Uh-oh!
It's Monday and there are no major M&A deals and no QE announcements to goose the markets. China is still going like gangbusters as lots of bad economic data of there is getting traders expecting more stimulus announcements by the PBOC, so 100% is no longer a reason to pause after 6 months of gains, is it?
We picked up 40 of the FXI May $48 puts on Thursday and those should be down around 0.70 this morning. So far, so wrong on our entry though as FXI is up 5% since we went short just 2 sessions ago. At this rate, Chineese markets will be double again by the end of the month – no wonder traders are rushing to get in desptie the World Bank downgrading their growth projections this morning. After all, who needs economic growth when you have market growth, right?
China's March Exports were down 15% y/y but don't worry, Imports were down 12.7% to match, so even must be a good thing and that explains the rally.
Imports have now been in freefall for 5 consecutive months and that's a drag on the whole Asian economy and Exports were sucking too except for the Feb shipment of IPhones and IWatches to the US that bumped the numbers 50% from last year but back to our usual crap numbers already in March.
Isn't this the kind of data that makes you want to pay an average of 100% more for the companies that are participating in this economy? If you are a Chinese trader, the answer is – OF COURSE! Things are slowing down so fast in China that Feb Power Consumption was off 6.3% from last year, due exclusively to a 2.5% drop in consumption by Primary Industries, who are the primary users of power in China (remember when we used to manufacture stuff?).
BNPs Chief Economist, Richard Iley calls China a "self feeding frenzy of speculation" that is using margin debt to finance "speculative gains built on unsustainable increases in leverage." There's no hidden meaning here, folks – the man is telling you to GET THE F OUT of the Chinese market!…
