Clocking What Isn’t Chinese Stimulus

One of the very few central pillars supporting the hopes for a second-half rebound was China’s “stimulus”. Since we’ve been conditioned to just accept whatever a central bank does as equal to it, throughout the last thirteen months since the first RRR cut was initiated that one, as well as the four which followed (five for smaller and medium banks), have been described this way. The US President has even tweeted along these lines.

But with data in hand for the first five months of 2019 already, hopes are again dimmed by a very different reality. Powerful stimulus isn’t showing up. People are starting to notice.

China’s growth is in danger of slowing further after weakening in April and May, with monetary policy makers having fallen behind in applying stimulus, according to Deutsche Bank AG, which advises buying the nation’s bonds.

From (global) bond bears to bulls without ever factoring why they went from one to the other (or why they were the one instead of the other in the first place). Once you see how the RRR cuts were never “stimulus”, China’s economy and even the PBOC’s motivations within it start to make sense. They just don’t add up to the Western accounts of either.

It all begins or ends, depending upon your perspective, with what’s now almost certainly an expensive and still ticking clock. When CNY falls, that’s bad for China and the rest of the world not because the world or China depends upon a steady or “stronger” yuan, but because of what it says about the eurodollar system driving everything into a global recession.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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