I just got an email response from a subscriber who asked if I would tie all my thoughts together from this morning's First Look post on China vs. the US. The wording was kind, but what he really meant was... "C'mon McGough...Throw me a bone. Your macro analysis doesn't do squat for me if you don't tie it back to an investable theme." Fair point.
I admit that sometimes I get too hung on up the big picture. The crux of my First Look China comments were as follows...
As exports go up due to government stimulus, then FOB (delivered price of goods in question) comes down, and the balance of power in the fight for margin dollars shifts to the US part of the supply chain.
I had been (and still am) concerned that as exports kick up, it could come at the expense of local consumption in China, therefore hurting multinationals with large China presence. That is not yet happening.
The key to watch out for now is whether increased export activity overshoots demand and we're left with a stuffed channel in 2H. That's definitely not the '2Q is a slam dunk' consensus call.
I don't think we'll see that, but as always will stay intellectually honest in evaluating the data.
I still think the big call is that we'll see a divergence between quality and junk starting in 1Q10.