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Might be worth keeping an eye on China economic data this weekend

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posted on Jun, 8 2012 @ 04:51 AM
China’s ‘good news’ rate cut spooks market - Commentary: Timing of long-awaited easing comes as surprise

For months now, the markets have eagerly awaited a major easing move from the People’s Bank of China. At even the slightest hint of a coming rate cut or even just another trimming of banks’ reserve ratios, stocks have rallied, believing that monetary-policy support would keep the world’s second-largest economy safe for a “hard landing.”

Then, at long last, Beijing delivered with a quarter-point decrease to the policy rates, while adding some interest-rate liberalization measures for an extra kick.

Over in the U.S., the move sent Wall Street higher in Thursday morning trade, with shares making gains that held until later in the session, when Fed chief Ben Bernanke failed to promise more U.S. easing for the near future.

But Chinese markets didn’t take the “good news” well — after a fleeting initial boost, Hong Kong’s Hang Seng Index and the Shanghai Composite headed south.

What gives?

The answer appears to lie, at least in part, with the timing of the decision.

The PBOC, unlike the central banks in most other major economies, doesn’t set dates for its policy announcements, preferring to act whenever they deem it prudent, rather than tying themselves to a policy-meeting calendar.

Nonetheless, many market players had expected any interest-rate action to wait until this weekend, when China’s statistics bureau is due to release its monthly flood of data, including key inflation, industrial output and retail-sales metrics.

Presumably, PBOC Gov. Zhou Xiaochuan and his colleagues have an idea of what sort of picture these numbers will paint.

Combine that with the PBOC’s recent custom of waiting until weekends or holidays to make their policy announcements, and Thursday’s rate cut becomes a “surprise” move that suggests some level of emergency.

It's no news now that China has surprised economists with their sudden 25 basis point drop of their interest rates yesterday. Surprising given as the article says, it's timing, but also the fact it is the first time the PBOC has adjusted rates downward since 2008.

China is set to unleash a boatload of economic data over the weekend and traders are concerned there's going to be some skeletons in the closet. The unusual timing is more than an anomaly and perhaps a strategy to allay fears in advance of the possible poor data to be released and be seen as economically proactive rather than reactive. Or perhaps, as the article suggests, an emergency response to economic deterioration much more severe than what is commonly understood or expected.

There's maybe the possibility that China realises they have to start encouraging growth and are starting to lower interest rates to this end. Had they lowered them too fast, markets and economists would of caught on to the trouble brewing, so they are just starting with a 25 basis point cut. Have a look at the following article from Business Insider as well.

CREDIT SUISSE: 'China Is In A Liquidity Trap'

China is in liquidity trap, just like everyone else in the world. That’s according to Dong Tao of Credit Suisse

China is regarded as one of the few bastions of strong economic growth remaining of which global economic growth is highly dependent on. Poor economic data coming out of China is going to have some major adverse impacts on the markets next week and on confidence levels abroad.

Could be an interesting weekend.
edit on 8-6-2012 by surrealist because: Added comments

posted on Jun, 8 2012 @ 05:22 AM
reply to post by surrealist

aha...pulling the strings so softly with not quite a grip
.....who really does control turmoil?

posted on Jun, 8 2012 @ 06:57 AM
I think its such a scam they are pulling, i look to the last video the most, good thread.

China's Ghost citys and malls

China's Empty Cities should be called Chinas Stimulus Package

House Prices Plunge in Chinese Ghost Town

Fake and Abandoned Disneyworld in China

posted on Jun, 8 2012 @ 08:07 PM
China slashes fuel prices to boost demand

China is cutting petrol and diesel prices by nearly 6pc as the world's second-biggest economy looks to stimulate consumer demand and combat the effects of the eurozone debt crisis.

The price reduction is the second cut this year and follows Thursday's surprise announcement that interest rates were being dropped by a quarter point as Beijing battles slowing growth.

The fuel cut is the largest since late 2008, and will see the government lower the ceiling on retail prices by 530 yuan (£54) a tonne and diesel by 510 yuan, an official from a state-owned oil company said.

China's oil demand dropped to a six-month low in April and posted its first yearly decline in at least three years.

According to China's fuel pricing rules, a change is considered if a weighted moving average price of three types of international crude oils rises or falls 4pc, and the interval between two price changes is at least 22 working days. Fuel price cuts follow that formula closely, but increases are often postponed or reduced in scale to ease inflation.

The move has raised fears that industrial production and inflation data due out over the weekend will be poor.

posted on Jun, 10 2012 @ 06:13 AM
Admittedly there weren't any disastrous figures that came out of China so far but there is definitely slowing economic activity and softening inflation and their global trade surplus widening to $18.7 billion. One report showed China's imports and exports actually picked up due to increased US demand, but there's concerns about growing inventories not being cleared.

China’s economy continues to cool off - Some analysts see cause for optimism amid otherwise bleak data

China Inflation Eases; Is Door Open for More Stimulus?

China economy weak in May, inflation at 2-yr low

China exports and imports rise 'no cause for joy'

Weak China data add to pressure for stimulus

I think the story is far from over. China and the PBOC wouldn't take evasive monetary policy action casually unless they were harboring some major concerns, as a couple of comments in the articles above also suggest.
edit on 10-6-2012 by surrealist because: Fixed link

posted on Jun, 10 2012 @ 06:47 AM

Goldman Sach’s Leading Indicators Signal Steep Market Crash Ahead

June 8th, 2012

(HigginsBlog) – Goldman Sachs reports their Global Economic indicators show the world has reentered a contraction and a steep stock market crash lies ahead.

Goldman Sachs Global Leading Indicator (GLI) show that the global economy has entered into a contraction phase “suggest this could be a much more severe downturn” than Wall Street is currently anticipating. ...


There's a global recession happening...China included...
the rate reduction & the fuel price reduction are the china policy makers trying to lessen the impact of the slowdown...just like the Fed Reserve tries to steer the US economy

i'm not invested in China at all...probably my mistake

posted on Jun, 10 2012 @ 09:02 AM
Corporations and the Bankers think they can control what level of technology gets into a country based upon their economy.

Try finding a laptop with a 17" screen for example in Brazil.

China will clear its inventory by running say laptops with 17" screens to Brazilians at prices we are trying to get for 15" screen laptops.

They've got the shipping industry, the manufacturing capability, and the inventory. China's going to do well as long as they have access to oil to keep the machine running.

Chinese citizens can't declare Bankruptcy. Therefor they'll never suffer the losses Western countries have suffered over the decades. They'll keep the same person living in a home and working to pay it off until they die...then the next sucker takes over.

The Bankers KNOW the Chinese economic model only has a few weaknesses. And it's why the Bankers are dumping Billions into the Philippines now to try and get them to start a war with China. Plus all the actions to try and cut China's access to crude oil/natural gas.


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