China’s Vice President Seeks to Reassure Investors Over Economic Slowdown

I think the explanation is largely elsewhere.

The reason it can’t do both: its faltering currency.

Further falls in crude oil prices were the catalyst for the widespread sell-off as investors from NY to London dumped stocks. This could hurt India’s $13 billion exports to China, essentially comprising commodities such as cotton, copper, oil, organic chemicals and ores, besides prolonging the crisis in bigger commodity exporting countries.

That said, US stocks aren’t immune from the impact of China and the pain in the energy sector from cheap oil and gas.

All these indicators seem to trigger more stock market speculation, and in the worst case, a financial meltdown. The oil price crash from over $100 per barrel just 18 months ago has been disastrous for Russian Federation. Emerging market companies, banks and governments have responded by taking out dollar-denominated loans. Patience is certainly not one of Wall Street’s virtues and the lack of broad, immediately higher consumer spending has the Street anxious. Let’s not forget Iran’s production coming to market soon as well. Falling oil prices suggests a slowing global economy. Many banks and financial institutions are speculating on commodities. The result is a dysfunctional market. In the 1990s, a former Brazilian central bank governor reminded global bankers and fund managers that if they shorted the Brazilian currency too much, what they made would be cancelled out by their losses on their Brazilian loan book. A structural reform of its tax system is now clearly needed; its current system is archaic and biased.

It’s all because supply massively outweighs demand.

Global demanding weakened over the previous year, he said. “IMF is forecasting a 6.5 per cent growth rate (for China) in 2016 and we see the transitions as manageable”, she added.

Today, the news is bad and getting worse. The CBO is projecting the budget deficit for 2016 will be 2.9%.

“The catalyst, once again, was investors’ focus on China’s waning manufacturing sector, which showed another month of softer activity”. And speaking of deficits and debt…

“Things are OK”, said Fotios Raptis, senior economist at TD Economics. “It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March, when the new staff macroeconomic projections become available which will also cover the years to 2018”.

There is plenty of headroom for residential construction to increase before reaching the level of a housing bubble.

It’s a situation compounded by the unwillingness of the Chinese government to acknowledge low growth is an economic reality and could lead to structural problems for the country in future, he said. “I am bullish”, chief executive Howard Schultz says.

With the Chinese domestic economy slowing down, one of the greatest fears is that there will be a commensurate slowdown in Chinese import demand. From a fundamental perspective, this fascination with China as a driver of global weakness borders on the surreal. What is significant is that there has been quite a sharp drop, so the question is, is it a correction or are we in bear market?

Note: In addition to this daily pre-open article about the market, economy, and the corporate earnings picture, Sheraz Mian also provides detailed earnings analysis in his weekly Earnings Trends and Earnings Preview reports. This in itself indicates the stock markets might be over-valued. Every day, humans all over the globe get up and strive to make their lives (and others) better. At most, there is suggestive evidence of a mild slowdown, and even that is far from certain. Along with the rest of the market, we were somewhat surprised that the circuit breaker was triggered twice in the first four days of being operational – the thresholds of 5 per cent and 7 per cent were probably set too tight for the A-share market given its historical volatility level. This may last two to three years, he added. Even better, 101 times out 105 the rolling 10-year return for the stock market has been positive.