Having glimpsed the ugly reality of the under-belly of the Chinese economy last week, and the divergence between that and the government’s PMI survey fallacy, it is no surprise that by the magic of excel, GDP and Industrial Production modestly beat expectations (+7.5% YoY vs 7.4% exp and +9.2% YoY vs +9.0% exp respectively). However, despite epic credit injections, home prices tumbled 9.2% YoY and Retail Sales missed expectations rising only 12.4% YoY. Even as it is self-evident that re-flating the next chosen bubble, or attempting to socialize losses, is not sustainable in the long-run, it is clear (given the surge in deposit creation in recent months) that China has chosen the path of short-term easy-street as opposed to the reform-based hard-street they had promised.
GDP jumps for the first time in a year as coal demand collapses…
and Industrial Production surged… Its biggest jump in 13 months and first beat in 7 months
and then there’s real estate…
- *CHINA JAN.-JUNE HOME SALES VALUE FALLS 9.2% Y/Y
- *CHINA JAN.-JUNE HOME SALES AREA FALLS 7.8% Y/Y
- *CHINA JAN.-JUNE NEW PROPERTY CONSTRUCTION FALLS 16.4% Y/Y
and retail sales missed…
Smells like a massive inventory build to us…
- *CHINA UNLIKELY TO CUT INTEREST RATES THIS YEAR: SEC. JOURNAL
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The question is – where will the hot money inflation-prone printing of the PBOC flood now that CCTV has exposed the US-real-estate channel?
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The market’s reaction to all this ‘great’ news… +4 pips in USDJPY! lol
via Zero Hedge http://ift.tt/1nGkCKv Tyler Durden