After an unprecedented surge in Chinese attempts to stimulate the economy in late 2015, mostly on the fiscal side, coupled with recent monetary easing by the PBOC which cut the banks' reserve ratio recently and unleashed a tsunami of new loan creation in January, many expected that this unprecedented credit impulse would translate into at least a modest rebound for the economy, prompting a stable pick up in spending for the economy which many are touting is now consumer-spending driven as opposed to export and production.
At the end of 2014, the U.S. was the only bright spot among the world’s major economies. Chinese growth was slowing, Europe was flirting with deflation, and Japan was crawling out of recession. But last year’s standout economy has fared much worse in 2015. Revised figures show that US GDP shrank 0.7 percent in the first quarter.
The Chinese government's anti-corruption campaign hit luxury shops hard as the gifting expensive items for company executives dwindled — but spare a thought for the country's corporate caterers. The sector was almost wiped out in a stroke when the reforms were announced in 2012, as companies put an end to extravagant parties. Analysts from Merrill Lynch show this in one great chart. Here's what happened:
As a followup to today's weak retail sales report (see Autos and Restaurants Positive in Overall Weak Retail Sales Report; Last Month's Sales Revised Lower), today's business inventory and sales report is downright anemic, also with negative revisions.Bloomberg Econoday offers these comments on business inventories.
To understand why the retail sector will continue to be such an investment minefield consider just two phrases: Black Friday and Cyber Monday.
The latter, the mock tradition of buying stuff online when the boss isn’t watching on the Monday after Thanksgiving, is emblematic of the forces challenging a retail industry much of which was built for a U.S-centered cars, parking lots and box store paradigm which makes less and less sense every day.