Monday, October 27, 2014

And consumer demand includes UK housing

Stock markets threatened by collapse in Chinese consumer demand

Figures from the world’s largest consumer goods groups last week laid bare the shocking weakness of consumer demand in China, which threatens to pull down global stock markets that have been priced to perfection by more than five years of extraordinary monetary policy and asset price inflation.

Posted by hpwatcher @ 02:03 PM (3473 views)
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8 thoughts on “And consumer demand includes UK housing

  • We live in unusual times. This quote stuck out. ‘China has used 6.6 gigatons of cement in the last three years compared to 4.5 gigatons the USA has used in 100 years.’ The world has just been on one big stimulus package on steroids in the last few years. What comes next to keep it going or reset the clock? War?

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  • London house prices to slump, starting with Enfield 🙂

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  • “The capitulation of the Chinese consumer threatens to drag stock markets around the world into a death spiral as one of the pillars of global growth is undermined”.

    But stock markets are driven by extra liquidity and the consequent stock buybacks by CEOs borrowing money to buy their own shares to boost their price and therefore their own and shareholders’ remuneration (big correlations between corporate borrowing, stock buybacks and the S&P 500). A recent NYT article declared “IBM is a buyback machine on steroids that has been a huge stock-market winner by virtue of massaging, medicating and manipulating” its earnings per share.” The fears and doubts about the ending of US QE and investors’ developing of exit strategies, rather than worries of a slowdown in Chinese consumer spending, is what’s causing gyrations in stock and corporate bond markets. Taper tantrums.

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  • @icarus – IBM and many other Large American IT companies started having serious problems 12 months ago around the time I was made redundant, the company I was made redundant from shared a building and canteen with IBM.
    The problems American IT is facing is primarily due to a strong kickback in the EU, ASIA and pretty much everywhere because of the NSA (National Security Agency). People can no longer trust american companies because the NSA may be snooping into their companies through the software and/or hardware.
    An old work friend of mine has now been kicking around the office for 18 months whilst they’re waiting for orders to come in!

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  • Imho, the coming crash will be the normalisation of mispriced markets.

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  • khards – Interesting take on IBM’s recent problems, but the company has performed moderately for years, e.g. stagnant revenue since 2008, and last week the stock dropped 7% after the company’s performance fell well short of expectations. It has been spending more than twice as much on buybacks of its own shares and dividend payments as it has invested in its real capital. Any ‘success’ has been due much more to financial engineering than to company performance. Buffett must have known that the game was to spend money on executives and shareholders rather than on the business when he loaded up on the stock in 2011.

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  • …..and IBM is far from atypical in this respect.

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