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Chinese M2 Growth Dropping To 9 Year Low Means More Pain In Store For SHCOMP
When it comes to the gyrations in the stock market, there are those who, quite foolishly as of late, believe that market moves are driven by such arcania as fundamentals and/or technicals, or, much more relevant lately, are purely a function of overall liquidity in the system. Which brings us to China where unlike the US, the stock market has been in full on collapse mode until last Monday when the government, rightfully so, decided to bail out its own banks while letting European ones fend for themselves. Yet, unfortunately for China bulls such as Jim O'Neill, we have some bad news: the core indicator of overall systemic liquidity, M2, just tumbled to a 9 year low as of Friday, printing at 13% on expectations of 14%. Not only that, but the direct loans in the financial system, dropped far below the 550Bn CNY estimate, at just 470Bn, the lowest since December 2009. Granted, this is all "on the books" stuff (yes, we know, we know, communist regime and goal-seeked econometrics - check), so who the hell knows what is happening with the uncontrollable shadow banking system. Well, nobody, but since robots only have overt data to play with, regardless of how manipulated it may be, the following two charts will probably be a wake up call to anyone expecting a China driven "risk renaissance" absent the PBoC deciding to do away with its inflation-fighting regime, and launching into print speed ahead (something several hundred millions migrant workers would not be delighted with).
China M2 Change...
And M2 vs SHCOMP YoY change.
charts: Bloomberg
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Any day now, those mealy-mouthed Plutocrats in Beijing will do something to shock the financial markets in order to re-goose the economy and jump start stocks.
Just like the Japanese, they will craft some statement about "one-way" markets. The Shanghai has been going down way too long, no bounces whatsoever.
Maybe an RRR cut. Maybe some new policy with the Yuan. Who knows???
And the Chinese are expert manipulators, they are going to surprise the bears very soon.
the Chinese govt v's a billion Chinese selling property and saving = China meltdown from hell.
actually the kick-ass doomsday trade is shorting Goldman Sachs and China at the same time.
...and Canada, Australia also Germany they need a wakeup call, whole EZ does. Lamo Euros
Robo,
To the extent that some of the brightest hedge fund managers saw the collapse of our excessive credit creation that finally happened in 2008 coming so far ahead of time--I mean, literally some of them thought 1994 was going to be that turning point where debt/gdp started contracting, you may be right.
China is fucked as far as I'm concerned, but who is to say they don't pull a Greenspan and get another 3-4 years of partying done before things really head south. Personally, I'd rather it just happen. With the worst of the market impact manifesting itself immediately before, rather than immediately after, a vix options expiration.
The difference is all its trading partners entered the crisis already, so the China collapse will unfold much faster because there isn't a healthy environment around China to buoy it up. That's the problem with globalizing your economy, everybody experiences the downswings at the exact same time and it exacerbates the problems.
Actually, Panda Bears are protected in China.
Also of note, they are marsupials and not technically "bears"
*I don't know where to find Cliff Claven.*
Excellent post.
Does the forced devaluation of the US Dollar vis a vis the greenback serve only to cause our equity market to move higher? I say yes. Discuss....
those emerging market migrant worker bitchez should have bought crAAPL stock.
Oh, it aint nothin' a big ol' WAR cant solve...
China plays the long game. It's a 3000 year civilization.
Like Russia, in which the economy imploded from huge debts acquired from the 40 years arms race, and the nation became a Potemkin village, America is following this economic trajectory.
Who's going to lend $$$ to America to wage a war? If you were a soldier, would you fight, and die for fiat currency? If America goest to war with China, it'd be suicide.
Besides, America will go to war with Iran first. It needs the oil supply. It controls Iraq oil. If it can get Iranian oil, it has a huge leverage on China, which is short oil, thus unable to project power (read The Prize).
Therefore, if China cannot acquire oil fields, it can't project power, and America remains a unipolar power. Shits gonna hit the fan if China develops non-oil based military weapons, and machinery.
China plays the long game. It's a 3000 year civilization.
They sure shit in their nest like there's no tomorrow.
Marc Faber says you need to buy JPM if you want to make money.
http://marcfaberblog.blogspot.com/2011/10/at-their-lows-basically-banks-were.html
"But I am told by experts here in the U.S. that the auditors have become very, very tough"
did you hack Faber's blog?
Marc Faber was in Montreal, partying with strippers. He should probably go long ointments.
You have to laugh at those "surprised" by the Chinese slow down. In the US, the FED starts raising rates to curb growth and inflation concerns and they are given a thumbs up when it occurs. In China, they raise rates to slow growth and curb inflation (exactly what has happened as hoped by the Chinese) and all you hear about is how China is crashing and everyone is so surprised that it is happening. No.....China is not surprised. They have achieved their objective. Now they can hold rates steady or reduce them to kick start their economy again. The Chinese are laughing at those who laugh at them LOL. Look forward....not back kids.
stateside
Bravo. That is a very good point. Thanks for some useful insight.
P.S. It doesn't hurt to further mention that China holds about $3.2T in foreign reserves either http://www.reuters.com/article/2011/10/14/china-economy-reserves-idUSL3E...
Uh, so, we buy no stuff from China no more, no can afford it. China no sell stuff. Is that what I'm seeing?
"Scotty, we need more on engine #1."
"Sorry Captain, I'm giving her all she's got."
M2 MONEY SUPPLY IS A BAD THING FOR CHINA?
THE GOV ALL TIME TIME TRYING CURB THE EXCESSIVE FIAT FROM THE SYSTEM IS TO REDUCE THE ENTIRE VOLUME OF M2.
