Given the clear flow of worrying China material, it’s time for a pep up and the counter-contrarian signal generator, The Pacometer, arrives right on time with a point-by-point attack on the Chinese uber-bear straw man:
- As the headlines shout, the latest HSBC flash PMI reading of 48.3 is the lowest in seven months. Seven months! Anyone remember the Chinese economy imploding and taking Australia with it when the PMI was lower seven months ago? Exactly…
- It’s February…all figures coming out of China this month should be a little softer and a bit less reliable than usual as the lunar new year celebrations…
- Just like Australia, China is growing its services sector as a priority. It’s increasingly outsourcing manufacturing to cheaper countries and automating much of what remains…
- While this PMI is a little lower than expected, it should also be seen in the context of the latest favourable trade figures…
- Also as previously explained, a PMI below 50 doesn’t necessarily mean absolute contraction in China’s case, due to the high starting base…
- The momentum for growth could be weakening. If it is, the cadres will throw a little stimulus…
- Beware the ever-present China bears crawling out of their caves, from permabears like Harry Dent…
I could debunk it all but I’d rather just listen to the wail of the siren: weeooo, weeooo, weeooo!
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