China manufacturing shrinks for the first time in two years, survey shows

China’s official measure of activity in factory and workshops shows it contracted in January, signalling continued slowing of the economy

China grows at slowest rate for 24 years

China’s manufacturing activity contracted for the first time in more than two years in January, an official survey showed on Sunday, signalling further downward pressure on the world’s second-largest economy.

The official purchasing managers’ index (PMI) released by the national bureau of statistics came in at 49.8 last month, down from the 50.1 recorded in December.

Related: Hard times return as China bids to bring its economic miracle to an end

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Socialist Exceptionalism

“In the minds of the statists, “Government Works Better” and ‘things’ work at the surface; but at the core, it’s a disaster… The Americans that look to the government to ‘save’ them – and even gleefully thank the government for helping bail them out – fail to realize that it was the government that f##ked them in the first place…”

How Ukraine Can Save China From Its Existential Threat (Spoiler Alert: Girls)

In China last year, just over 115 boys were born for every 100 girls, and since sonogram technology was introduced to China in the 1980s – allowing families to determine a baby’s gender during the first few months of pregnancy – the gender imbalance in the world's largest economy has grown colossal. However, as Beijing News recently explained, there may be a solution for China's 34 million woman shortfall… Ukrainian women, as “their economy is depressed but beautiful women are running rampant.” While Foreign Policy notes that the best destinations for Chinese men to find spouses are Japan and South Korea, there appears to be plenty of fish in the sea, at least outside China. Oh the wonders of Ricardian comparative advantage – Ukraine needs an export business (and produces – from what we have heard – attractive women) and China needs to import 'women' (to fill its massive shortfall). Global economic growth problems, solved…

16% Of Global Government Bonds Now Have A Negative Yield: Here Is Who’s Buying It

A week ago many were surprised to learn that in his attempt to “fight deflation”, the ECB’s Mario Draghi unleashed the biggest deflationary wave of all time, when in the aftermath of the ECB’s NIRP policy, and subsequently QE, an unprecedented €1.4 trillion in European debt with a maturity of more than 1 year traded down to subzero, as in negative, yields.

But what happens if one expands the Eurozone NIRP universe to include the debt of other countries including Japan, Denmark, Sweden, Switzerland and so on? Conveniently, JPM has done the analysis and finds that a mindblowing $3.6 trillion of government debt traded with a negative yield as recently as last week. This represents 16% of the JPM Global Government Bond Index, or in other words nearly a fifth of all global government debt is now trading with a negative yield, meaning investors pay sovereigns, using other people’s money of course, for the privilege of buying their issuance!

JPM’s full take:

There is currently €1.5tr or $1.7tr of Euro area government bonds of greater than one year maturity trading with negative nominal yields, almost all of them of core euro governments of up to 5 years maturity. This figure rises to $1.8tr if one adds $16bn of Swedish, $60bn of Swiss and $45bn of Danish government bonds currently trading with a negative yield. Almost all Japanese government bonds are trading with positive yields this week, but last week around $1.8tr of them were trading with a negative yield. So the total universe of government bonds traded with a negative yield was $3.6tr last week or 16% of the JPM Global Government Bond Index.

The logical follow up question: as the entire world appears slowly but surely headed to a uniform NIRP platform, where every single sovereign’s debt will have a negative yield thanks to one or more central banks’ guarantees that said debt will be monetized no matter what (those curious what happens when there is even a faint doubt if a given nation’s Treasurys won’t be backstopped and purchased by a central bank, just look at what happened to Greek bonds this past week), why do investors keep dumping their cash in securities that have a negative carry?

Here again courtesy of JPM’s Nikolaos Panigirtzoglou, are six investor classes which, even with US stocks trading at the low, low forward GAAP PE of a modest 20x, prefer to incentivise governments around the globe to issue even “moar” debt, in the process making a global debt crisis that much worse, as the stock of government debt rises to truly catastrophic proportions.

Investors who fear or expect deflation tend to find nominal bonds with even negative yields attractive as long as expected deflation makes real yields positive. In a deflationary environment investors tend to shift away from real into nominal assets. During the previous two decades in Japan, this took the form of a shift away from equities and real estate into cash and nominal JGBs. Investors who speculate on currency appreciation, for example investors buying Swiss or Danish government bonds to speculate on CHF or DKK currency appreciation. Investors who expect capital gains from central bank easing i.e. rate cuts or QE. For example, investors who have been buying euro area bonds over the past six

“King Dollar” Is Crushing ‘Recovery’Dreams, 87% Of US Companies Have Guided Lower

The 'souring' of the mother's milk of stock markets continues. Management guidance and commentary implies 3-5pp impact due to 'king dollar' FX headwinds as an astounding 87% of companies guided below consensus expectations for next quarter. Bottom-up consensus 2015 EPS estimates were cut by 4% during January, and, as Goldman Sachs warns, 4Q EPS is tracking 7% below the consensus estimate at the start of reporting season. Finally, and perhaps most worrisome, granular bottom-up consensus is below top-down 'strategist' consensus for the first time since 2009… as the gap between Forward P/E valuations and long-term growth is as wide as it has ever been.

“King Dollar” is not 'unambiguously good' for America…

Revenue results are correlated to dollar strengthening, which has led to weaker revenue results and lower forward guidance that incorporates the FX headwind.

Greece on collision course with Brussels after Merkel backs hardline debt stance

Germany will resist Greek efforts to do deals with individual creditor nations, even as Syriza finance minister heads to meet French counterpart

Angela Merkel has ruled out the prospect of Greece securing further debt cuts from its creditor nations, potentially putting the country’s new leftist government on a collision course with Brussels. The German chancellor’s uncompromising stance will not be welcomed in Athens, where the new ruling party, Syriza, insists that it will make good on its promises to halve the country’s €320bn (

We need big tax increases, but no party will admit it

There is only one way to provide what the politicians have promised and what the public wants

Current government plans imply a fall in public spending to the smallest share of the economy since the second world war. But the headline figure matters less than how the money is spent.

Demographic trends will push spending on state pensions and health inexorably up and the Tories have also pledged not to means-tests benefits for better-off pensioners. So other public services will face an unprecedented squeeze.

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Voters face epic choice at general election – over the size of the state

On 7 May, electors will be offered the starkest choice in a generation. We weigh up the radically different Tory and Labour spending plans

For two decades and more, it has been a truism in British political campaigning that where spending the public’s hard-earned cash is concerned, there is mortal danger in allowing too much space to open up between you and the opposition.

Make too many spending pledges, or venture a modest tax rise or two, and you risk being tethered to a giant, Zeppelin-style “tax bombshell”, looming over anxious households (Labour, 1992). Pledge to make deeper cuts than your rivals, and they can paint you as a brutal, Thatcher-style job-snatcher, taunting you with questions about how many nurses, teachers and doctors you plan to sack to meet your spending targets (copyright G Brown).

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