SO THE PEOPLE ON ZH BELIEVE PRINTING FUCKING MONEY DOES GROW THE ECONOMY?
-1 for all caps
-1 for strawman
-1 FOR CRY BABY
-1 FOR UGLY AVATAR
hey buzz, what is he trying to say?
no it means bad debts are piling up.
slowing credit + bad debts = China is FUBAR
what bad debts are piling up? the ones nobody can pinpoint but somehow are always mentioned as the cause of their coming demise?? china is the only adult in the room by recognizing their inflation problem and doing something about it.
read the ZH post. M2 drops, black-market loans pick up. China inflation fight? Please. They have most likely hyper-inflation on some food products, say tea prices. Point is, China is obsessed with GDP growth, but they know that local council debt charges rising, personal loan writeoffs are rising, a property market bubble that is nightmare personified. The list goes on. They are turning one tap down and turning a blind eye to the 'undisclosed' one.
I think China will implode very soon once the 'saving' mentality kicks in and they start to feel poorer on the properties geared 90:10 value drop. The Chinese have acted like children re: their YUAN fixing (fighting inflation!!!) and 'threats', also that 'white knight' BS.
China is obsessed with GDP growth = dated false impression.US is not obsessed with GDP,but debt growth
hyper-inflation on some food products = Chinese pigs are flying, but not the rest of them including dogs and cats
local council debt charges rising = Not every local concils
on and on..
China will implode because they save??? they would implode and get poor because of price droping?but richer because overpriced. it's those phoney traders and fat cats, wall st hedge funds get poor, this is what Chinese are welcoming and will love the gov even better
solve your dollar crisis first,before criticising the Yuan
the chinese citizens have one of the highest savings rates in the world. they save because they dont have social security or medicare to fall back on. and last i checked, higher interest rates means more incentive to save. what are you talking about?
SLOWING CREDIT?
YOU MEANT THE FAKE CREDIT CREATED DURING THE 08-09 WHICH WAS PROVEN AS THE REAL CAUSE OF INFLATION AND FALSE DEMAND THAT LEADS TO THE RECOVERY.
If Central Bank given out more these funny money instead of caping it, isn't that going to make the whole thing worse? IT WORKS WELL IN the US by introducing QE1-2 so far
BAD DEBTS?
Then that's why the Bank stop lending more risky debt into the property and overheated sector to make the Market force to bust the bubble as early as they can. China will slow but it won't take shortcut or hopium like the US to make Wall.St. as giant black hole that totally make most of those banks into zombie banks. Then their savers would get arrested if they close their accounts.
You should be more worried about Wall.St and US Bonds, Brother. That's one hell of nuclear bomb overhanging every single American's head
Hey moskov, you sound like Fat Ass Willy. BTW has anyone seen that mofo lately? Anyway I agree with some of what you say and I read it with a Chinese accent just for fun. Remeber the Chinese guy from the Hangover, that is what I am reminded of when I read your posts. I am not trying to make fun of you as I am a round eye.
I hear ya mossy, you have a point in all those caps of yours.
Time to go full retard & we know Robert Downey Jr says never to go full retard!
I hope the Chinese can make it through these difficult times and create a sustainable economy. The Chinese
people work hard and have suffered much. A better life for all the people of the world would benefit everyone
and should be the goal of all of us who believe in God.
They HAD a sustainable economy.
They have been going for 3000 years right ????
Unfortunatly for them they were talked into joining the ponzi.
Better luck next time guys....
So which is it guys and gals? China is treated as God-like here for encouraging their citizens to get into gold and silver and their central banks wildly applauded for buying the gold being dumped by the bankrupt western countries yet in the same breath ridiculed for their financial situation. I was taught to speak out of one orafice.....not two. Some here may consider doing the same. Pick one.
stateside
but ,but , but , i bought a bunch of copper bars and hid them in my basement already..........good grief.........now this......damn....
inflation is getting harder to control
this time it took them 2 weeks
Hong Kong’s Chinese Gold & Silver Exchange Society, a century-old bullion bourse, will start trading gold quoted in yuan today, boosting the city’s status as an offshore hub for the currency.
PAGE should turn a new page in history for real gold price discovery.
The days of the Comex scam are numbered.
Special report: China’s debt pileup raises risk of hard landing http://forum.prisonplanet.com/index.php?topic=219203.0
China Lending Shrinks as Wen Wrestles Inflation, 14 October 2011, (Bloomberg) http://www.bloomberg.com/news/2011-10-14/china-lending-falls-to-lowest-l...
China’s New Lending, Money Supply Growth, Forex Reserves Trail Estimates, 14 October 2011, (Bloomberg) http://www.bloomberg.com/news/2011-10-14/china-s-sept-m2-rises-13-0-new-...
China selloff reflects lower credibility: analysts, 10 October 2011, by Dinny McMahon - Beijing (MarketWatch) http://www.marketwatch.com/story/china-selloff-reflects-lower-credibilit...
It's not so easy this time around to simply reinflate and embark an another grand public works program. The environmental degradation is resulting in riots, such as the storming of a solar plant when toxins from the plant killed local fishing (shades of ethanol and it's fertilizer run off causing more damage than it helps), combined with inflation pressures.
Inflation led to the Tiannamen Square and a revolution in 1949. The government is very aware of this, purposely engineering slower growth, and selling it in the state owned media by pointing out the problems of too much growth too soon . Central planning, printing, and government spending has not worked so well here in the US as solutions to the housing bust. The same rules apply for China.