loss China Macroeconomic DataPublished tonight by the country’s National Statistics Office, “Assuming that they are true, which is saying a lot, they have been really disappointing,” Jose Luis Cava, a market expert, says on his YouTube channel today.
They have been below even the worst forecasts. What’s more, youth unemployment has remained above 20%, an all-time high.
Based on these data, The specialist asks the following questions: how the Central Bank of China will respond; Second, how will the yuan react. Third, how are European and US financial markets going to respond? And finally, how are Chinese economic and political officials going to respond in the race to catch up with the United States’ level of demand.
On a monthly basis, from macroeconomic data China shows decline in real estate investment, a decline in real estate investment and a decline in retail sales. Experts point out that it should be noted that China has not raised interest rates.
In addition, the Central Bank of China has injected massive amounts of liquidity. So, these facts suggest first of all that demand from China, private demand in China, is very weak, says Kava.
Second, the expansionary monetary policy of the central bank fails to stimulate the economy. “Something’s wrong here.”
We can reach a third conclusion, which is probably Disappointing China data hits global demand slumpfrom demand in the West, which is now suffering the cumulative effect of rising interest rates.
How will the Central Bank of China react? The agency has also observed that there has been a sharp decline in credit in the last month. “A central banker who wants to control the growth rate of credit, given this fact, will react by reducing the cash ratio,” says the expert.
China established a cash flow ratio of 20% in 2014 and is reducing it. Now it is located around 10.75.
Therefore, we are going to consider, as the most likely scenario, that the Central Bank of China lowers the cash ratio in June.
As Yuan has reacted, Down, so the yuan continues to downtrend against the dollar.
In terms of how the fixed income markets reacted this morning in Europe and the United States, we’ve seen how bond prices have risen and we’ve seen, therefore, how yields have fallen and then currencies like the Swiss franc, for example For, emphasizing its short-term upward trend. “Therefore, it appears that investors in fixed income markets are anticipating a pronounced cooling in the global economy.”
how will they react Chinese Economic and Political Authority, We’re seeing that if the yuan falls, well, and prices stay stable or don’t rise, China’s GDP is going to be very difficult to reach in the short term, and I’m talking about a 10-year period, the United States GDP of
This puts the brakes on China’s aspirations of reaching the level of GDP of the United States. And so, very likely, Kawa says, political officials will not seek to escalate and intensify their confrontation with the US, which is good for world peace.
S&P 500 Analysis
First, be aware that futures and options contracts expire on Friday of this week, and options on Wix expire as well. “A Tough Week.”
The S&P 500 has been trending sideways for six days. collect 4100 zone support And the resistance of zone 4158.
“The question is simple, is it preparing to break the rise or is it preparing to break the decline? I don’t know”, says Kava. As speculators, you have to develop a betting plan, how to react to price fluctuations.
Experts will look at earlier support 4100 area. If that support is pierced, selling is likely to accelerate. The first target will be the 4045 area and the next target will be the 4000 area which is a very important support.
In the following chart, the experts have drawn a bearish direction, which now runs through the 4040 area.
If the S&P 500 breaks above 4040, it will probably try to move to the next level that we have prepared for you, the 4180 area, where the experts will sell.