Here Comes The "China Hard Landing" - Full Bank Of America Presentation Slides

Tyler Durden's picture

Earlier today Bank of America released a presentation and a conference call in which the firm's head of China equity strategy David Cui spoke about the dreaded "China Hard Landing" or the event that would kill all decoupling dreams for ever and ever, and probably lead to a world depression. It seems that the latest down move in the market is being partially attributed to just this notification finally making the rounds as can be seen in the note below: "BofAML’s David Cui is the Markets’ #1 rated China Strategist according to the 2011 Institutional Investor All-China Survey. While he is not responsible for our China GDP forecast, he sees significant Chinese specific financial market risks that could trigger lower than expected Chinese growth. He sees that those financial market risks as having increased considerably. He will expand on this on the call, but he sees these financial stresses as having a very high probability of triggering lower than expected growth. That lower growth could well be sub 7%, and therefore by Chinese market standards would be termed a “hard landing”, clearly a HUGE issue for all global markets." Granted this is not news to those who have been following the Chinese situation (as fringe blogs have been for over a year), but the market does tend to have a habit of being about 12-18 months behind the curve. Here is what Bank of America had to say...

From Bank of America:

Fitch's head of sovereign rating Andrew Colquhoun commented that in the near term, the biggest risk to China's sovereign rating is the banking sector.
 
BofAML’s David Cui was ahead of the curve on this one:

He believes that there is still a large downside risk in China.

David believes that there is a good probability of a hard landing, he highlights timing associated with this could be past 2013 with the new administration.

After 3 years of loose monetary policy David doesn't think it would be wise for the government to ease from here and if what David fears about the underlying lending markets materializes then more aggressive drop is quite possible.

The anecdotes coming from this underground market are really serious and although some technical rebound for equities is probably due, this shouldn't be taken as an actual turning point.
 
Furthermore, copper is said to be the commodity with a “PHD in Economics”…. Look what it is telling us:

And the full presentation given to clients as part of BAC's 9 am conference call:

 

h/t Converttrader

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treemagnet's picture

Dr. Copper needs to go see a specialist, like Dr. Silver or Dr. Gold.

junkyardjack's picture

Looks like Dr Silver and Dr Gold are under investigation for malpractice

Zero Debt's picture

Why not make an appointment with Dr Doom?

fraud-fed's picture

Because he does not seem to keep his appointments. Where the hell is he!?

Comay Mierda's picture

trying to divert attention from their own inevitable hard landing

fuu's picture

At first I was confused if that was a BAC chart.

buzzsaw99's picture

emerging. markits. bitchez.

Ethics Gradient's picture

It's the demerging market that is causing most headlines at the moment.

UP Forester's picture

The SUBmerging market?

 

BTW, nice rotor....:)

rajc's picture

@Comay Mierda agree.

do we really want to read any material published by any banks or entities that needed a bail out???

s2man's picture

BoA seems to be more forthright, lately.  Maybe they know they are going down, and have decided to tell the (partial) truth.

myne's picture

Classic diversionary tactic.

This is schoolyard stuff.

Teacher catches kid being naughty, kid dobs on 3 others who were helping.

Prisoner's dillemma applies too.

The one who cooperates in exposing others is treated less harshly.

Once they dob though, everyone has motivation to dob. The last one to hold out cops it worst.

 

I still remember one day in high school (approx 14yo) being caught with mock posters suggesting our school was a nazi organisation run by the Hitler moustache wearing female principal. Crude, but amusing to us.

Well, they knew I didn't have the skills to make the poster, so they pressured me to tell. Telling me I'd be suspended for longer if I didn't. It clicked that that's all they could do. That if I dobbed, then 4-5 other friends were going to get suspended too and I had no guarantee they weren't lying to me. I explained to them that the overall punishment would be lower if I took all the blame. 2 days definitely vs 4-10 days(if they were lying) spread evenly. They didn't really like that but there wasnt much they could do.

I gained some respect that day.

Random_Robert's picture

You gained some respect, but I'll bet later that day the Principal was researching the cost of installing cameras in all the lockers....

Principal = King George

You= Thomas Paine.

