E The Daily Shot And Data - June 22, 2016

Greetings,

Let's begin with a few items on China's economy.

1. Capital Economics argues that capital outflows from China have been driven by "Chinese firms paying back external debt." Based on that assumption capital flows out of the country should be ending now.

Source: ‏@CapEconChina 

2. After a quick fiscal stimulus boost, China's excavator sales decline again. This is one of the indicators of industrial activity.

Source: Macquarie

3. China's home sales seem to be slowing.

Source: Macquarie

4. A recent study found no evidence that the RMB fixings are linked to the currency basket (CFETS) announced by Beijing in 2015. In fact, the RMB volatility against the "magic basket" has been higher than against the US dollar.

Source: Hong Kong Institute for Monetary Research

5. China's M1 vs. M2 growth divergence (broad and narrow money supply) suggests liquidity is trapped in the financial sector instead of flowing into the broader economy. One of the drivers of this trend is banks financing more of their assets via the bond market rather than with deposits.

Source: Macquarie

An indicator of the divergence above is China's banks lending to non-bank financial entities (such as WMP managers).

Source: Deutsche Bank. @IveBeenHad

1. In other emerging market news, Macau inflation rate is now the lowest since 2010. Is Macau cutting prices to bring back some of the lost business?

2. Turkey's Central Bank cuts the overnight lending rate. Again. As directed by the Erdoğan administration. 

3. Brazil inflation rate hits the lowest level in a year in mid-June as the currency weakness effects subside while domestic demand remains poor.

4. Nigeria's central bank was forced to buy naira in the market for the second day since the free-float, as bids for the currency disappeared. Liquidity remains poor.

Source: @fastFT

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