China's economy slowed in July. Retail sales barely grew. Investment slumped. Economists are reinforcing concerns about supply-demand imbalances, which is what economists call it when people stop buying sh*t they don't need.
The world's second-largest economy is grappling with reality. Turns out building ghost cities and financing infrastructure projects that generate zero returns has consequences. Who could have predicted this. Besides everyone. For years.
Retail traders saw this headline and immediately checked their portfolios of Chinese EV stocks bought at all-time highs. They're down 73%. They will not sell. They will instead read seventeen more articles about supply-demand imbalances and convince themselves this is a buying opportunity.
Investment slumped steeper in July than in June. This is the financial press way of saying the line went down more than it went down last time. Technical analysis says none of this matters. The 200-day moving average doesn't care about retail sales. The RSI doesn't factor in supply-demand imbalances. The chart patterns existed before this headline and will exist after.
Some analyst at a midtown firm is preparing a client note right now explaining why this data reinforces their thesis. Their thesis changes every month. Last month China was undervalued. This month it's a value trap. Next month it'll be a contrarian play. The only constant is the fee.
Here's what matters: none of this data changed the trend. The price action already told you everything this headline pretends to reveal. But retail needed the headline to feel smart about losses they're calling unrealized.
Photo by Camillo Corsetti Antonini on Unsplash
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