Chinese macro data for July looks on the soft side. While infrastructure capex is strong, real estate capex looks to have past the peak already and manufacturing capex is flat for the first time (figure 6). Figure 7 shows a pickup in electricity production growth, but continued softness in materials production. Figure 8 shows our composite macro indicator, which averages 28 Chinese data series. It has been well correlated with resources share prices historically, but resources have run well ahead of late. The rally looks at risk
I put it to you that early 2014 is the right analogue on that chart.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
