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trader mark - Financial Professional

Mark is a self taught private investor who operates the website Fund My Mutual Fund; a daily mix of market, economic, and stock specific commentary. Fascinated by the market since an early age, he discovered mutual funds as a teenager in the 80s and moved to equities by the mid 90s. The origin of the website is to leverage the power of the internet in developing a transparent track record to attract investors for his potential "long/short" mutual fund. His equity focus is identifying secular growth trends and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points.

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Chinese Numbers Are Starting to Look as Skewed as Ours

CommentsCommentsPosted: Thursday 17/09/2009 08:28

It is hard to take the Chinese data at face value, much like in the U.S., (any country that can have nearly double digit revenue growth while their electricity usage falls has a magic trick I'd like to see), but the most important data point in my eyes at this point is loan growth.

If the Chinese push through "relatively more" loan growth - everything seems to surge; if not, things seem to falter. We saw that last month when loan growth fell off a cliff and commodities and the Chinese stock market took a break. Now it seems they decided enough was enough, and we've seen rebounds in both.

It really is as simple as that, and the United States (the world leader in these policies since the late 80s) is doing the exact same thing, although from a far weaker position, since its consumers are cramped with heavy personal debts. But that won't stop our fearless leaders from pushing money onto the craps tables at a relentless pace. Paper printing prosperity will be ours no matter what. [May 19, 2009: Paper Printing Prosperity Defined]

Both are pushing through their "central command" inflationary policies that will drive up asset values - and both are succeeding. Only one country is admitting the issues this is causing, and it sure isn't us.

Via Bloomberg:

(1) Factory output

  • China's factory output climbed 12.3 percent last month from a year earlier, the most since August 2008, the statistics bureau said yesterday.

(2) Retail sales

(keep in mind there is a lot of double counting in this number the way the Chinese do it, it is not just the "end sale" that is counted)

  • Retail sales, rose 15.4 percent, the biggest gain this year after accounting for seasonal distortions.

(3) M2

(this is a measure of money supply and much like in the U.S. it is exploding higher)

  • M2, the broadest measure of money supply, expanded by a record 28.53 percent.

(4) So with all this building and selling of stuff you'd think exports were exploding higher too. Not so much...

  • China's exports fell more than economists estimated in August, weighing on government efforts to spur growth in the world’s third-largest economy.
  • Exports slid 23.4 percent from a year earlier, the customs bureau said on its Web site today. That was the biggest drop in three months and compared with the median estimate in a Bloomberg News survey for a 19 percent decline.
  • Exports to the U.S. fell 21.8 percent in August from a year earlier, the biggest slide since China’s shipments began to contract in November, according to Bloomberg News calculations. ("strange" considering the green shoots exploding in the States)
  • Exports to the European Union fell 26.6 percent. (similarly "strange")

(5) Imports

were not great but better than exports - effectively the exact opposite situation as in America; it's like old times are here again.

  • Imports fell 17 percent leaving a trade surplus of $15.7 billion.

So as we look back we see a contracting world trade situation being supported by central bank / stimulus measures where governments are the end all and be all.

  • “Exports won’t truly recover unless China’s main trading partners such as the U.S. and Europe regain growth next year,” said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. Trade “will continue to be a drag on the recovery,” he said.
  • Exports fell for a 10th straight month. The decline in imports was the biggest in three months and more than economists estimated.

(6) To that point - bank loans rebounded in August versus July, and really as speculators of markets this is all that matters. X amount of ABC commodities, or XYZ stock certificates cross referenced with exponential growth in fiat money the world over = higher prices. In other words - we can't lose

  • Local-currency new loans were 410.4 billion yuan ($60 billion) in August, up from 355.9 billion yuan in July, the central bank reported.
  • The reacceleration in credit growth may deepen concern among some observers at the danger of asset-price inflation.
  • Bank of China Ltd. Vice President Zhu Min warned on Sept. 10: “The potential risk is that a lot of liquidity goes to the asset market,” Zhu said. “So you see asset bubbles in commodities, stocks and real estate, not only in China, but everywhere.”

Don't worry Mr Min. As long as assets / markets go up, it means everything is right in the world. Greenspan taught us this. These things always end well.

It will not be too bad this year. Both China and America are addressing bubbles by creating more bubbles and we're just taking advantage of that. So we can't lose.

  • Premier Wen said yesterday China “cannot and will not change the direction” of the government’s policies. His remarks reflect a commitment last week from the world’s biggest nations to maintain unprecedented fiscal and monetary measures to secure a recovery from the deepest recession since World War II.

And away we go... could be the best time for speculators in our lifetime.

[Aug 5, 2009: China's Provincial Growth Figures Far Overstated versus National Figures]

Article Source: http://www.fundmymutualfund.com/

 
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