Part of the slowdown is intended by China’s policymakers but recent data shows that the Chinese economy is clearly off to a slower start to the year.
“We believe weaker-than-expected external demand, tight monetary policy stance in 4Q2013 and heightened anti-corruption initiatives contributed to the economic weakness. We are getting close to further policy loosening.” (Goldman Sachs)
Charts on the Chinese Economy:
China GDP Forcasts:
“US GDP growth tends to drop during colder-than-average winter quarters, but then tends to bounce back in Q2. We look at GDP growth during episodes in which the cumulative heating degree day deviation was at least 1.5 standard deviations above average during Q1 (that is, it was colder than usual).” (Goldman Sachs)
There is nothing wrong with home sales in the abnormally cold weather. Buy a house, yes. Go to the store, no.
“New home sales rose 9.6% in January, vs. consensus -3.4% – upward revision to December – level at new post-recession high of 468k, vs. consensus 400k – timely indicator of housing activity. This is a welcome departure from recent downside surprises on the NAHB housing market index, housing starts, and existing home sales.”
“Our US forecast calls for “bite” taken by weather to come back as a 0.5-0.75 pp boost to US growth in Q2.” (Goldman Sachs)
US economic macro data has been much weaker than consensus expectations. In line with historical seasonal patterns. Normal procedure is to begin the year far too optimistic. Expectations are adjusted downwards and after that, a period with positive surprises.
Macro surprises have had a tendency to be seasonal during the last couple of years.
US economic data has been much weaker than consensus expectations.
brokenmarkets 