End of the China bull?

[notting]

And....

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government ”” all part of an effort to prop up confidence in the economy among business managers and investors.

from
China Confronts Mounting Piles of Unsold Goodscorn:

http://www.cnbc.com/id/48773431

 

[Joules MM1]

BBG: China MNI August Flash Business Sentiment Indicator
By Ed Thomas || August 24, 2012 at 01:54 GMT

Current Condition

Overall Business Conditions 46.76 (prior 49.73)
New Orders 46.57 (prior 52.32)
Production 43.33 (prior 49.03)

MoM Level Change

Overall Business Conditions-2.97 (prior -3.48)
New Orders -5.75 (prior -2.12)
Production -5.70 (prior -0.97)

With all the figures below 50 showing that the Chinese economy is shrinking further than last month . The official survey of China business sentiment will be release in one week .

 

[Joules MM1]

Insight: China's steel traders expose banks' bad debts



By Ruby Lian and Kelvin Soh

SHANGHAI/HONG KONG | Sun Sep 2, 2012 6:00pm EDT
excerpts

The battle between the banks and steel traders also exposes flaws in the 4 trillion ($629 billion) stimulus round in 2008, and offers a warning to those calling for pumping more money into the system. At that time, Chinese banks threw money at the steel trade - a crucial cog in supplying the country's massive construction and infrastructure growth.

In one Shanghai courtroom, steel trading firm boss Li tries to fend off a fed-up lender. China Minsheng Bank, the country's eighth-biggest lender, is trying to recover 3 million yuan ($472,100) of loans it made to the trading firm.

When the bank recalled the loan in June, Li tried to sell two Shanghai apartments she had used as collateral. In a flat property market, she came up empty-handed.

Her plea for more time to repay is one of more than 20 court cases Chinese banks have taken against steel traders. The targets tend to be mainly smaller trading firms with fewer than 50 employees, as the larger state-backed steel firms have more cash reserves.

These traders are mainly based in and around Shanghai, a tight-knit community drawn from Zhouning in the southern province of Fujian. At its peak in 2009, some 12,000 steel trading companies were scattered across the city, accounting for close to 3 percent of Shanghai's GDP, according to the local business chamber.

By some estimates, the number of steel traders has fallen by half, as steel prices crumpled in the third quarter of 2011.

"The court cases you see are usually when things get desperate," said a loans official at a Shanghai branch of Bank of Communications, who asked not to be named because of the sensitivity of the subject. "We've had people go missing. Some have fled overseas, while others just take on a new identity and move somewhere else."

The owner of one of China's biggest steel trading firms, Yizhou Group, skipped the country with his wife and children after piling up about 1 billion yuan ($157 million) in loans to banks including Bank of Communications, the official said.

Calls to Yizhou were not answered.

In the Shanghai courtroom, lawyers for Minsheng Bank told Li after the hearing that banks were desperate to recall loans as they had heard of some borrowers going missing with tens of millions of yuan still owed.

"One trader fled to Australia after borrowing 23 million yuan, while others used their property as collateral to several banks at the same time " Li said, recounting what she'd heard from a lawyer. "So banks are very cautious and taking immediate action against borrowers if they don't repay."

http://www.reuters.com/article/2012/09/02/us-china-banks-steel-idUSBRE8810AM20120902

 

[Uncle Festivus]

More stimulis would be like pushing on a piece of spaghetti?

Hard landing.......for us too......as the 2 speed economy becomes one, again?

Commodity prices yoy

 

[Trembling Hand]

More stimulis would be like pushing on a piece of spaghetti?

Hard landing.......for us too......as the 2 speed economy becomes one, again?

Commodity prices yoy

View attachment 48819

Thats a stinker of a data release.

Out of all the string pushers I reckon china will push the first and most.

 

[Joules MM1]

More stimulis would be like pushing on a piece of spaghetti?

Hard landing.......for us too......as the 2 speed economy becomes one, again?

Commodity prices yoy

View attachment 48819

.....so the period where prices were (considerably) lower than now, how do we put that into perspective.....was the commodity set-up worse then? (and look at where equities are now).....is this a cup half full view?

does the game have to be viewed in a cliff face, as in, all things go to zero with no expansion?

speaking of zero......

tw@terring:

Sean Brodrick ‏@SeanBrodrick

You ever get the feeling that @zerohedge will only be satisfied when the Earth splits apart in a fiery doom?

like that segway ?

 

[skc]

speaking of zero......

tw@terring:



like that segway ?

The earth splitting up is not enough - gold also needs to be accepted by aliens at $9000/oz (assuming we have to abandon earth in a spaceship, and those aliens will not accept our fiat currency as payment for living on their planet).

