As I wrote last week there are two paths for China. One contain the virus. Two obfuscate the numbers to pull its economy out of depression.
Here is the big takeaway from the last week’s post:
This hardship on the Chinese economy could pave the way for the eventual spread of the virus as the government battles depressionary losses due to a trade shutdown.
On Wednesday China announced economic stimulus including bailouts and the idea of forced mergers in airline and shipping companies to combat the economic slowdown.
The number of new Chinese coronavirus cases reported was only slightly higher than the previous days giving international investors a ray of sunshine. While many view these numbers with skepticism, it is the only barometer to measure the outbreak.
These fiscal and monetary actions point to China taking the obfuscation route in order to jump start its economy. Hell be damned for the spread of the virus.
Remember that China’s factories have been closed for almost a month since before the New Year’s celebration in January. As a result many industries cannot make payroll to the workers who may show up.
On Tuesday we had Apple and WalMart report weak sales guidance because of the Chinese outbreak. Wednesday sneaker makers Adidas and Puma gave similar reports to investors in what will most likely be a daily occurrence of bad manufacturing news for now.
Let’s hope the number of new cases trends down (really) for the sake of China and world trade.
Gray's Economy 