The market for established, tradeable equities is coming up to important price resistance
just as the Party Bigs are gathering to look at reform issues. S&P China SPDR (GXC)
Back on 6/25 I posted that the Shanghai was deeply oversold just after the PBOC was
punishing its big banks and dealers by intervening in the overnight markets. My view
then as now is that the PBOC must begin to operate with greater discipline if more serious
problems are not to follow upon a five year period of extraordinary liquidity and debt growth.
China M-2 money has compounded 22% annually since 2008. China Dragon Flu 6/25
Most analysts agree that China needs to reset economic priorities away from reliance on
industrial investment / mercantilism toward building a larger and more stable consumer
economy. All well and good. My concern is with run - away real estate markets which can
only be sensibly controlled by more restrictive monetary and credit policies that have to be
reset to align with China's self professed goals of 7.5% real growth and controlled price
inflation. I'll judge the Plenum at hand by whether the Boys are up to slowing down the
Big Red Liquidity Machine.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!