China expect more tightening – MoneyWeek

CanChinamanageasoftlanding?

Theauthoritieshaveanunenviabletask,saysEdwardHadasonBreakingviews。

Theyneedtokeepgrowthaboveabout8%andjobcreationsteadysoastoavoidsocialunrest。

Yetwithdebt-soakedWesternconsumersretrenching,exportsareunlikelytorevivesoon。

AndtherewontbeasignificantjumpinChineseconsumptionuntilanimprovedwelfarestategraduallylowershighsavingsrates,saysNewYorkUniversitysNourielRoubini。

Sotheentireeconomydependsonlooselending,saysStratfor。

Andthatisalreadystoringuptrouble,withanincreaseinbadloansinthepipelineandovercapacitywidespread。

JackRodmanofGlobalDistressedSolutionsreckonsthathalftheofficespaceinBeijingisvacant。

Deflatingmonumentalinvestmentandpropertybubblesgentlyisdifficultatbest,saysJamesChanosofKynikosAssociates。

Commoditycorrectiononthecards

WhetherornotChinacanultimatelyavoidanastycrash,however,thegradualslowdownonthecardsforthisyearisonekeyreasonwhycommoditiesarevulnerabletoacorrection。

Giventheunprecedentedstockpilinglastyear,evenifGDPgrowthstaysindouble-digits,Chinesedemandwillslow,saysCapitalEconomics。

AndWesterndemandishardlygoingtorisetooffsetthis。

Withcredittightandindebtedconsumerscautious,thewithdrawalofevensmallpartsofthestimuluspackagesrisksendingtheeconomybackintothedoldrums,saysTheEconomist。

NotethattheInternationalEnergyAgency,forinstance,predictsanoil-lessrecoveryintheOECDcountries。

InAmerica,totaloilproductsdemandwasstill2%downyear-on-yearinJanuary。

Supplies,meanwhile,lookample。

AccordingtoWeinberg,totalcopperstocksinwarehousesmonitoredbyexchangesinLondon,ShanghaiandNewYorkareatasix-yearhigh。

Crudeinventoriesalsoreflectanoversuppliedmarket,saysDeutscheBank。

Copperandoilwillhittheskids

Ongoingtalkoftighteningbycentralbankswillcontinuetofuelconcernovertheglobalgrowthoutlook。

Inthemeantime,riskaversion,duetoGreecesdebtcrisis,alsounderminesrawmaterialsasitbolstersthedollar。

Givenallthis,metalsinparticularlookovervalued,saysDeutsche。

Itseesoilbackatanaveragepriceof$60inthethirdandfourthquarters,from$74now。

Asforcopper,itwillaveragejustover$6,000atonnebetweenJuneandSeptember–12%belowcurrentlevels。

NakedTextNakedText