 

 

 

pazmaker's picture

If that happened today you would be arrested and interrogated by department of homeland security or the FBI and put on the list.....labeled a domestic terrorist.

 

Times have changed haven't they?

Tidewater's picture

Which I'd guess is Australia, from "dob," maybe also "click," and the avatar (de Vlamingh). If I'm wrong I'll eat Vegemite. Which I'd rather not. Could probably find some where I'm at though.

rambler6421's picture

Deflation bitchez?

PulauHantu29's picture

Steve Roach is one of the few analysts/economists I believe when it comes to China He was the #1 MS economist for Asia up until recently and lived in Beijing.

Please interview him about China...not a BAC person.

Plus, OzLand is leveraged 40:1 based on China's growth. For every little drop in China's demand for materials, OzLand will feel lots more pain imo. Their RE is already sinking....

GL!

BrocilyBeef's picture

Is it a surprise that the Chinese economy fails?

"Made In China"

The only question is when and what else it takes down (and how much fire, explosions, dead fish people, etc.)

Smiddywesson's picture

Anytime anyone says anything bad about China or Israel on this site it generates a lot of junks.  There wouldn't be prying eyes from those countries here, would there? 

Screw China, it's the ultimate bubble resting upon the Great Bubbles that are popping in the West.  It's over Hop Sing.  You don't get the Century of China, and you certainly don't get laid because your One Child policy led to all the girls being aborted.  All you got from all that work was a polluted landscape, corruption, bankrupt provinces, soon to be hollowed out industries, and trade barriers going up. 

You, no trouble!  Go now to ghost city and cry on pillow.

Stoploss's picture

Awwww, those damned fringe blogs!!

BrocilyBeef's picture

if you can't stop them, join them.

qussl3's picture

China will just print, and build to timbuktu.

When inflation goes bonkers they'll then try price controls, they've already tried it with diesel and alcohol, matter of time before they try it elsewhere.

That bitch has still got some legs in it yet.

prains's picture

China will just print, and build to timbuktu.

 

and paint thin the milk

pazmaker's picture

and add plastic to the rice...

zorba THE GREEK's picture

Don't forget the lead painted toys for tots.

shazbotz's picture

Chinese Ghost Cities Bitchez

fake economic growth!

China's Ghost Cities and Malls

http://www.youtube.com/watch?v=rPILhiTJv7E


A great deal of China’s economic growth has been through the strategy of the government building massive cities and universities that there is no demand for. All of the materials and labor that goes into these massive projects improves GDP. Unfortunately, its led to an estimated 64 million empty apartment units in China that are too expensive for most Chinese families to afford (there is only a little over 30 million multi-unit housing units in the U.S.). Occupancy rates in these new cities are at less than 25%. And the ‘world’s largest shopping mall’ is almost completely empty.

There is even an aerial photo of the Yunan University – built to accommodate 2.3 million students. How many students actually attend? 11,000.

All of this could ultimately result in a few little problems for China:

  • Massive government debt to build and maintain all of this when there is no demand for it and then eventually tear a lot of it down.
  • A housing bubble that will be so big it could potentially bring down the entire economy.
  • Civil unrest for the wastefulness of taxpayer dollars to create housing that nobody can afford.
  • Complete degradation of an already poor environment and habitat.

If this is what it takes to maintain economic growth… then China has some big problems.

Wake TF up

Comay Mierda's picture

step 1: build ghost cities

step 2: ?

step 3: PROFIT!

Smiddywesson's picture

HA!  You got two junks for that.  Suck it Chinese trolls.  Put the truth in your egg rolls and shove it.

Hey, why is it everytime your f'd up military shoots someone down in international airspace they have to appologize to you? 

How is it you draw a line in the China Sea, claiming distant territory for your own, that is so tortured in shape it would make a redistricting politician blush.  Your claims over these islands are based on POTTERY shards?  LOL, nation of bullies and theives.

You must appologize now to Smiddywesson for your barbarian antics.

PulauHantu29's picture

The Middle Kingdom has been around for over 5,000 years.

How long has BAC been around?

BAC survives on pushing paper around...China thrives on production.

Who will Bite the Dust first?

