(WCTW) This Feels Pretty Serious
What changed this week (in case you ever wondered what WCTW stands for)? China, that's what's changed.
Over the past few weeks, I have compiled a list of people on Twitter who have a great grasp of China's situation. Here is the list:
Shanghai Macro Strategist - A real insider. Extremely insightful.
Investing in China - Great analyst and great coverage on Chinese companies.
Brian Tycangco - Great analyst on China, Chinese companies, and China macro.
I think what's happening in China will have major ramifications for all the markets. Similar to how the quantitative easing from the US Federal Reserve reshaped global markets (2010), China's current stimulus will reshape the inflation trade, value vs growth, and so much more. I highly recommend you follow them.
Stimulus and how it stacks against reality?
Yes, Chinese stocks are up a lot since the Politburo launched a monetary bazooka (many analysts are calling it this) into the financial markets. Names like Alibaba look like meme stocks and the Shanghai Stock Exchange is up ~23% since the middle of September.
But aside from the manic stock market reaction we've seen so far, the policy measures, in my opinion, are still insufficient to meaningfully alter China's incoming economic trajectory.
I think there are two very good (balanced) views I've read so far. The first one comes from Patrick Zweifel on China. In Patrick's case, he's pointing out that confidence consumers remain far too weak.
China consumer sentiment
In addition, the property market remains extremely weak, which won't be uplifted so easily by the latest fiscal and monetary stimulus announcements.
To conclude his tweet thread, Patrick points to the absurdly high savings rate the Chinese consumers have relative to the US:
As a result, there needs to be structural changes in not just the policies that the Chinese government embarks on, but consumers need to flip 180.