Boom. You can't out tariff us. Period. This Trump knows.

[devil21]

That's a bit silly. You don't run out of money because stuff costs more. You run out of money because you can't find work. No paycheck, no money. If anything, bank accounts will fill as people go back to saving money up for things they really want.

I guess people that run out and buy the latest doo-hickey with their credit cards and live in mom's basement will be greatly affected by these tariffs.

There's more job openings right now than unemployed people. If you're out of money, it's not because of tariffs.

My post was hyperbole, obviously, but the celebration of higher prices as "WINNING" by the Trump PR team is becoming tiresome.

[Swordsmyth]

My post was hyperbole, obviously, but the celebration of higher prices as "WINNING" by the Trump PR team is becoming tiresome.

The celebration of job losses by the China PR team became tiresome long ago.

[Swordsmyth]

Likely American voters are vastly more interested in putting new tariffs on foreign countries than implementing new free trade deals.

A new poll by Public Opinion Strategies reveals likely voters’ lack of excitement for the free trade apparatus of Washington, D.C. that has prevailed for decades. Instead, likely voters find implementing new trade restrictions more important to securing a booming U.S. economy that benefits American workers.
When asked to rank a number of policies that would be considered “most important” for Congress and President Trump, likely voters say slapping tariffs or other trade restrictions on foreign countries who violate trade agreements is much more important to them than the U.S. entering new free trade deals.
A majority of nearly 60 percent of likely voters say it is important for Trump and Congress to “place trade restrictions on countries that violate trade agreements” to create more American jobs. Meanwhile, only 38 percent of likely voters said entering new free trade deals is the most important means to creating U.S. jobs.


About 63 percent say it is very important for Trump and Congress to mandate that “all taxpayer-funded infrastructure projects use American made goods whenever possible,” in order to add to the number of U.S. jobs in the economy.
Likewise, 80 percent of likely voters say taxpayer-funded infrastructure projects should be built by American workers and American-made products, rather than by the lowest bidder.


The poll comes as economic nationalism has swept across the American electorate, with a similar poll revealing last month that 6-in-10 midterm voters support Trump’s tariffs on foreign imports, designed to protect American jobs and industry while forcing multinational corporations to bring manufacturing back to the U.S.
As Breitbart News reported, there have been about 11,100 U.S. jobs created due to Trump’s protective tariffs. On the other hand, there have been about 514 job losses directly tied to the tariffs. There are 20 times as many American jobs that have been created in the last six months thanks to Trump’s tariffs on imported foreign goods than jobs that have been lost.

https://www.breitbart.com/politics/2...ot-free-trade/

[Swordsmyth]

For all the concerns that Trump's trade war and tariff increases could jeopardize corporate capital spending plans, resulting in a broader economic slump, a Special Question posed by this month's Philly Fed survey found that this is not the case; in fact when taking into account Trump's tax relief/fiscal stimulus just the opposite picture emerges.
In Special Question #3 in the October Philly Fed survey, the regional Fed asks "How have each of the two factors, tax relief and trade policy (including tariffs), affected your expected capital spending for 2019 compared with 2018?"

What it found was that while some 40% of respondents would increase CapEx as a result of Tax Relief, only ~23% would cut capital spending plans due to the adverse consequences and unpredictability resulting from tariff increases and trade policy.

In other words, as long as positive impulse from Trump's tax relief permeates the economy, the president has little to worry about when it comes to adverse consequences from the ongoing trade war with China or other nations.

More at: https://www.zerohedge.com/news/2018-...fect-trade-war

[Swordsmyth]

Chinese macro data has been serially disappointing for almost five straight months, and tonight - as Yuan tests down to cycle lows - all eyes are on the heavily 'managed' macro data to reasssure the masses that despite a 25-35% collapse in its stock market this year, all is well in the land of hidden debt.
China's regulator already offered up some reassurance tonight that "China's financial market volatility is not in line with the healthy status of the economy..." adding that "financial risks are controllable."

