Vimal Gor on China in 2018

Advertisement

From the always excellent Vimal Gor today:

Another fake break?

This month President Trump faced increasing political problems, President Temer was swept up in another Brazilian corruption saga, North Korea lobbed more missiles in their relentless ‘testing’, and China’s credit ratings were downgraded by Moody’s. After a solid start to the month, markets started to suffer a crisis of confidence, wondering if this was finally the big break out of the range. But if you followed the old adage “sell in May and go away”, you would have had to rush back half way through the month to reboard the FOMO Express. Following a brief dip in equity markets and a short and sharp spike in volatility, the S&P 500 continued its march towards all-time highs, and the VIX fell back into ‘whatever’ territory. The bears felt cheated, the buy-the-dippers felt like geniuses, and the unloved middle are left to wonder why, in a world of so many uncertainties, of lofty asset valuations, and of central banks determined (for one reason or another) to “taper” and “normalise”, is there so much complacency in the market? We had a decent month on the funds with all flagship funds outperforming their respective benchmarks. In last month’s Newsletter I went very deep into the intricacies of Chinese financial plumbing and we got feedback that I lost a few people on the journey, so this month I wanted to step back and take a big picture view. In this note I aim to pull together our current thoughts on China and, given the growth inflection point looks to be clearly behind us, investigate what they mean for the rest of the world’s economies and markets.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
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.