E The Daily Shot And Data - February 24, 2016

Let’s begin with a number of developments in China.

1. According to RBS, Beijing may not have sufficient appetite for an aggressive fiscal stimulus program as well as bank bailouts, as non-performing loan balances increase. One could argue that it will be forced to undertake both, resulting in larger deficits.

Source: @RBS_Economics

2. China’s electricity production is no longer growing. Much of this is due to weak industrial demand and is not necessarily a great proxy for GDP growth.

Source: Macquarie

Part of the explanation for the above is the shift in corporate activity from raw materials production to “downstream” businesses – which require less electricity.

Source: Macquarie

3. China’s FX reserves remain under pressure as January saw more capital outflows.

Source: @acemaxx, @MorganStanley

4. China has become the global demand center for copper, still importing massive amounts of the commodity.

Source: Credit Suisse

5. The nation remains heavily dependent on investment (discussed previously).

Source: Macquarie

Investment level at 45% of the GDP is simply not sustainable and based on the history of other major Asian economies, the full rebalancing is yet to come.

Source: Macquarie

6. China’s e-commerce mix continues to change as the customer-to-customer businesses start to dominate.

Source: JPMorgan

In some emerging economies, weaker currencies are generating inflationary pressures.

Brazil’s CPI rate continues to climb.

Source: ?Investing.com

South Africa’s inflation is also waking up as the rand weakness takes its toll. This is a 17-month high and above the central bank’s target.

Source: ?Investing.com

It was a bit surprising to see Australia’s wages now growing slower than those in the US as China’s slowdown pressures the labor markets.

The news out of Europe is dominated by Brexit fears as the British pound drops below $1.4 for the first time since 2009. This uncertainty is part of the BoE’s policy calculus at this point. It should keep the central bank on hold for some time, thus pressuring the pound.