Before tonight's main meal of government-sponsored data is served up, we remind you, as we reported two weeks ago, an indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show.

The index is based on a survey of CKGSB students and graduates who are executives at companies operating in China. The respondents represent around 300 privately-owned small and mid-sized enterprises across several sectors of the economy.

"Most surveyed companies are now experiencing unprecedented difficulties and have become increasingly pessimistic about business prospects for the next six months," Li Wei, the economics professor at CKGSB who oversees the survey, said in a commentary accompanying the September survey results.
"For most, business has never been worse."

In fact, one look at the 'real' economic data in China and it is evident that it has been disappointing for the longest period since 2015...

And heading into tonight's print, yuan was weakening...

So given all that, we are sure tonight's data dump will be goldilocks - not too warm (because everyone would know it was fake) and not too cold (because we can't signal that Trump is winning).
Before the data hits, bear in mind what Bloomberg noted, Chinese growth data has become both extremely predictable and frankly boring these last five years.

Reported figures have haven't deviated by more than 0.2 percentage points from median forecasts since 2013. Another observation is if you look further back, it almost never comes in below expectations.
So here's tonight's data:

• China Q3 GDP Missed at +6.5% YoY vs +6.6% YoY expectations (and +6.7% YoY prior)
  
• China Sept Retail Sales Beat at +9.2% YoY vs +9.0% YoY expectations (and +9.0% YoY prior)
  
• China Sept Industrial Production Missed at +5.8% YoY vs +6.0% YoY expectations (and +6.1% YoY prior)
  
• China Sept Fixed Asset Investment Beat at +5.4% YoY vs +5.3% YoY expectations (and +5.3% YoY prior)

China’s economy faced increasing headwinds in the third quarter, with worsening trade tensions and the government’s deleveraging campaign undercutting growth. Those problems prompted officials to step up stimulus, but the impact of those measures has yet to kick in and more may be needed.

"We expect further escalation of US-China trade tensions going into 2019, which will likely be partially offset by CNY adjustment and more growth-supportive fiscal and monetary policies," wrote JPMorgan economists led by Zhu Haibin, who expect growth to slow to 6.1 percent next year. "We expect fiscal and monetary policies to become more growth-supportive, providing a lift to headline GDP growth," they wrote.

Chinese officials will have to step it up as the stimulus is not working...
China GDP is the weakest on record aside from the peak of the financial crisis; Industrial Production grew at nearly its weakest on record; FAI was the weakest on record; but retail sales bounced...

China's growth moderation has come as inflation quickens, with headline CPI climbing to 2.5% YoY in September, raising the prospect that the nation experiences at least some measure of mild stagflation.
China says downward pressure on growth is growing, according to the National Bureau of Statistic's press release.


More at: https://www.zerohedge.com/news/2018-...growth-q1-2009

[Swordsmyth]

Charting China's Imminent Implosion

[devil21]

Charting China's Imminent Implosion

Oh the humanity!

China Q3 GDP Missed at +6.5% YoY vs +6.6% YoY expectations (and +6.7% YoY prior)
China Sept Retail Sales Beat at +9.2% YoY vs +9.0% YoY expectations (and +9.0% YoY prior)
China Sept Industrial Production Missed at +5.8% YoY vs +6.0% YoY expectations (and +6.1% YoY prior)
China Sept Fixed Asset Investment Beat at +5.4% YoY vs +5.3% YoY expectations (and +5.3% YoY prior)

So China's GDP is ~2.3% higher than ours, yet their economy is imploding while ours is booming? That makes no sense. Their retail sales are UP which means they are successfully, albeit slowly, redirecting to an internal consumption model and away from the export model. Industrial dropped a bit because they are importing more items, as is necessary when your currency becomes much more accepted globally. Investment increased but it's hard to say whether that's outside investment by entities receiving those exported yuan or something else.

