Yesterday we noted [5] the fact that China's Shanghai Composite was now red for 2013 as inflationary fears [6] once again raise the odd specter of a central bank suggesting less than orgasmic expansion of its free money. While the 'Pisani's of the world see the relative outperformance as some 'rotation' in the smart money, we humbly suggest he take a trip down memory lane and note how rapidly the so-called 'smart money' reverted to China's lead in the last few years as the lack of an inflation shock absorber [7] led the PBoC to pull back and implicitly drag on the world's equity market-based linearly-extrapolated economic growth hopes. As a reminder, it's never different this time.
China's Shanghai Composite vs the S&P 500... Deja Deja Vu
[8]
And while we won't be seeing inflation showing up in any government data in the US, the inflation genie is starting to creep out of its bottle here too [9] (how are those margin expansion expectations going to cope?)
Chart: Bloomberg