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Spring is about redemption from winter, of hope over doubt, of growth over recession, of assets over liabilities. The week ahead will be about China and its growth and success of the credit induced push from Beijing to regain confidence. The gloom of 4Q seems long gone, much like winter, and the search for redemption of those afraid of another recession is now underway. The pain trade has been in retail where cash levels have burned a hole in the pocket as equities rally 30% in China and 16% in the US year-to-date. No one is convinced that this can sustain for all of 2019 but the doubters have to prove why the usual credit growth and return on asset games that have worked so well since 2009 will be different this time. The rise of total social finance in China for March 2019 changes the view of many as the link between credit and asset prices drives all.
China and the US drive global growth with the consumer the key for both. There are cracks. The China import numbers for March make the upcoming retail sales data that much more important. The US faces the usual fears about gasoline prices eating away at confidence and with wages not matching other inflation. The University of Michigan consumer sentiment should give some pause as the price action of markets meets the grim outlook of a battered US consumer.
The Weekly Track redemption
- The Weekly Track - Redemption by Bob Savage/articles/the-weekly-track-redemption/
Spring is about redemption from winter, of hope over doubt, of growth over recession, of assets over liabilities. The week ahead will be about China and its growth and success of the credit induced push from Beijing to regain confidence. The gloom of 4Q seems long gone, much like winter, and the search for redemption of those afraid of another recession is now underway. The pain trade has been in retail where cash levels have burned a hole in the pocket as equities rally 30% in China and 16% in the US year-to-date. No one is convinced that this can sustain for all of 2019 but the doubters have to prove why the usual credit growth and return on asset games that have worked so well since 2009 will be different this time. The rise of total social finance in China for March 2019 changes the view of many as the link between credit and asset prices drives all.
China and the US drive global growth with the consumer the key for both. There are cracks. The China import numbers for March make the upcoming retail sales data that much more important. The US faces the usual fears about gasoline prices eating away at confidence and with wages not matching other inflation. The University of Michigan consumer sentiment should give some pause as the price action of markets meets the grim outlook of a battered US consumer.
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Robert Savage
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