Posted on 02/29/2020 10:33:56 AM PST by blam
One week ago, ahead of today’s Chinese data release which would for the first time capture the devastation from the coronavirus pandemic, we wrote that “to those who have been following our series of high-frequency, daily indicators of China’s economy, it will probably not come as a surprise that the world’s second biggest economy has ground to a halt, its GDP set to post the first negative print in modern history. To everyone else who is just now catching up, we have some news: it’s going to be bad.”
Specifically, we said that ahead of official Chinese economic data which will soon start capturing the period when the coronavirus crippled the country’s economy, Nomura’s Chief China economist Ting Lu pointed out that China’s Emerging Industries PMI (EPMI), which gauges momentum in the country’s high-tech industries and is closely correlated with official manufacturing PMI, slumped to 29.9 in February (from 50.1 in January!), its lowest-print on record, which was a “pure reflection of the devastating impact of the COVID-19 outbreak.”
What would this mean for the closely followed China manufacturing PMI? As Nomura added, "even adjusting for seasonality and expected progress in business resumption in the coming week, we estimate the official manufacturing PMI could drop to a range of 30-40 in Feb."
In retrospect, it turns out that Nomura's dire forecast was optimistic, because moments ago China's National Statistics Bureau reported the latest, February PMIs and they were absolutely catastrophic:
(snip)
(Excerpt) Read more at sgtreport.com ...
Yup.
So, let’s ask some questions?
Will the PMI numbers take the market by surprise?
I mean, is it possible that everyone (or even most of Wall Street and institutional investors) never gave the upcoming PMI numbers much thought? Maybe that they “forgot” about it?
Or is it possible that the poor PMI numbers have already (to some extent) been priced into the correction?
Curious.
Personally (how else) I think there will be a recession as a result of manufacturing and production disruption in China. We’ll see how severe it is.
The major cause of the problem is that the Democrats have spent 50 years installing blocks and “environmental regulations” that ban manufacturing and construction in the United States.
Absolutely right on. I contend one of the reasons pharmaceuticals have been off shored is enviro regs for chemical manufacturers made it all but impossible to make them here.
A dr said everyone should have a thermometer on hand for self checking. A fever is considered 100.4 btw.
Vital medical supplies like antibiotics and several other drugs, etc should be required to be produced in the United States just like vital defense components are.
Absurd.
China is over.
>>I contend one of the reasons pharmaceuticals have been off shored is enviro regs for chemical manufacturers made it all but impossible to make them here.<<
Probably true, but another factor is lawsuits. It’s just too easy for the trial lawyers to clean the clock of successful producers in the U.S. All it takes is one liberal California jury to start a landslide of judgements that can bankrupt even the biggest companies. In fact, the deeper the pockets, the higher the jury award. See RoundUp for one of the latest examples.
>>China is over.<<
I’ve watched over the past month as China successfully brought the virus spread completely under control in every single province except Hubei, and even there the new cases are diminishing each day.
Of course, I tend to think they’ve been successful by just not reporting any new cases, but that’s another issue. By now, given the reported numbers, every factory worker should be headed back to work in China because the virus has been contained.
It would be interesting to actually see the inside of a few of those humming factories now, just to see if the workers agree with the government’s assessment that the virus has been successfully contained.
I’m open...what’s your answer?
The solution to ALL of our economic problems and a lot of our social problems too would be protectionism (tariffs) and stop ALL immigration. WIN-WIN.
I would recommend a thermal scan thermometer which requires no physical contact nor contamination.
These same thermal scans are what the Chinese are using to determine fever.
They scan from the forehead, and do not require internal oriface access.
Interesting thoughts. Have you fleshed that out further. I would like to read more of your thoughts on why China reacted that way.
If the Chinese govt. response to SARS, MERS, bird flu, or the current porcine ((Sus scrofa domesticus) virus is any indication
any information given by that government is highly suspect and probably fictitious.
If the information from them over the last 15 years of 4 viral diseases is any indication,
then that would be a significant change of behavior.
(P.S. Leopards don't change their spots, especially overnight; they have history and genetics)
Don't forget that this is a very authoritarian government which rules over its unarmed population;
also recall that the physician who sounded the alarm about the virus, (allegedly) succumbed to the disease
so he is currently unavailable for comment (Arkancide ?).
"Trust but verify" (Ronald Reagan)- and they wont let unrestricted access to the CDC to verify - go figure !
That’s an excellent idea. Thanks for the tip TIK.
Hope all is well for you and yours.
I went to the store yesterday and picked up some bleach, extra soup, Musinex, and ibuprofen.
We have Tylenol. I’m really not supposed to take ibuprofen on a regular basis due to it’s blood thinning properties. But, I find they work better on fevers/general aches & pain than Tylenol. My prior time as a bubble girl left me well stocked with hand sanitizer. I have a feeling that hand sanitizer may be the next item to be hard to find in the stores.
