China's industrial profits grew 4.2% in August. This marks the weakest growth rate of the year. Economists predict Beijing will deploy more stimulus to prop up corporate profitability. Consolidation will accelerate in sectors plagued by sluggish demand and fierce competition.
Retail traders saw this headline and immediately began drawing trendlines on their phones. They connected three random points on a chart. They called it technical analysis. One of them posted "bullish divergence" in a Discord channel at 3am. Nobody asked what he meant. Nobody cared.
Beijing will lean harder on stimulus because that always works forever with no consequences. Print money. Prop up failing companies. Watch consolidation accelerate as the strong devour the weak. This is called free market capitalism when America does it and communist intervention when China does it. The difference matters deeply to people who lose money in both markets.
The 4.2% growth figure represents the weakest performance this year. Last month was stronger. Next month could be weaker. Or stronger. Technical analysts have drawn shapes predicting both outcomes. They will reference whichever chart proves correct and delete the other one. This is called having an edge.
Sectors facing sluggish demand and fierce competition will consolidate faster now. Weaker firms will disappear. Stronger firms will absorb them. Retail traders will buy shares in the companies that no longer exist because the ticker symbols still populate on their brokerage apps. They will wonder why their positions show zero value. They will blame market manipulation.
Stimulus measures will target corporate profitability because corporations matter and you do not. Beijing understands this. So does Washington. So does every government that has ever printed money to save institutions while letting individuals figure it out themselves. The chart on your screen will not tell you this.
The industrial profit data came from China's National Bureau of Statistics. They measured it. They reported it. Economists analyzed it. Traders ignored it and bought calls anyway.
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