China: Dour Indeed

Consistent with our recent work, the Chinese growth outlook for the remainder of the year appears rather dour indeed.

China: Dour Indeed - China PMI

This is evidenced by this morning’s data, which showed manufacturing growth hitting an 11-month low in July. Asian markets were mostly lower on the news, with the Shanghai Composite falling 1.3%.

The consensus response (i.e. “Must… Stimulate… Now…”) remains largely offsides. Pulling forward railway construction won’t move the needle on Chinese growth. In reality, all it does is create a vacuum of reduced outlays to muddle through on the back-end. 

Still, we don’t want to be short anything that even remotely resembles a stimulus package. The buy-side is trained to buy stimulus now, and ask questions later.