This narrative of the Chinese collapse is pretty lame. Yes, their equity markets are dropping but when their currency is purposely weakening AND their stock markets are dropping that means that their currency and markets are being revalued, not that their economy is collapsing. I'm sure you'll call me a Xi shill or whatever but someone needs to clear up this ridiculous narrative of China collapsing while US is thriving, yet their numbers blow ours out of the water and WE are the ones about to be taxed to the hilt via tariffs and a currency losing reserve status.

[TheCount]

Oh the humanity!

If the US hit any of these metrics, Swordsmyth would need to go to the ER for an erection lasting more than four hours.

[specsaregood]

From an entertaining investors conference call yesterday:

In remember, throughout the entire world, we don't have any more, thanks to Section 232, thanks to the actions taken by the U.S. Government. We don't have any more throughout the world, the dumping effect of dumping Chinese steel, because we not only put these guys out of here, but we also back our little kids, little brothers.

Japan is benefiting so much from Section 232, because the Japanese cannot stand up against the Chinese on their own. And their domestic market is benefiting from the fact that price is went up in Japan. Germany, benefiting a lot. All of these effects are benefiting a lot. They complain, because it looks good on paper, looks good on TV. But at the end of the day, everybody throughout the entire world benefiting from tariffs. Mexicans, they are benefiting a lot. Canadians, right now with the quota, with hurricane, with the U.S. MCA benefiting a lot.

So we recovered our leadership in the world in the steel business. Thanks to President Trump. Thanks for his courageous actions supporting the resurgence of manufacturing in the United States of America. That's what happening.

By doing that, we stood up against the bully and the bullish China. So China is in deep trouble right now, because their plan fell apart. Their plan was predicated in the United States never reacting and allowing our economy to be decimated by their actions no more.

https://seekingalpha.com/article/421...nscript?page=8

[Danke]

China's ghost cities and their multibillion-dollar debt are raising concerns

https://www.afr.com/news/world/asia/...0180404-h0ybjz

[Swordsmyth]

Oh the humanity!



So China's GDP is ~2.3% higher than ours, yet their economy is imploding while ours is booming? That makes no sense. Their retail sales are UP which means they are successfully, albeit slowly, redirecting to an internal consumption model and away from the export model. Industrial dropped a bit because they are importing more items, as is necessary when your currency becomes much more accepted globally. Investment increased but it's hard to say whether that's outside investment by entities receiving those exported yuan or something else.

This narrative of the Chinese collapse is pretty lame. Yes, their equity markets are dropping but when their currency is purposely weakening AND their stock markets are dropping that means that their currency and markets are being revalued, not that their economy is collapsing. I'm sure you'll call me a Xi shill or whatever but someone needs to clear up this ridiculous narrative of China collapsing while US is thriving, yet their numbers blow ours out of the water and WE are the ones about to be taxed to the hilt via tariffs and a currency losing reserve status.

If the US hit any of these metrics, Swordsmyth would need to go to the ER for an erection lasting more than four hours.

The ChiComs lie about their numbers and their system is dependent on much higher numbers than ours is, any significant sustained slowdown will turn into a collapse.

Their egregious misallocations of resources was already starting to threaten them and now Trump's tariffs are multiplying the damage and they haven't even had time to take full effect yet.

[Swordsmyth]

Earnings reporting season is underway, and analysts are eager to hear from executives about how an escalating trade war between the U.S. and China is impacting their businesses. A common theme is that they are ready to relocate supply chains if the cost of importing Chinese goods becomes prohibitive.

More at: https://finance.yahoo.com/news/compa...143908195.html

[Swordsmyth]

For close to 30 years, we’ve been told that China is going to overtake the US and the ‘West’ and become the largest and most powerful economy on Earth. Supposedly, the best the West can hope for is to ‘manage’ China’s rise and hope it liberalizes on the way to the top.

