The stories coming from the media now about the China slowdown is just another case of the media reporting the scene of the crime, way after it has happened. This slowdown has been going on for a year now, and yes, it has gained momentum, but the signs were all there. It takes no genius to look at the symptoms. Vast underperformance of the Shanghai Composite relative to other worldwide equity indices since 2010. Weakness in commodity exporting country equities such as Brazil and Australia. Real estate bubble popping last year, with dumb money rioting in front of real estate brokerages about buying at the top. The funny thing is that Chinese weakness has the least effect on the U.S., the strongest equity market in the world.
This is one of the times where you shouldn't fade the news. I think China is screwed and the only rallies you will see will be induced by lowering of rates and those will be temporary. Eventually, even China will have to do QE. It is a QE world, and China will not be immune from it.
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2 comments:
There a quite a few sour grapes out there.
Cheerleaders refusing to get into this market until there is a 3-5% pullback.
They list reason after reason why the market SHOULD be going lower.
Sour grapes.
China tried to slow down economy and succeeded. This is altogether different than bubbles blowing up and financial meltdowns caused by cronie capitalists here in the US
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