The first signs of weakness came after China’s HY real estate index fell a massive 82% in just over 2 years.
This came as Evergrande, one of China’s real estate giants, filed Chapter 15 bankruptcy.
This put the index back down to 2008-levels, but barely anyone talked about it. pic.twitter.com/OYhpxKCVBo
— The Kobeissi Letter (@KobeissiLetter) September 26, 2024
Deflation is the exact opposite of inflation, it's when prices fall.
While this may seem welcomed, the economic impact is detrimental.
If you know prices are falling tomorrow, why buy today?
The result is an economy that is effectively frozen. pic.twitter.com/N0EBQwiCeu
— The Kobeissi Letter (@KobeissiLetter) September 26, 2024
Unemployment in China is surging to new decade-highs.
Manufacturing has been capped, construction is struggling from the real estate market collapse, and consumer demand is weak.
It already feels like China is in a major recession and they likely ARE. pic.twitter.com/F6SBMvz1Yb
— The Kobeissi Letter (@KobeissiLetter) September 26, 2024
Now, China is in panic mode and 2020-like stimulus has began, including:
1. Cutting reserve requirements by 0.5%
2. Cut 7-day RRP rate by 0.2%
3. Lowering mortgage rates
4. Injecting $142 billion into banks
5. Implement "forceful" rate cutsThis is only the beginning.
— The Kobeissi Letter (@KobeissiLetter) September 26, 2024
Chinese stocks are 4 sigma overbought which is a record, and still below the 2023 level.
Nothing gets solved by lying constantly. Something everyone has to learn the hard way. pic.twitter.com/BXCcqcWwHI
— Mac10 (@SuburbanDrone) September 26, 2024
This week, hedge funds are buying Chinese stocks at the fastest pace since March 2021, which was the end of the China AND EM stock rally. Why doesn't anyone check facts anymore?t.co/y9OJzVBFtc pic.twitter.com/nQGTxKnVCj
— Mac10 (@SuburbanDrone) September 27, 2024