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“wire rods for use in the construction industry were piled up everywhere: inside a full warehouse at the riverbank, out in the open near wharfs and any empty space next to the factory floor. Even industry data is picking up a major swoon in output, that is also probably understated.”
The data just turned from bad to worse,” writes SocGen’s Wei Yao of today’s December home price report from China. She says real estate’s woes have yet to spread to the general economy, but that is about to change. “Contraction in sales and sharp deceleration in investments will send shockwaves along the industry chain.”
My actionable is a 1.5% position in SMN, the double negative inverse of the basic materials index. My entry averages 15.73.
New high yield on 5 year Portugal:
http://www.bloomberg...R%3AIND&img=png
Edward Chancellor of GMO gives us 10 ways to know if you’re in a bubble. He says China just so happens to fit the mold:
1. A growth story that is uncritically accepted.
2. Overconfidence in authorities.
3. Easy money and credit expansion are precursors to a financial crisis, according to Chancellor, who cited data similar to that published by Reinhart and Rogoff showing that debt-to-GDP invariably rises rapidly before a crisis.
4. An investment boom and a misallocation of capital.
5. Troubling “agency” issues. At the peak of the dot-com era, Chancellor said it was common for investment banks to hire brokers and analysts not based on their ability to understand businesses or their competitive strategies, but based on how well they understood the “game” of underwriting and how fees were allocated among, for example, trading, new issues and corporate finance.
6. Collective irrationality and herd behavior.
7. & 8. Fraud and Ponzi financing.
9. Conspicuous consumption, which in China has been most obvious in excess investment.
10. Valuations.
Read more: http://www.businessi...1#ixzz1jpI6Z96e2. Overconfidence in authorities.
3. Easy money and credit expansion are precursors to a financial crisis, according to Chancellor, who cited data similar to that published by Reinhart and Rogoff showing that debt-to-GDP invariably rises rapidly before a crisis.
4. An investment boom and a misallocation of capital.
5. Troubling “agency” issues. At the peak of the dot-com era, Chancellor said it was common for investment banks to hire brokers and analysts not based on their ability to understand businesses or their competitive strategies, but based on how well they understood the “game” of underwriting and how fees were allocated among, for example, trading, new issues and corporate finance.
6. Collective irrationality and herd behavior.
7. & 8. Fraud and Ponzi financing.
9. Conspicuous consumption, which in China has been most obvious in excess investment.
10. Valuations.
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