China September activity data: Industrial Production 5.8% y/y (expected 4.9%)

IP, retail sales and investment data

Industrial Production 5.8% y/y  big beat
  • expected 4.9%, prior was 4.4%
industrial production YTD 5.6% y/y
  • expected 5.5%, prior was 5.6%
Fixed Assets (excluding rural) YTD 5.4% y/y small miss
  • expected 5.5%, prior was 5.5%
Retail Sales 7.8% y/y inline
  • expected 7.8%, prior was 7.5%
Retail Sales YTD 8.2% y/y
  • expected 8.1%, prior was 8.2%

China Q3 GDP 6.0% y/y (expected 6.1%)

Economic growth data from China for July – September 2019

For the q/q 1.5%

  • expected +1.5%
  • prior was +1.6%

For the y/y 6.0% –  a small miss.

  • expected +6.1%
  • prior was +6.2%
The small disappointment on the GDP number will be tempered somewhat by the big beat for September industrial production, on a separate post:
  • China September activity data: Industrial Production 5.8% y/y (expected 4.9%)
Yet again China GDP comes in not more than 0.1% away from the Bloomberg survey central estimate. The government target is 6 to 6.5% and woe betide the statistician who brings in a result under…
6.0% is the slowest in 27 and a 1/2 years (wait … FT says 30 years). Thing is, as the economy grow in size … and its huge, expecting super-duper % growth rates is unreasonable.

Labour’s Corbyn: Johnson’s deal is worse than May’s

Comments by Labour leader, Jeremy Corbyn

  • Best way to sort Brexit is to have a second referendum
  • Johnson’s “sell out” deal should be rejected
Earlier in the day, it is said that Labour lawmakers have been whipped to vote for a second referendum on Saturday. If that is the case, it means that Johnson will find any further support for his deal to be lacking.

China commerce ministry: The goal is to stop the trade war, remove all tariffs

Is that a hint on the stance that they are about to take moving forward?

  • Hopes that China can make progress with the US in removing tariffs
  • Currently working on text with the US
  • Wishes both sides can reach an agreement as early as possible and make progress on cancelling tariffs
Just in case you forgot about this “little” report here from earlier in the week.
It could be a subtle hint about what will be discussed in the next round of talks but I may be reading too much between the lines here.
I mean that’s quite a bit of mention about removing/cancelling tariffs, no? ¯\_(ツ)_/¯

China says will remove business restrictions for foreign financial institutions

Comments via Chinese state media

  • Will remove business restrictions for foreign banks, securities companies and fund management firms
Adds that they will not allow forced technology transfers by foreign firms as well. The state media also notes that the above move is to offer a more attractive environment for foreign firms to invest into China.
The timing of the message here is no doubt a little “convenient” as they want to make sure that the US is aware that they are making efforts to keep up their end of the bargain in the trade truce. Or at least to give out the perception that they are.

IMF lowers global growth forecast to 3.0% from 3.2% in July

The latest growth estimates

The latest growth estimates
The prior estimates were in July and at that time they were downgraded from April.
  • Prior was 3.2%
  • 2020 growth to 3.4% from 3.5%
  • US growth to 2.4% from 2.6%
  • US 2020 to 2.1% from 1.9%
  • Cuts 2019 China forecast to 6.1% from 6.2%
  • Cuts 2020 China to 5.8% from 6.0%
  • US-China trade tensions will cumulatively reduce global growth by 0.8% by 2020
  • Risks skewed to the downside due to uncertainty over trade tensions, Brexit, declines in risk appetite and manufacturing weakness
  • Eurozone 2019 1.2% vs 1.3%
  • Eurozone 2020 1.4% vs 1.6%
  • Germany 2019 1.2% vs 1.7%
  • India 2019 6.1% vs 7.0%
  • LatAm 2019 0.2% vs 0.6%
  • LatAm 2020 1.8% vs 2.3%
  • World trade volume 1.1% vs 2.5%
The IMF warned last week that it was going to cut global growth so this isn’t a surprise but we might have expected to see 3.1%.
They estimate that the trade war could cause China’s GDP to fall by 2.0% in the short term and cut 0.6% from US GDP.
If anything, the 2020 numbers look optimistic.

China Sept. CPI: 3.0% y/y (expected 2.9%) & PPI -1.2% y/y (expected -1.2%)

Inflation data out of China, pork prices a big factor in the CPI

CPI expected 2.9% y/y, prior 2.8%

  • fastest rise since October of 2013

PPI expected -1.2% y/y, prior -0.8%

  • fastest rate of decline since July 2016
more to come
Background to the rising price of pork ( swine flu outbreak ):
  • supply issues worsened over the summer
  • pig inventories fell at a sharp rate
  • live pig prices hit a record high last month
  • the Chinese government to announced price caps, quotas, subsidies to pig farmers

Singapore loosens monetary policy for first time in 3.5 years

Singapore has moved to loosen its monetary policy for the first time in three-and-a-half years to help offset slowing economic momentum due to prolonged U.S.-China trade tensions.

As a small, heavily trade-dependent economy, the country has been heavily exposed to the tariff battle between two of its largest trading partners. Exports have been falling at a double-digit pace from last year’s levels.

The Monetary Authority of Singapore, the central bank, said in its semiannual policy statement Monday that it would slightly decrease the slope of the Singapore dollar’s exchange policy band, a move to guide a weaker appreciation of the local currency.

The nation’s monetary policy is based on its exchange rate whereby the Singapore dollar is managed against a basket of currencies representing the country’s major trading partners.

With this move, Singapore follows regional peers such as Indonesia, the Philippines and India, all of which have eased monetary policy by cutting interest rates in recent months.

Singapore’s adjustment comes as trade-related industries stagnate under pressure from the U.S.-China standoff, though economists say domestically focused sectors have held up better. Continue reading »