China exports contracted by -25%, while Chinese markets went up on hope for more stimulus
Talking points:
– The post-Yellen Congressional Testimony rally remains supported, although pullbacks over the past two days have given the appearance of potential resistance: Traders still need to exercise caution given that we’re hearing from the three largest Central Banks over the next eight days. And manage risk; always manage risk.
– We got another disappointing print out of China last night as exports contracted by a full -25.4% in USD-terms (-20.6% in Yuan terms). Chinese markets actually went up last night, as hopes for more stimulus have kept the bid strong.
Chinese Exports Crushed: Chinese exports went down by 1/4th in February of this year; a full -25.4% in USD-terms, and -20.6% in Yuan terms versus an expectation for an -11.3% decline. This is the largest decrease seen in Chinese exports since May of 2009. Imports also came in weaker with an -8% decline, and this was the 16th consecutive month of contraction.
This is yet another extension in disappointing trade data out of China that alludes to a heavier-than-wanted contraction taking place in the economy. Those fears were somewhat assuaged over the weekend at that National People’s Congress as China held on to a 6.5% growth rate. Premier Le Keqiang announced a 6.5-7% growth target, and this was largely thought to be bullish in the fact that it would likely bring on heaps of stimulus from Beijing to accomplish that GDP growth.
And this speaks to the topic that was central in our special report on the Chinese economy, entitled, Inside China: It’s Just a Matter of Time and it May Have Already Begun: Debt-fueled growth. In that report we looked at the remarkably consistent stream of Chinese growth and the fact that much of that growth, especially of recent, has been fueled with debt. With this growth target set over the weekend, it was largely considered that China was going to keep taking out debt to fuel growth, and this could help pull the global economy back from the brink while other issues were addressed like commodity prices, interest rates, etc.
