Chinese Exports Collapse In February Despite Largest Credit Injection Ever

While a few will blame the total and utter collapse in China exports in February on the lunar new year's early date this year, the scale of the miss is simply stunning.

For a few brief seconds, everything was awesome as Bloomberg's initial headline proclaimed a big RISE in exports, but they quickly corrected - causing heart attacks across every tape-reading algo in the world...

Exports plunged 20.7 percent in February while imports fell 5.2 percent, leaving a trade surplus of $4.12 billion, the customs administration said Friday.

Economists forecast both exports and imports would shrink, although not as much as the fall. The Lunar New Year break fell about 10 days earlier than last year, likely boosting January’s shipments and weighing on February’s.

But Chinese imports from the US crashed the most on record...

In addition to the shutdown that happens each year, February was an uncertain period for Chinese exporters, with negotiations through the month on whether the U.S. would raise tariffs from March 1.

Analysts were quick to defend the crash as an outlier...

“There is big progress in the trade talks compared with a few months ago. But the trade tension itself brings uncertainties to companies, who could slow or delay their investment, or even move some of their production overseas” UBS AG economist Tao Wang said in a conference call on Thursday. A potential economic slowdown in the U.S. and Europe, together with their monetary policies, will also add to the external challenges for China, she said.

And the rest of the world better hope so too... because if this correlation holds up - all hell is about to break loose back in the 'decoupled' USA...

US equity futures dropped on the headlines...

And Chinese stocks were already suffering their biggest drop of the year...

As a reminder, this collapse is occurring after the PBOC announced it had flooded the economy with a gargantuan 4.64 trillion yuan in various new forms of debt which comprise China's Total Social Financing in January, including notably, the "shadow" credit which Beijing had been aggressively cracking down on: an aggressive credit expansion which many took as a tacit confirmation that China was losing the fight with deleveraging.

So if 4.64 trillion didn't help... and RRR cuts... and promises of tax cuts... just what is the US and Chinese equity market pricing in?