The Hangover

Today's post will be mercifully short, as last night was Macro Man's office Christmas party. Overconsumption of adult beverages has left him nursing a startlingly powerful hangover, and he really hasn't got the energy to do more than point at pictures.

Thankfully, China released a veritable library of data last night that makes for interesting viewing. The latest M2 data confirm that Beijing has been throwing a pretty serious party of its own, with plenty of liquid(ity) provided....
The bill hasn't come yet, so everyone still seems to be having a good time. Even the normally grumpy "foreign devil" guests can't complain too much; hey, just look at that import growth!
Ah, but some early arrivals who drank deeply do indeed to be in the early stages of the same "pounding head, dry mouth, dodgy guts" ordeal that your author is currently enduring. Copper imports have started collapsing back towards trend:
as have iron ore imports:
Strangely, the one commodity sector that seems to be the most resilient is the one with the soggiest price of late, crude:
Of course, China has a relatively lower profile in the oil market than they do in, say, copper. But still, the relative divergence in price fortunes is striking. In any event, it seems as if even China cannot party indefinitely without getting a hangover. Sure, a hair of the dog approach can postpone the pain....but the more that that remedy is pursued, the more painful the hangover will be when it finally comes time to sober up.
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Skippy
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December 11, 2009 at 11:17 AM ×

Headline inflation has also started to rise in China - not surprising given the base effects from last year and the recent rise in food prices. Inflation lags M2 growth by around 9 months - it is just a matter of time. Of course, asset price inflation is already underway. The hangover may be very large - 10.4t in loans over the past 12 months (or one third of GDP) is one hell of a party.

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Anonymous
admin
December 11, 2009 at 12:30 PM ×

http://themisse.wordpress.com/2009/11/30/if-they-had-facebook-in-star-wars

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Anonymous
admin
December 11, 2009 at 12:48 PM ×

very funny

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Anonymous
admin
December 11, 2009 at 1:08 PM ×

MM, what about coal? Are they still importing more than normal? or it also coming back to normal?

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Macro Man
admin
December 11, 2009 at 1:12 PM ×

Similar profile, though the srop off has not been as extreme yet. That might have something to do with the weather...these data are not seasonally adjusted, so might make sense that energy imports have not fallen as much.

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Minty
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December 11, 2009 at 1:19 PM ×

The one thing I have learnt in markets is that when drunk and anticipating less sleep than usual, one MUST drink a Berocca before bed to prevent ill effects the next day.

Hope you're surviving MM

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Tord Steiro
admin
December 11, 2009 at 2:07 PM ×

Just one question:

As far as I can understand from this graph:

http://preview.tinyurl.com/ye79jvh

we may experience a certain inflaton in hangovers when banks start lending and the multiplier returns to something less ridicolous than 0.8...

Any thoughts?

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But What do I Know?
admin
December 11, 2009 at 2:43 PM ×

Whatever your hangover, it could be worse, MM; you could have watched the Steelers last night. . .

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Macro Man
admin
December 11, 2009 at 3:00 PM ×

Well, I said the other day that the pity party's over. I'm at the point now where I hope they lose out so they can finally draft a half decent tackle....

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Anonymous
admin
December 11, 2009 at 3:27 PM ×

am loving this treasury smackdown...well deserved and more to come...

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Anonymous
admin
December 11, 2009 at 3:29 PM ×

i hear ya about the hangover

how bout them steelers...!!!

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December 11, 2009 at 4:23 PM ×

How about them dollars, en fuego atm...

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Anonymous
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December 11, 2009 at 4:52 PM ×

LB- time for the US flattner has arrived

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zjin
admin
December 11, 2009 at 6:35 PM ×

US November gasoline price is almost 50% hgiher than that in November 2008. I cannot wait to see the headline inflation number next week before FOMC. Sure Ben will see that number before everybody else here, right?

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Steve
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December 11, 2009 at 6:38 PM ×

Tord that's assuming the reserves stay flush in the face of a rising multiplier. Your chart demonstrates that there is no causality going on. It's the pushing on a string deal.

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Gary
admin
December 11, 2009 at 8:48 PM ×

zjin -

this is a big problem with finance now. If you go out and look at real prices in the real world -- they are definitely going up

But finance geeks insist on a weird academic debate about theoretical models that may or may not even be valid -- money multipliers, reserve deposits, number of leprechauns within a distance of the NY Fed.

Theoretically, the finance geeks are right... but as we all learned (or should have learned) from the LTCM disaster, the real world doesn't always "obey" theory

Theoretically, LTCM could not blow up. Theoretically, we cannot have inflation because low unemployment (like in the 1970s?) or because some money multiplier nonsense.

But in the real world, it can and is happening.

My favorite quote I like to tell analysts is: every ship at the bottom of the ocean has a set of charts on it. Just because there are no underwater rocks shown on the chart does not mean you can't hit one or run aground.

That's the difference between book smart and experience

To everyone on the blog: Have a great holiday and I hope to have lots of endless debates again next year. MM -- hope your hangover clears quickly

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jc
admin
December 14, 2009 at 8:19 AM ×

MM

It took a decade for the Japanese Damn to burst.

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Skippy
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December 14, 2009 at 8:19 AM ×

Abu Dhabi, Dubai's white knight.

"Hans, Bubi, I'm your white knight!"

Eillis, Die Hard.

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Jay Palkar
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December 20, 2019 at 11:04 AM ×

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Amrita dubey
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January 27, 2020 at 12:31 PM ×

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