Tags

, , , , , , , ,

 

In the economic war being fought between China and the US, the real world implications are being seen by the market.  While the US tries to export inflation to China, we have the Chinese trying to export deflation to the US.

The truth is that China will loose this battle, and possibly the economic war.

“Surging inflation and sustained robust economic growth may prompt the central bank to raise interest rates five to six times next year,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai. “We are quite pessimistic about the bond market next year.”

The rate that ships move at sea has slowed down to rates last seen during the darkest hours of late 2008.  The baltic dry goods shipping index is also about to hit the seasonal lows of last summer, but this time there is no Xmas shopping season about to kick off to save day rates.

The global economy is slowing down everywhere, but in Chinese numbers.  In time, they too shall change.  For now, its implications of inflation in China.  In the future, it will be higher interest rates, to attempt to slow down a run away economy.

You only have to read the latest headliness, where China says it will rush to Europe to buy Euro bonds, to support individual states.  China’s largest market is Europe, and its a basket case.  Its second largest market is the US, and its not shopping now.  The third largest is the local Asian markets, and they are relient on Chinese growth, for their own.

This is not going to end well.  China can not feed its people, is relying on European broke buyers for its demand, and it needs the US to find a second import season for its exporters to stay in business.  All of this, while China has to raise internal rates, and the official US vs Yuan exchange rate.

Its time to go long Popcorn, the world economy is about to experience serious shocks.