A new broom sweeps clean. Or at least that’s the hope in the markets. Bloomberg showed recently how the 14% slide in the equity market since Barack Obama’s election mirrors the 12% slide after Franklin Roosevelt’s election in Nov 1932 until his inauguration (albeit a bit later in March 1933). Subsequently the Dow rallied some 75% - link .
I laughed out loud when the highly manipulated Chinese GDP data was released, showing Q4 growth at a 6.8% yoy rate after 9.0% in Q3 and a peak of 12.6% in 2007. That this outturn was bang in line with the median estimate of economists surveyed by Bloomberg makes it all the more unbelievable in my mind. All other economic data worldwide have been surprising massively on the downside and China should be no exception. A few hours earlier, for example, South Korea reported Q4 GDP had declined a hefty 5.6% QoQ, massively worse than a Reuter’s consensus which looked for a contraction of 2.7%! I naively thought that this QoQ decline was already annualized, but it was not. On a US style of reporting, the South Korean economy contracted at a 20% annualised rate in Q4. Asia is in depression. Whatever the heavily manipulated Chinese GDP is telling us, that economy must now be contracting. The Yuan needs to be devalued.
We already commented on China today and Asia yesterday ... Geithner actually surprised me today, see here!
"But just think about the consequences" wrote Edward Hugh ...
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