It is clear why that sentiment continues to be so prevalent. China has been the fastest growing large economy in the world for decades. Since 2000, China’s economy has grown over 325%. That compares to 33% in the US and just 1% in Italy. Since 2008, China has been responsible for a stunning 54% of all global GDP growth (pdf). China has become the second largest economy in the world, roughly two-thirds the size of the US, the world’s largest manufacturer, the largest consumer of industrial resources, and the largest exporter. For decades, China has outgrown the US and the West in virtually every economic metric one can think of.
Accordingly, the mythos of the ‘Chinese Model’ has emerged: so called ‘Capitalism with Chinese Characteristics.’ Yet no one can articulate exactly what ‘Capitalism with Chinese Characteristics’ means beyond platitudes about the ‘genius’ of China’s leaders and an even vaguer sense of ‘long term’ planning and ‘wisdom.’
In truth, the secret to China’s economic success is simple. It is built on the largest and fastest growing debt bubble in modern history. Today, the ratio of Chinese banking system assets to GDP (a measure of financial system debt) is higher than it was in the EU on the eve of the 2011 European Sovereign Debt Crisis and nearly six times that in the US before the 2008 Housing Crisis.


Looking specifically at corporate and household sector debt, China is reaching levels last seen in Spain before their financial crisis in 2011 or in Japan at the peak of their economic growth in the 1990s.

What’s more, as we first explained here on The Sounding Line, the Chinese government likely ran a bigger deficit than the US last year when local government debt is included in the calculation. The whole world critiques the US government (quite justifiably) for its unsustainable spending, yet we hear very little about China’s similarly large government spending problem.
Considering that most of these figures exclude China’s massive $10 trillion shadow banking system, notoriously lax accounting rules, and penchant for completely making up economic statics to create the illusion of growth, China is likely in the midst of the largest debt bubble in modern history.
Much of China’s debt has gone into massive infrastructure projects throughout the country. Accordingly, China is now spending nearly 90% of GDP to build infrastructure despite persistent overcapacity problems and numerous ghost cities that still remain essentially empty years after they were built. Perhaps the most remarkable thing about China’s economy is that it is ‘only’ growing at an official rate of 6.7% despite such massive over construction and exaggerated economic numbers.



More at: http://thesoundingline.com/taps-coog...rose-in-china/

[Swordsmyth]

Edwards' argument revolves around the claim with China's policymakers having had a very ‘good’ crisis in 2008 (which was papered over only thanks to trillions in new debt, as Kyle Bass' tweet above shows), "since then, naysayers, such as myself, have been consistently wrong in projecting that policymakers would lose control and that a grotesque credit bubble would burst and lay the economy low."

And yet, just like in late 2015, with the sharp swoon that followed China's devaluation and the bursting of its stock bubble, once again fears are growing about the Chinese economy slowing rapidly, even if few fear a bust. Instead, Edwards contends that as President Trump exerts mounting pressure on the Chinese economy via tariffs, "the worry is that a Chinese policy response will send the global markets into a tailspin, just as the August 2015 devaluation did."
Which, in turn, reminds the SocGen strategist that, as we reported back in August, China just unveiled its first ever current account deficit, marking a seachange in the direction of China's capital flows, and making China’s policymakers’ job even harder, once again bringing up the question: "Is luck running out?"


Of course, the current account is just a symptom of an greater malady affecting China: namely a rapid slowdown in Chinese growth. Referencing the recent work of SocGen China economist Wei Yao, Edwards notes that the swing into current account deficit shown above is likely to be permanent. The result will be increased fragility in the renminbi "at a time when economic growth is slowing sharply, led by the industrial (secondary) sector (see left-hand chart below). And with export growth to the US only temporarily buoyed to avoid tariff hikes, this slowdown is likely to intensify."

Even more troubling than China's brand new current account deficit is that as Yao highlights, the Chinese economy has slowed to the point that employment has begun to fall, most visibly in the slump in the latest employment component of the PMIs (both official and Caixin). And while the decline in manufacturing jobs has been apparent for a few years now (ie sub 50), but it is also the services sector that is now also shedding labor, making China's economic slowdown a "really serious" issue for policymakers.