(At home) Putting a spray nozzle on an alcohol bottle will work just as well. It’s drying on the hands, but gets the job done.
Good point.
Because I am smarter than the H1-B workers and those could never displace me! I am with the other 50 million Americans who are living the American dream and not in the least bit affected by foreign workers.
heh heh, I now live a couple of miles from a field where one of those landed and detonated in a fireball.
Two different facilities with different purposes.
[Interesting thoughts. Have you fleshed that out further. I would like to read more of your thoughts on why China reacted that way.]
https://en.wikipedia.org/wiki/Zhao_Gao#Coup_following_Qin_Shi_Huang’s_death
https://en.wikipedia.org/wiki/Jianwen_Emperor#Fall_from_power
That was then. This is more recent:
https://en.wikipedia.org/wiki/Project_571
https://en.wikipedia.org/wiki/Hua_Guofeng#Ousting_and_death
A few years ago, a high-level Chinese official attempted to seek asylum at a US consulate. Obama rejected his request, even though he would have provided a treasure trove of classified info about Chinese officials, real sanctum sanctorum stuff. (Yet another reason why I think Obama is a treasonous nogoodnik). The guy he worked for was alleged to have been in the process of organizing a coup:
https://en.wikipedia.org/wiki/Bo_Xilai#Downfall
Bottom line here is that Xi was under pressure to do something, to prevent sentiment among Party elites from turning against him, making him vulnerable to a coup. So he went all out. Same reason that Trump banned travel from China despite the possibility of being criticized, which he was, for overreacting. He wanted to lay down a marker so he could say he did something, while everyone stateside was super-blase. Now that the liberal media thinks this is the Black Death redux, and hyper-ventilating, Trump is adding more measures. Ironically, Xi did not have that luxury. He had to be seen acting decisively. In theory, he is dictator-for-life. In fact, he can be ousted at any time. It’s pure power politics, with zero principle or legal precedent involved. If enough Party elites (each with their own individual agendas) unite against him, Xi is finished.
The following events involving the courtiers (Zhao Gao and Li Si) who acted as regents after the First Emperor (Qin Shi Huang) died (~2200 years ago) may give you a flavor of the intrigues involved:
[At the end of the reign of Qin Shi Huang, Zhao Gao was involved in the death of Meng Tian and his younger brother, Meng Yi. Meng Tian, a reputable general and a supporter of Qin Shi Huang’s eldest son, Fusu, was stationed at the northern border, commanding more than 200,000 troops for the inconclusive campaign against the Xiongnu. Following the sudden death of Qin Shi Huang at Shaqiu, Zhao Gao and Li Si, the Chancellor, persuaded the emperor’s youngest son, Huhai, to falsify the emperor’s will. The fake decree forced Fusu to commit suicide and stripped Meng Tian of his command. Harbouring hatred for the entire Meng family due to his prior sentencing by Meng Yi, Zhao Gao destroyed the Meng brothers by convincing Huhai to issue a decree that forced Meng Tian to commit suicide and execute Meng Yi.[citation needed]
Qin Er Shi, who viewed Zhao Gao as his tutor, became the next Qin emperor.
Two years later, Zhao Gao also killed Li Si, executing him via the “Five Pains” method, Li’s own invention. The method consisted of having the victim’s nose cut off, cutting off a hand and a foot, then the victim was castrated and finally cut in half in line with the waist. He also had Li Si’s entire family exterminated.
In 207 BC, rebellions broke out in the lands east of Hangu Pass. Zhao Gao was afraid that Qin Er Shi might make him responsible for the uprisings. To preempt this, he launched a coup and assassinated Qin Er Shi, and then installed Ziying, Fusu’s son, as the new emperor.
Ziying, however, knew that Zhao Gao intended to kill him afterwards to appease the rebels, so he feigned illness on the day of the coronation, which forced Zhao to arrive at his residence to persuade him to attend. The moment Zhao Gao arrived, Ziying ordered a eunuch, Han Tan, to kill Zhao. Zhao Gao’s entire clan was exterminated on Ziying’s order. ]
Chinese court intrigues are, for now, less bloody, but the shifting alliances are pretty similar. If you know anything about Roman history, stuff like this should be pretty familiar. Caesar allying with Pompey, Caesar falling out with Pompey, Brutus allying with Caesar, Brutus killing Caesar, etc, etc. Basically a no holds barred competition for power.
Xi needed to say he did something. So he did something. Overall, this looks like a major overreaction. But then again, even if it is one, I think no one is going to get too cranked up about overreacting to the possibility of an epidemic that could kill millions. Same reason people buy fire insurance even after the mortgage has been paid off, and the bank no longer requires it.
I do look at it as a good thing... but it won’t be as fast as we need it to be...
Another positive is pollution is way down in China...
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