 

 

Don Quixotic's picture

Well, China has imploded more times than Bank of America, has had more peasant rebellions than BofA, has been conquered more times than BofA, is definately more corrupt than BofA... I vote China with BofA hot on its heels.

Smiddywesson's picture

The land has been there for 5000 years, the system of government hasn't.  And that government is scared, otherwise it wouldn't have had to censer the media and kick out Google.  You throw out the "Middle Kingdom" baloney like it's one people.  There are 292 languages spoken in China.  There aren't any "Chinese."  There are a huge number of diverse groups being held together at the point of a bayonet and the promise of "The Century of China."  Well, guess what?  You aren't getting your Century of China because it was built on a pipe dream that the world wasn't going to change and you would perpetually benefit from the current monetary and trade system.  That system is over, so I'd be surprised if there even IS a China in another 50 years.

 

Kina's picture

Message to Blythe and other scum out there.

Cover all your shorts now or get totally blown out of the water when volume overtakes you as Asians and Europe en-mass flee uncertainty and a destituter Euro for gold, silver...

LongSoupLine's picture

CNBS see's it more important to NOT mention China.  It takes too much time away from slamming Whitney's muni-bond call "one year later" every 5 minutes.  Because if she's wrong in exactly one calendar year then obviously the economy is getting better.

Gee, do ya think CNBS will bring on all the "Dow 600,000/SPX 20,000" "contributors" they parade daily to slam them "one year later"? 

I hate those CNBS shillfucs!

Mister Ponzi's picture

If there is an expert out there in "hard landings", it is Bank of America...

s2man's picture

Sub 7% growth is a hard landing? 

qussl3's picture

When food inflation can hit 15% and you spend 40% of your income on food, it is.

Absalon's picture

If the housing bubble is as big as suggested than a blow off could cause the Chinese economy to actually shrink.

 

 

Smiddywesson's picture

Collapse.  When you are accustomed to a $10 million dollar salary each year, and your salary is cut to $8 million, you go bust. 

Josh Randall's picture

Big collapse event is drawing near -- all these Truth Tellers coming out of the closet to point their finger so they arent guilty by ommission; or maybe so they can build some last minute credibility and look like Financial Jimmy the Greeks when they hang up their shingle and try and get into business after financial armagedon.   

chinaboy's picture

There are problems in China. And Chinese stocks both in Shanghai and Hongkong are in bear territory.

However, using the materials that presented by BOfAML to prove anything is laughable. What is wrong is not what he presented. What he presented is collection of garbage data good for American investment banking circle. Just like CIA could not predict the breakup of the Soviet Union, the I-Bank types could not do anything useful today.

fdisk's picture

"China Hard Landing" blahh blahh blahh

It's a JOKE. 8-9% growth rate expected in

2011-2012, as of now China experienced power shortages, that's how

"slow" China is moving. Pork, Agriculture product shortages as well.

BrocilyBeef's picture

I won't be left holding the bag of fried rice, wantons, sweet-sour pork, euro bonds, etc.

reader2010's picture

Fuck it. Nominal GDP growth is purely bullshit for those brainwashed yo-yos. China's REAL GDP growth has been negative for the entire year so far. 

Smiddywesson's picture

Yes, their numbers are bullshit.  Don't listen to what they say, watch what they do.  The very fact they buildt all that infrastructure like the ghost cities shows their desperation.  I ask you thi, does a nation that is experiencing growth like they claimed to be enjoying EVER build ghost cities, malls that go empty, empty office buidings, railroads to nowhere.  They are starting to crack.

And for anyone who thinks they have incredible business minds, like they did the Japanese before they blew up, I smell a large measure of Keynes in their actions.  They are no smarter than anyone else.

fdisk's picture

China is evolving, bitchez! Mind your own biz and worry about your own backyard! *L*

BrocilyBeef's picture

you are the greater fool.

Smiddywesson's picture

Why don't you just come out and say it, just call us "barbarians."  That's your name for everybody, right?

Mind your own business is what you always say, except when you are poking around in other people's business.  Like when you are stealing territory in the South China Sea?  Like when you are building aircraft carriers and threatening your neighbors?

Appologize.  You must show humility and appologize.