Meanwhile, the traditional response Beijing has activated in such situations - namely blowing a massive credit bubble, no longer appears to be an option as Chinese policy seems "to swing from feast to famine as policymakers grapple with the increasing instability of the credit bubble they have created."

The main reason cited by the SocGen economists for the policymakers' reluctance to blow yet another bubble is concerns about how it will affect China housing market, where the issue is that Beijing's credit policy swings about so violently it destabilizes a housing market that is constantly prone to bubble tendencies (see chart below). This, Edwards believes, is due to few alternative investment opportunities - especially after the 2015 H2 equity market collapse.



And here Edwards makes a bold assumption: "after the aggressively expansive monetary and fiscal policy of 2015/16, the authorities remain determined not to reignite the credit bubble." Perhaps, or perhaps Beijing simply has not had a reason to pull out all the debt stops just yet in the past 3 years, ever since the Shanghai Accord of early 2016 unleashed another debt tsunami across China, whose aftereffects have kept the economy afloat.
Still, one can argue that Edwards is correct, especially when one looks at the overall public sector deficit which is already at 2009 crisis levels of 11% of GDP, as creation of China's shadow credit - the deus ex machina for the past decade - continues to be "strangled."


As a result of these trends, the SocGen strategists describe Chinese policy easing in the face of the current sharp slowdown as only "half-hearted" and demanding for more stimulus from Beijing to avoid a sharp economic contraction.

Which in turn brings us back to the start of this post, and the lesson from 1987, because whereas everyone is focusing on an entirely different set of problems, Edwards cautions that "no one expects a [Chinese] hard-landing" and asks "Why not?"
If he, and Kyle Bass are right, we'll get the answer to this question very soon.


More at: https://www.zerohedge.com/news/2018-...e-hard-landing

[Swordsmyth]

https://twitter.com/Jkylebass/status...56440353169408

[Swordsmyth]

According to the latest data from China's SAFE, net FX outflows from China picked up to US$21BN in September (vs. US$11BN in August) and the highest since mid-2017 with Goldman noting that "outflow might have increased moderately further in October, but has unlikely reached the level seen in late 2015/early 2016 in our view."



It may not have reached the furious outflows from the peak of the post-depreciation period, but as Goldman concedes, this risk will rise over time if the authorities continue to resist interest rate differential-driven depreciation pressure.
And, to counter the risk of a return to China's dramatic outflow phase, Reuters writes this morning that China is likely to resume selling some of its vast $3 trillion currency reserves to stop any precipitous fall through the psychologically important level of 7 yuan per dollar "as it could risk triggering speculation and heavy capital outflows."
Indeed, as noted in our morning wrap, on Friday the yuan hit a fresh 22-month low of 6.9641 against the dollar. Additionally, earlier in the session the offshore Yuan tumbled as low as 6.9769 after the PBOC fixed the onshore Yuan north of 6.95 and weaker than consensus expected, at which point however Beijing intervened, when at least one big China bank sold the US dollar in the afternoon, prompting the yuan to reverse loss, and triggering stop-loss orders by short-sellers of the yuan.

And with the Yuan just inches away from the key level of 7.00 vs the dollar, dropping 6% against the dollar so far this year, reflecting its slowing economy as well as pressure on exports due to an ongoing tariff war with the United States, Beijing is starting to sweat.
According to Reuters, to counter any potential spike in outflows, "a defense of the yuan at 7 per dollar would be mounted to show investors that the authorities wouldn’t allow a runaway market."

“If the yuan falls through 7, there could be a rapid depreciation of the exchange rate”, said one policy insider. “In order to avoid such a passive situation, the authorities are likely to step in the market to stabilise the yuan.”

And, according to a second Reuters source, should the Yuan hit 7.00 against the dollar, the PBOC would make a stand, rather than allow any sudden break through a psychologically important level to feed pessimism among investors.

“The central bank will intervene - intervene directly or indirectly. It’s necessary. The central bank has many policy tools. We cannot let the yuan fall past 7, as it would have a psychological impact on people,” the second source said.

