China fall

The Chinese export falls hard (!) – The export is down with 25.4% the two first months!!! It is possible that this reduction in export from China is temporarily, but not many believe in an increase in March even though some think that that Chinese New Year created a part of this fall, but 25.4% is an abnormal high number within economics; back in May 2009 we find a fall with 26.5%.

Some believe that the negative numbers are related to the low crude costs. Since these costs are changing and an increased support to import in China, we might expect a positive change in the near future. The oil price is going up again, and that might change the market. The steel market is on the point to receive a governmental stimulus. Since most markets are guided by emotions, we might expect strange decisions in times like this; decisions that might create dramatic looking ups and downs. The Chinese government tries to stimulate the Chinese market through buying and accommodating the market through stimulation, but this does not change the fact that it look dark and the stock market is bleeding and that the reserves are heavily reduced.

Last weekend we heard the Chinese prime minister promising a Chinese economic growth between 6.5 and 7%. We might wonder what magic he is going to use to accomplish that. Nomura in Japan think a best case scenario is 5.8%. Since most of the World depends on China to do trade we will find many opinions and predictions. It is a fact that China imports more, and that indicates that China produces more to export. Still we find the market going in all directions, and that is a bad sign. It tells us that emotion rules the Chinese market and emotions is the best manager of the greatest market on the planet. All the facts are stable: slow growth in China, dept. in the market, over capacity and strong US dollar.

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