China's imports missed estimates in August. Exports beat them. The country faces mounting pressure to rebalance trade. These three facts exist in the same headline, which means someone thinks they belong together.
The world's second-largest economy imported less than expected while exporting more than expected. This is called having customers but not being one. Every economist with a Twitter account now demands China rebalance its trade. Rebalancing means buying more stuff from countries that already buy your stuff. It's the economic equivalent of being told to smile more.
Retail traders saw this headline and immediately googled what imports are. Then they googled what exports are. Then they bought calls on Chinese EV companies they can't pronounce. Then they checked their portfolio an hour later and wondered why knowing China's August import figures didn't make them rich.
The data showed momentum gathered in both directions. Momentum is what we call it when numbers go up and we pretend we predicted it. August was last month. You're reading about it now. The information traveled slower than the trades based on speculation about the information. This is efficient market hypothesis in action.
Mounting pressure comes from other countries who want China to import more of their goods. They've tried asking nicely. They've tried tariffs. They've tried calling it rebalancing instead of demanding. None of it matters because China will import exactly as much as China wants to import, which in August was less than estimates suggested.
Estimates missed reality. Reality didn't miss estimates. Reality showed up on time and did what it wanted. The estimates were wrong, but we still call it China missing estimates, as if China was supposed to hit a number some analyst made up in July.
The technical analysis remains unchanged: lines go right.
Photo by Zalfa Imani on Unsplash
Leave a Comment