Trading Now

Trading Now

Tuesday, August 11, 2009

The CHINA Report

* I have posted that China is not going to be the White Knight for the world economy. This is further proof. The BDI Index is falling off the cliff for 2 straight weeks now. This means that the supply of ships exceeds demand which means that China is not buying up world iron ore, oil or agriculture. And the Chinese banks are lending out money just like we did to speculative investors which is creating an enormous rally in Asian stock markets. Mr. Market takes awhile to catch up but when he does, LOOK OUT. -Tradebum

via BetweentheHedges
- China’s exports and new loans tumbled in July and industrial output rose less than estimates, underscoring government concern that the world’s third-biggest economy is yet to establish a solid recovery. Exports fell 23 percent from a year earlier, the customs bureau said. “The fixed-asset investment number is worrying because government-sponsored investment is a pillar of the recovery,” said Tao Dong, chief Asia-Pacific economist at Credit Suisse AG in Hong Kong. “This set of data should postpone any thought of more aggressive tightening; the economy is slowing down a little bit.” The export decline matched economists’ estimates and was the third biggest since China’s shipments began to shrink in November last year. Imports fell 14.9 percent, leaving a trade surplus of $10.63 billion. The industrial production figure suggested the economy “started the third quarter on a slightly softer tone,” Ben Simpfendorfer, a Hong Kong-based economist for Royal Bank of Scotland Plc, said in a Bloomberg Television interview. “It’s a modest disappointment.” July’s new loans were the least since the government dropped quotas limiting lending in November last year and pressed banks to support a 4 trillion yuan stimulus package. None of 11 economists surveyed forecast such a low number. China Construction Bank Corp., the nation’s second-largest bank, will cut new lending by about 70 percent in the second half to avert a surge in bad debt, President Zhang Jianguo said last week. “We noticed that some loans didn’t go into the real economy,” Zhang, 54, said in an Aug. 6 interview at the bank’s headquarters in Beijing. “I feel that some industries are expanding too rapidly. For example, housing prices are rising too fast, and housing sales are growing too fast.” UBS AG said in a July 31 note that the scale of China’s new lending in the first half was “neither sustainable nor necessary.” Consumer prices fell 1.8 percent last month from a year earlier, the biggest decline since 1999, the statistics bureau said today. They were unchanged from the previous month. Producer prices dropped a record 8.2 percent.

- China’s imports of copper and the metal’s products in July dropped for the first time in six months, declining from a record, after stockpiles increased in the world’s largest consumer. Imports slumped to 406,612 metric tons in July, the Beijing-based customs office said today. That’s 15 percent down from a record 477,217 tons in June, according to data on the Bloomberg. The country may have stockpiled as much as 400,000 tons of copper in the first half because of sizeable imports and a seasonal slowdown in demand, Macquarie Group Ltd. said July 6. Reported inventory by the Shanghai Futures Exchange has jumped fourfold this year to 63,434 tons from the end of 2008. Caijing magazine reported in June that China has bought 235,000 tons of copper for strategic reserves this year, citing Yu Dongming, a Chinese government official. The country has also bought aluminum, zinc and some rare metals for reserves. China may not continue purchases of industrial metals for strategic reserves after prices rebounded, the magazine cited Yu as saying.

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