That said, China is now juggling two opposing tasks, with Beijing’s priority now to ward off a sharper slowdown in the economy, which grew only 6.5% in the third-quarter, while at the same time it is worried about the impact of the weaker currency on capital outflows.
To address the slowing economy, the central bank has cut reserve requirements for lenders four times this year, and is expected to ease monetary policy further, while on the fiscal side the government has pledged more tax cuts next year to support growth. Those actions, however, have caused the yuan to weaken to just shy of a decade low.
Should the PBOC loosen monetary policy further to depreciate the yuan more in order to bolster sagging economic growth, policymakers will be on guard against spooking markets as the exchange rate nears 7 per dollar, a third Reuters source said.


And now that China has set an intervention "trigger" bogey, FX traders will quickly test just how serious Beijing truly is. Expect the USDCNH to hit 7.00 in days, if not hours. What happens after could set the tone for risk returns for a long time.

One glimpse at the last two days price action suggests the PBOC is already stepping in as traders test Chinese officials mettle...


More at: https://www.zerohedge.com/news/2018-...rops-below-700

[Swordsmyth]

[Swordsmyth]

Over 70 percent of U.S. companies operating in China have said they may delay or cancel investments in the country because of the ongoing trade dispute between Beijing and Washington, while just half of their Chinese counterparts answered similarly, according to a poll released Oct. 28 by the U.S. Chamber of Commerce in South China that was conducted between Sept. 21 and Oct. 10.

More at: https://worldview.stratfor.com/situa...ng-investments

[phill4paul]

You can't out tariff us. Period. This, Trump knows.

China blinks....

China to cut import tariffs on wide range of products

BEIJING (Reuters) - China will cut import tariffs on textile products and metals, including steel products, to 8.4 percent from 11.5 percent, effective Nov. 1, the finance ministry said on Sunday.

Beijing has pledged to take steps to increase imports this year amid rising tension with some of its biggest trade partners, such as the United States.

Earlier in July, China reduced import tariffs on a range of consumer items including apparel, cosmetics, home appliances, and fitness products to fulfil pledges to further open China’s consumer market.

Import tariffs on wood and paper products, minerals and gemstones will be cut to 5.4 percent from 6.6 percent, the ministry also said in its statement.

Average import tariffs on over fifteen hundred products will be lowered to 7.8 percent from 10.5 percent, the ministry said.

“Reducing tariffs is conducive to promoting the balanced development of foreign trade and promoting a higher level of opening up to the outside world,” the ministry said .

China’s cabinet has announced plans to cut tariffs on machinery, electrical equipment and textile products beginning on Nov. 1, as the country braces for an escalating trade war with the United States.

The overall tariff level will be reduced to 7.5 percent in 2018 from 9.8 percent in 2017 as a result, the cabinet has said.

https://www.reuters.com/article/us-c...LLi52Qo2ek2Nt8

[Swordsmyth]

You can't out tariff us. Period. This, Trump knows.

China blinks....



https://www.reuters.com/article/us-c...LLi52Qo2ek2Nt8

Are they cutting tariffs on us? or only on other countries?
Last time they cut tariffs it was only on other countries in an attempt to strengthen their economy to better try to outlast us.

We are their primary target.

[Swordsmyth]

Hong Kong homeowners who bought flats in the last several months have seen their value decline as much as 20% in a matter of weeks, according to HSBC, sending values into negative equity which had only left the region in early 2017, reports the South China Morning Post.

Hong Kong’s famously expensive property market has started to feel the strain lately from a fall in demand caused by rising interest rates, a struggling stock market and fears about the impact of the US-China trade war.
Negative equity occurs when a home loan exceeds the market value of the property, and has not been seen in Hong Kong since early 2017. -SCMP

"Theoretically, buyers who obtained a mortgage of 90 per cent of the flat’s value will fall into negative equity once home prices have dropped more than 10 per cent," said Chief Vice-President at mReferral Mortgage Brokerage Services, Sharmaine Lau.

