Asian markets continue to trade poorly, especially China, trading near its 2019 lows. There have been a lot of key levels broken in the CSI 300, which makes one wonder just how much lower this index could go and how bad the economic conditions in China are.
We don’t talk much about China inflation, but the CPI report is due on January 11, and the CPI is expected to fall by 0.4% y/y, which would be better than the decline of 0.5% y/y in November. We aren’t talking about disinflation here, we are talking about deflation, like where prices are falling.
When the China “impulse” is strong, it tends to lead to a strong US economy, and perhaps one reason why the manufacturing and services ISM PMI here in the US has been in contraction for months is because the China impulse has stalled out.
Oil prices seem to be suffering as a result of this weak environment in China as well.
So China is one market we need to continue to be mindful of, and more importantly, be aware that their economic struggles could become the rest of the world’s struggles. The weakness seemed to show up in Nike’s (NKE) results, and I suspect that Nike won’t be the only company to see these struggles when earnings come out over the next few weeks.More By This Author:Options Action May Have Driven Stocks Sharply HigherThe Magical Melting VIX Saves Stocks For NowAn S&P 500 Return To 3,900 May Be In The Cards For 2024
