In this briefing:
- Trade During Lunar New Year
- Why China’s Stimulus Will Disappoint
- FLASH: UK GDP Resurgence Raises 1Q19 Forecast
- Preview: UK Fiscal Spring Statement Beside Brexit
- National People’s Congress/Political Loyalty/Trade War/Huawei Sues
1. Trade During Lunar New Year
An underlying issue regarding February data is just how pressurized it is. Between cross armed speculations about trade talk negotiations and the biggest Chinese holiday, it should come as no surprises that February data is underwhelming. Chinese markets are still grappling with a way forward in the trade talk quagmire, but February numbers are in many ways seasonal, due to the holiday snapshot it encompasses.
2. Why China’s Stimulus Will Disappoint
By Lawrence Brainard, Chief Emerging Market Economist at TS Lombard
- In a Chinese version of QE the PBoC is flooding markets with liquidity
- Commercial banks will be slow to use it to boost lending to SMEs
3. FLASH: UK GDP Resurgence Raises 1Q19 Forecast
- UK monthly GDP exceeded all expectations by surging 0.5% m-o-m in Jan-19. Construction rebounded by even more than I expected, as did manufacturing, while services remained resilient relative to the biased surveys.
- The level of GDP is already 0.35% above the 4Q18 average, so I raise my forecast for 1Q19 by 0.1pp to 0.4% q-o-q. The BoE’s 0.2% forecast is looking woefully gloomy, although Brexit remains critical to the policy outlook.
4. Preview: UK Fiscal Spring Statement Beside Brexit
- The Spring Statement is intended to be more of a fiscal update than a significant event, and limited forecast changes further shrink its relevance, especially relative to Brexit. However, I expect the new remit for 2019-20 to be £128bn.
- Reforms to the RPI have become a market concern again, but now would be a terrible time for the Chancellor to rock the boat. A consultation could be launched into reforms of the index’s use, rather than construction, though.
5. National People’s Congress/Political Loyalty/Trade War/Huawei Sues
China News That Matters
- Still faster than most of the world
- Stick with Xi, if y’know what’s good for ya
- Trade deficit grows as war drags on
- I’ll see you and raise you: Huawei sues Washington
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.
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