The largest losses are likely to be flat owners who paid sky-high prices for tiny apartments in older tenaments, according to industry watchers, who add that banks tend to become very conservative in valuing such properties when the real estate market takes a turn for the worse.


"Lower valuations will first apply to flats that have less marketability. Banks’ valuations, which are supported by surveyors, are made in line with market conditions," said Cushman and Wakefield head of valuation and advisory services for the Asia-Pacific region, Chiu Kam-kuen.
Meanwhile, SCMP was able to find apartments at older housing developments which are now valued at HSBC far below their recent selling prices.

A 234 square foot unit at 36-year-old Lee Bo Building in Tuen Mun, which was sold for HK$3.82 million on October 8, is now valued 20 per cent lower at HK$3.08 million. In North Point, a 128 square foot unit at 41-year-old Yalford Building, sold on August 29 for HK$3.1 million, is also valued a fifth lower now by the bank, at HK$2.48 million.
In Kowloon, a 210 square foot unit at 34-year-old Hong Fai Building in Cheung Sha Wan sold for HK$3.87 million on June 20 is already down about 13 per cent, according to HSBC, at HK$3.38 million.
The spectre of negative equity is only going to get worse, according to Louis Chan, Asia-Pacific vice-chairman and chief executive for residential sales at Centaline Property.
“More homeowners will fall into negative equity next year as flat prices may decline by 10 per cent,” he said. -SCMP

The precipitious drop may force companies such as the Hong Kong Mortgage Corporation (HKMC) to adjust their mortgage insurance program in light of market developments.

More at: https://www.zerohedge.com/news/2018-...egative-equity

[Swordsmyth]

As Chinese markets began to wake, yuan just broke below 6.98/USD for the first time in this downswing, despite PBOC liquidity withdrawals sending money market rates spiking (to squeeze yuan shorts).

This has the distinct smell of capital outflows...



It has been a one way street since Golden Week...


More at: https://www.zerohedge.com/news/2018-...pital-outflows

[Swordsmyth]

Overnight, China revealed the latest confirmation that its economy is slowing more conventional wisdom realizes when the National Bureau of Statistics reported that the manufacturing PMI fell to 50.2 in October - on the verge of a sub-50 contraction - down from 50.8 in September and below the 50.6 estimate. It was also the lowest number since July 2016 with almost all sub-indexes showing weaker growth momentum. The NBS non-manufacturing PMI also missed, printing at 53.9, and declining from 54.9 due to the weaker services PMI.


Commenting on the report, Goldman said that "growth faced increased downward pressures in the manufacturing sector" and highlighting the continued decline of trade-related indexes, noted that "weaker external demand has possibly weighed on activity growth in the manufacturing sector." Meanwhile, weaker auto sales also translated into soft auto manufacturing activities and dragged on overall manufacturing growth.
Goldman also blamed "slower property transactions" for the drop in the services PMI, which was further impacted by the the drop in the stock market : the NBS observed that the October PMI reading for the securities industry was the lowest this year, excluding the Chinese New Year months.
But most importantly, Goldman - as well as most China watchers - took the report to indicate further accommodative policy would be ushered in by Beijing to support contracting economic growth (Goldman expects one more RRR cut before the end of this year).
Perhaps hearing this request, on Wednesday China’s leadership vowed that further stimulus is being planned to prevent the broad slowdown from taking hold. Admitting that Beijing's cocktail of fiscal and monetary stimulus has been behind the curve, a Wednesday Politburo meeting chaired by the president said that "downward pressure" is increasing, and the government needs to take timely measures to counter this.
"Changes are happening even though the economy is still stable. Downward pressure on the economy has grown, some companies have a large number of operational difficulties, and some risks and hazards that accumulated over a long time are revealing themselves" the Politburo statement said, promising to take preemptive action "in a timely manner."

