GLOBAL MARKETS

Manufactured Numbers 

China’s National Bureau of Statistics reported their factory activity, or Purchasing Manufacturing Index (PMI), dropped from 49.8 in September to 49.3 in October. 

The PMI has hovered below the 50 mark, indicating contraction, for six straight months.

In contrast, IHS Markit, a private data firm, showed a solid start to the fourth quarter for China’s manufacturing sector.

Their PMI rose from 51.4 in September to 51.7 in October, signaling improving conditions for three straight months running.

The October numbers are the strongest seen since February 2017.

TREND FORECAST: Despite all the headline news about trade wars in China, it’s not all downhill. There are ups and down. 

Considering the data supporting a global slowdown, with many nations such as Germany sinking toward recession, these latest Chinese statistics are a short-term fad, not a long-term trend.

As we have long observed, the Chinese government has been hesitant to inject massive doses of monetary methadone to prop up its overly inflated, $40 trillion-in-debt economy.

However, what is officially being reported and what is really happening behind closed doors in the world’s largest communist country is at best a bad guess.

We’ve also made very clear that China’s greatest fear is not the U.S. or any foreign nation, but rather the 1.4 billion Chinese people. 

Before the news was blacked out by the government, it was reported that some 30,000 labor and citizen protests had erupted in China in previous years.

Therefore, China will do all it can to keep its inflated property market inflated, its burgeoning retail sector growing, and its GDP expanding…at any cost, including a further devaluation of the yuan.