The Chinese economy is collapsing.
That, of course (in this insane QE World) is being taken as good news by equity traders who anticipate another wave of free money to come gushing out of Beijing ON TOP OF the $194Bn that was announced on Monday. That's right, China's economy is so big that they need $194Bn PER WEEK to keep it afloat. How long do you really think they are going to be able to keep that up?
We're short on China with some FXI puts, but not too many yet as we don't know WHEN this madness will end – only that it will end and that it will end very badly when it does. China's PMI is once again contracting at an accellerating rate DESPITE all the stimulus but last year Chinese market rallied while the economy was clearly contracting as well – popping FXI from 32 in March to 42 in September (up 35%) before collapsing back to 36 in October.
The Sept/Oct drop happened when Manufacturing numbers were improving, which indicates that the Chinese market, like Japan's and, to some extent, the US and Europe, have nothing to do with how well the economy is doing and everything to do with how much free money the Central Banksters will be able to transfer to their Top 1% buddies.
The reason the markets don't seem to make sense to you is because you are not in the top 0.01%, where all the free money is going. From their perspective, they don't give a crap about the economy or the companies they own and invest in, they only care about how much money they can funnel out of the Government, through the banks, that can end up in their pockets.
How else do you explain the madness of CAT, who haven't had good sales numbers since the beggining of 2013 (another indication of the World-wide slump) yet have kept their stock net flat over that time period? The stock even surged to $108 (up 30%) last year before coming back to the $80s but even…
