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China Stocks: What Could Go Wrong?

Bloomberg reports that China equity markets have become even bubblier after a wave of new irrationally exuberant “investors” that harken back to the U.S. in the 1920s when Joseph Kennedy purportedly began selling stocks after receiving a hot tip from a shoe-shine boy.

On a positive note, they now appear to have their real estate bubble under control…

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Renewed Interest in World Population

The story Climate change isn’t the problem. A population bomb is killing us at Marketwatch that was prompted by a new study in the journal Science that is currently making the rounds (also see The New Population Boom Could Easily Be a Dud at the WSJ) prompted a quick look at world population growth as shown below via this item at worldometers.

Recall that a few decades ago, this was the world’s number one problem, however, the recent flattening of the curve has eased those concerns substantially. The Science report argues that expectations of world population stabilizing during this century are likely wrong and that there could be more than 12 million people on the planet by 2100.

A couple of rather remarkable stats from worldometers:

  • During the 20th century, world population has grown from 1.65 billion to 6 billion.
  • In 1970, there were roughly half as many people in the world as there are now.

The precipitous decline in the price of copper over the last three days has dramatically increased the “pucker factor” for global financial markets as an increasing number of traders are taking copper’s price plunge as a cue to sell other assets.

Recall that copper is the metal with a PhD in economics since its use is so widespread and, as a result, its price provides important signals not just about the supply and demand of copper but of the health of both local economies and the global economy. Right now, it’s not saying anything positive about China or the world.

This CNBC report says the plunging price may be “acting as a fire alarm for the global economy” and fire alarms going off are never good. Even if it’s a false alarm, it’s highly disruptive over the short-term and, right now, it’s keeping people from buying stocks.

Bloomberg says iron-ore prices are also tumbling and that steel companies are teetering.

The real problem here is not the metal or the economy – it’s credit – and both copper and iron-ore have been widely used as collateral for sometimes dodgy loans from China’s enormous shadow-banking system that also appears to be teetering.

None of this sounds good…

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All the Home Prices in China

Reuters reports that efforts to slow credit growth and other measures taken by the Chinese government have finally succeeded in slowing the rate of growth in property values as new home prices in 70 major cities rose 9.6 percent in January from a year ago, down from 9.9 percent the month prior and the slowest rate of appreciation since late-2012.

There’s a much bigger chart here showing all 70 cities for anyone who knows the difference between Xining and Tianjin. They still have a bit of a bubble on their hands, but, as Canada has proven in recent years, bubbly real estate markets can stay bubbly for a very long time.

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