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Markets eventually need to deal with the China reality

  
  Analysis
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The situation in Saudi Arabia and focus on the Fed has took the spotlight away from China’s economic worries to start the week

China
  • China’s Premier Li says maintaining economic growth of 6% or more is very difficult
  • China Industrial Production in August 4.4% y/y (expected +5.2%)
  • China Retail sales for August: 7.5% y/y (expected +7.9%)
I still don’t think markets are paying much attention to the message emanating from China to start the new week, and that may be a sign of complacency.
Industrial production slowed to its weakest in 17 ½ years while retail sales slumped more than expected and the PBOC is still showing no signs of easing its lending rates just yet – as evident by today’s MLF operations.
Prospects of a trade deal may sound attractive for risk sentiment but it isn’t going to be a massive game changer to the slowing Chinese economy in my view. Domestic demand is weakening and that will continue to eat away at global economic growth.
Markets may be a bit distracted for the time being amid oil news, central bank focus, and hopeful optimism surrounding trade talks. But don’t expect that to stay the course for too long. The longer the ramifications of the above go unnoticed, the greater the hit it will have on markets when reality snaps back in.

Update on the Saudi attacks whodunnit – more from 3 unnamed sources

  
  Analysis
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An update on speculation of who it was responsible for the attacks on the Saudi oil facility

This via NBC, citing “three people familiar with the intelligence told NBC News“:
  • American intelligence shows that the attack on a major Saudi oil facility was launched from Iran
  • A congressional source says Democrats familiar with the details do not dispute that the attack was carried out by Iran
  • “This attack had a level of sophistication we have not seen before,” the congressional source said. “You will not see Democrats pushing back on the idea that Iran was behind it.”
What will be Trump’s response? And, does anyone doubt its coming?
Comments welcome.
An update on speculation of who it was responsible for the attacks on the Saudi oil facility
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