Are you seeing things start to deteriorate in China?
Discussion
There is definitely weakness which seems to be coming from two drivers. Not, however, that conditions are anywhere near as dire as the headlines now claim.
First, consumers aren’t willing to spend. There’s some PTSD after the harshness of last years Covid Zero. That is now combined with the more recent softness on the real estate market.
Second, and for me more critical, is exports and this is more of a story about global economic conditions. China is the Canary in the Global Economic Coal mine.
See how it all plays out in the next couple of months. Appreciate your asking. Thx.
What’s going on with exports?
Exports out of China are a reflection of global demand and its rather evident that global demand is down across the board.
Exports look good?
Yes, it could be the case that #china has seasonally bottomed. Another reason for why policy isn’t overly concerned in the here and now to deploy stimulus.
That said, conditions remain extremely uncertain. Who know what sort of global mayhem could be unleashed come September.
What happens in Sept?
A risk of a global liquidity crunch which could be severe enough for the treasury market to seize up. Cracks showing up already. Chinese currency. Japanese short term rates.
If we get through all of September I’ll breath a sigh of relief.