking the same thing Doogie. And QE4 should bring Henry Ford back to life.
And QE5 should cause QE6 and so on...until we have so many new notes that everyone can have their own face on the currency. :-)
Ok I've figured it out. An economic shock is about to occur. The CIA's airforce is more active than the US airforce. The Banker's all broke the laws of the US and also got the politicians to change the laws to allow the arrest of anyone deamed a threat - US citizens included. The CIA can now very easily create a coo, arrest the bankers and crooked politicians and move their people into position with the full support of US citizens. The CIA can then lend their services around the world to countries everywhere and it will soon be a win win situation for everyone. Globalisim will be deemed to have been a bad idea and products will be required to be manfactured locally due to the burden on the ecology that shipping shit halfway around the world just to make a banker buck. Done deal - look for blue skies ahead.
That could work. If not they coup try a coup d'etat.
Ok, since we are correcting things... The bankers that committed the fraud may now be legally considered financial terrorists. They can be held indefinitely without trial and tortured. They will not benefit by having the resources to pay judges and attorneys or have the benefits of executive pardons. Would those that now have a chance to easily and cleanly confiscate wealth and power choose to take it from 300 million that have already been stripped of both wealth and power or take it from the few thousand families that have stolen it. To me it seems the logical way that things play out is that the elite will turn against elite using the same laws that the stupid politicians put in place to protect both politicians and elites from the masses. They have signed into law their own death sentences.
See them clamber, these nimble apes! They clamber over one another, and thus pull each other into the mud and the abyss.
They all strive for the throne: this is their madness -- as if happiness sat on the throne! Often filth sits on the throne. -- and often also the throne on filth.
Brilliant. Makes OWS look like a diversion and cover for what is coming. The rich sit smugly in their castles not realizing the betrayal will be from within. In a game where the winner takes all there has to be many losers. Already 99% of the US is lost...leaving very few players on the board.
I like this comment. "...as if happiness sat on the throne! Often filth sits on the throne."
I think that is why the financial elite seem to get increasingly vicious and empty:
"For the love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows."
Ill agree,certainly the printing =inflation but people,understand the gold PM INDUSTRY has vested interest also!I don't hear anyone ever mention this agenda.Think about it.Crude is more an inflationary hedge than gold even if you think not.I used to be in the bullion biz,this type of time we relished gleefully!
I believe that the US HAS decoupled. From reality. I will say this though - the best thing that could happen to the US is that China becomes the world economic superpower. Then, when it creates it's own inflation, China can look to us for cheap labor. Entropy bichez.
They will build more empty cities in far more remote areas. And when they start to maintain those suckers, their service PMI will rock.
SP500 bull vs bear battle reverts to bearish bias after price action on Friday and more downside expected.
My long term indicators have continued to warn of US Dollar strength and EURO weakness and these signals have increased since 2009. The overdue dollar rally should be substantial.
http://stockmarket618.wordpress.com