 

[baby_swallow]

Here's a 3-yr comparison chart of the Baltic Dry Index (BDI), Shanghai and the Aust Mining (XMM)
Notice how deadly accurate the BDI as a long term leading indicator.
And here's the kick - while the BDI had dropped 75% in 8 months from May 2010 to Jan 2011, Shanghai see-sawed but the Aust resources continued to rally up to the peak in April 2011.
I reckon the Big Boyz (int'l hedge funds) made squillions shorting RIO and BHP.

 

[Joules MM1]

Here's a 3-yr comparison chart of the Baltic Dry Index (BDI), Shanghai and the Aust Mining (XMM)
Notice how deadly accurate the BDI as a long term leading indicator.
And here's the kick - while the BDI had dropped 75% in 8 months from May 2010 to Jan 2011, Shanghai see-sawed but the Aust resources continued to rally up to the peak in April 2011.
I reckon the Big Boyz (int'l hedge funds) made squillions shorting RIO and BHP.

big lag time in cause and effect of the bdi v the other instruments esp if you add in the iron ore chart.......probably big lag on speculation, the higher the food chain of speculation the wider the lag

those charts look like buy opportunities.....

 

[Trembling Hand]

I reckon the Big Boyz (int'l hedge funds) made squillions shorting RIO and BHP.

Except they haven't cuz the short positions on them have been tiny all year.

 

[Steve C]

Except they haven't cuz the short positions on them have been tiny all year.

Trembling Hand - Sorry if this is a really stupid question, but how can you tell the above?

 

[Trembling Hand]

Trembling Hand - Sorry if this is a really stupid question, but how can you tell the above?

http://asic.gov.au/asic/asic.nsf/byheadline/Short+position+reports+table?openDocument

 

[Steve C]

http://asic.gov.au/asic/asic.nsf/byheadline/Short+position+reports+table?openDocument

Thanks! You really do learn something new everyday on here.

 

[notting]

Interesting fundamental ground action -
Home Depot Inc (HD, Fortune 500) said it will close all seven of its big box stores and cut 850 jobs in China, another sign that companies are feeling the effects of a slowing Chinese economy.

We need to see signs of a pickup in Europ whch is what is dragging China most at present IMO.

 

[Joules MM1]

http://www.ritholtz.com/blog/2012/10/weaker-chinese-pmi-data/
excerpt

Chinese manufacturing PMI declined to 47.9 in September, from 47.6 in August and the 11th consecutive monthly decline, according to HSBC/Markit. Export orders declined at the fastest rate in 42 months, whilst purchasing activity fell for the 5th consecutive month. Input and output prices continued to decline and businesses shed labour for the 7th consecutive month.

 

[Uncle Festivus]

China = trend = overproduce = glut = hard landing

Yet another glut......

Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008.

http://www.nytimes.com/2012/10/05/business/global/glut-of-solar-panels-is-a-new-test-for-china.html?_r=3&emc=eta1

What happens when QE meets zero demand?

GUANGZHOU, China ”” After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government ”” all part of an effort to prop up confidence in the economy among business managers and investors.

General rule these days - double the bad news, halve the good news?

 

[Joules MM1]

World Bank cuts East Asia GDP outlook, flags China risks

excerpt

China's economy will likely expand by 7.7 percent this year, down from a May estimate of 8.2 percent, while the growth forecast for 2013 was cut to 8.1 percent from an earlier 8.6 percent.

As for the region as a whole, the World Bank now expects developing East Asia to grow by 7.2 percent this year and 7.6 percent in 2013, down from earlier estimates of 7.6 percent and 8.0 percent, respectively.

http://www.reuters.com/article/2012...ource=dlvr.it&utm_medium=twitter&dlvrit=56943

(ed, the unmeasured and shock value of the title of many (purported news) articles never quite seem to match the actuality of the figures)

 

[aliceconer]

The representative of the International Monetary Fund (IMF) in Hong Kong recently said that China's economy has no risk of hard landing. He believes that when the economic downturn, the People's Bank could cut interest rates again, and the central needs not to launch massive economic stimulus measures.

 

[Uncle Festivus]

The representative of the International Monetary Fund (IMF) in Hong Kong recently said that China's economy has no risk of hard landing. He believes that when the economic downturn, the People's Bank could cut interest rates again, and the central needs not to launch massive economic stimulus measures.

Phew - now I can sleep at night

If only it were that simple.......

 

[grace]

This is worth a listen - to the whole lot if you can spare the time. Das starts after the introductions.

http://www.youtube.com/watch?v=ZP8AjMAdql4

Satyajit Das - The end of ponzi prosperity

Low or no growth for a long time and stagnation are his predictions. There is also a prediction of 25% chance of total collapse or 75% stagnation.

"turning Japanese" - the lost decades is a theme.

Quite a bit about China in this presentation by Das. I posted this in another thread too. Apologies to those who have seen it there.