"The leadership is paying great attention to the problems, and will be more preemptive and take action in a timely manner," according to the statement. The Politburo reiterated that China will maintain a proactive fiscal policy and a prudent monetary policy, while trying to find solutions to help private businesses.

And yet, despite its reluctant promises, China finds itself in a dilemma: any further monetary easing will devalue the Yuan below 7.00 against the dollar, a critical level to both the PBOC, and to the Trump trade hawks, who will see breach of this key level as confirmation of currency war and react appropriately. Meanwhile, further fiscal stimulus would mean even more debt in a nation which already has over 300% debt/GDP, will record a record number of corporate bond defaults in 2018, and has been grappling with periodic on again, off again deleveraging campaigns which have so fair in reducing China's debt load.
And just in case stabilizing the economy was not enough, China has been grappling with a plunge in its stock market in recent months. Meanwhile, China's economy continues to contract and Beijing needs to respond, or else suffer the worst possible outcome: social insurrection as millions of angry, unemployed workers find themselves without a job for an extended period of time.

In response, earlier this month, the government and central bank introduced a raft of measures to stabilize sentiment, adding to steps to boost liquidity in the financial system, tax deductions for households and targeted measures aimed at helping exporters. Alas, those measures have yet to have much effect.


More at: https://www.zerohedge.com/news/2018-...ge-contraction

[Swordsmyth]

For Damian:

Baltic Dry Index

[EBounding]

Have we won this awesome trade war yet?

GM offers buyouts to salaried workers

[Swordsmyth]

Earlier this week, first China's official PMI and then the small-company focused Caixin PMI report confirmed that while China's economy was slowing, it had yet to contract, as the (famously goalseeked) indices printed just above the 50-level which separates expansion from contraction.

Not so according to a third, and more objective measurements of Chinese manufacturing. According to an index based on satellite imagery, China's manufacturing output contracted in October, refuting the official narrative of modest but persistent expansion.

The China Satellite Manufacturing Index compiled by the U.S.-based firm SpaceKnow, which uses satellite imagery to track activity levels across thousands of industrial sites, slipped below 50 in October for the first time since June 2017 according to Bloomberg. As with the official purchasing managers index, 50 is the dividing line between expansion and contraction.



More at: https://www.zerohedge.com/news/2018-...racted-october

[phill4paul]

Have we won this awesome trade war yet?

GM offers buyouts to salaried workers

Did you even read the article? They are implementing cost saving measure to provide for their more costlier decision to electrify their fleet.

As GM charges forward with its plan to largely electrify its global fleet and deploy autonomous vehicles in North America and China, the company says it needs to take "proactive" steps to prepare for the costliness of those ventures.

Same with Ford.

Ford CEO Jim Hackett plans to trim $25.5 billion in operating costs over the next few years, and at the same time spend $11 billion to restructure the global business. Like GM, Ford is pushing to get things in order — and cut excess — for an uncertain future expected to bring a slew of automated vehicles and electric powertrains into the marketplace.

The industry is changing and they are re-positioning. That is all.

[EBounding]

Did you even read the article? They are implementing cost saving measure to provide for their more costlier decision to electrify their fleet.



Same with Ford.



The industry is changing and they are re-positioning. That is all.

I did. I work at GM too. The tariffs are costing the auto industry billions. It's not the sole reason they're looking to cut heads to realign their structural costs with the business cycle, but it is a significant factor.

[homahr]

Have we won this awesome trade war yet?

GM offers buyouts to salaried workers

Winning trade war = making Chinese suffer

China's culture is based on suffering for their country so....

[phill4paul]

I did. I work at GM too. The tariffs are costing the auto industry billions. It's not the sole reason they're looking to cut heads to realign their structural costs with the business cycle, but it is a significant factor.

Well, I've recently had to make a life change and work at a company that manufactures drive lines for GM, Ford, Fiat Chrysler, BMW and Maserati. They just told us to square everything away and take time off now. Come spring we will be working 7 days straight for 2-3 months. So I'm thinking they are not hurting so bad as you have been led to believe.