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Macro Digest – China’s Inflation – Most Important Data Point in all of Economics…!

– Welcome to the dealyed inflation…China PPI

PPI YoY (China) {CH}

OBSERVATION PERIOD: Nov (Monthly)

ACTUAL  : 3.3%

PRIOR   : 1.2%

REVISED : —

SURVEY  : 2.3%  (Mean: 2.2%, High: 3.1%, Low: 1.0%)

 

This is exactly what I have tried to point out again and again over last six to nine month – China is MASSIVE exporter of inflation and the main take away from my Asian Tour is…

2017 will see surprise overshoot of inflation in Japan (China import prices, WTI crude rise and 2020 Olympics(which is already big all over Tokyo in construction terms…)

China will have higher growth not lower…..but not commodity driven growth, but consumer growth.

Two largest saving pools in world?  China and Japan – Impact of saving? Deflation… when spending is increased ? Inflationary….

 

Spending in China will rise more in next15 years than total personal spending of today in Europe..

Spending will grow annualized + 5.5% creating big positive buffer on China GDP….

I talk here about this with Roger Blitz of the Financial Times

4 réponses
  1. Zylo
    Zylo says:

    I always try to understand the points debated by Mr Jakobsen. Unfortunately my attempts are rarely successful… 🙁
    i’m not used in the detail of calculing the PPI, but if it is in current yuan and not corrected by inflation, then the yuan lost some 3,1% between 1st october and 30 november against USD (if my calcul is correct), so a 3,3% increase (yuan denominated) doesnt seem outrageous ?
    If the growth in PPI matches the decrease in the currency, I’m not sure they are exporting their inflation ?
    Moreover, the government already tried to boost consumption with a deluge of credit, and it does not look like it was so successful.

    It looks that the special status of china beeing the factory of the world is beeing challenged, so that means that they will have less production of added value. Less production of value means more credit to have the same consumption. And it makes worse the overcapacity problem…

    Making economical projections in a 15 year time frame is perillous : Il think we will begin to hit peak natural resources in a 5 year time frame, particularly the cheap abondant energy our civilisation is built on. The society model they try to imitate is doomed (because of the limits of planet earth), and even if they could the way to do it will be less and less successful.

    All that to say : if we can not exclude a collapse in one or more fiat money in a near future, I don’t think we will see inflation happen, nor exported to other countries. And if it happens, it will not be (IMHO) a slow inflations reflecting discrepancies between huge demand and small offer (meaning an economy growing), but more a skyrocketing inflation, meaning total loss of faith in the currency
    Time will tell !

  2. Tom
    Tom says:

    I don’t understand Jakobsen, his posts are always complex for nothing clear ….
    All the world dominated by USA and Europe are going now to shutdown China who he’s only living with yuan credit and we are just at the begining, everybody in all countries want China to be shut down.
    China dominates nothing, we give to China the opportunity to make money, now it is over … and not our interest, including all muttinational dominating the world.

    USA and Europe will never collapse, we are at the center of the world, wake up ! Jakobsen are traders saying bullshit just to create fake economic movement to make money, they know opposite they are saying will happen. Jakobsen is saying in summary China will dominate the world, hey you are not Chinese and will be never, you does not seems afraid about what you are saying because it is bullshit.

  3. Zylo
    Zylo says:

    @TOM :
    I’m happy to see I’m not the one who had issues getting the points.

    That said, I don’t share your optimism : yes we let them bleed us, but we have been badly harmed so far, and have lost a lot of capacity (loss of knowledge, lack of infrastructure, etc,…) and it will take time and money to rebuild all that, unfortunately we have neither.
    Growth in USA and Europe is over (because of energy and demography), it will be the same soon in china, for the same reasons. Economical decline, associated with disastrous foreign policy, ensure we will never be the center of the world again. The question is more : will we weight in the future…

    Another day, another post on ZH :
    http://www.zerohedge.com/news/2016-12-13/2017-will-be-year-inflation

    We had in the past oil at 100$ and no inflation, so again I doubt that this only cause will launch inflation. Hard to extract signal from noise 🙁
    We will see ! Interresting times…

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