Look, Green Shoots! And Just In Time For Viral Roundup

Anything backward-looking has been rendered somewhat meaningless by the Wuhan virus, an unfortunate state of affairs, given that the global economy was arguably on the cusp of inflecting for the better.

And yet, it’s still worth keeping yourself apprised of the incoming data. If the outbreak abates and remains largely confined to mainland China, the data from December and January suddenly “matter” again.

With that in mind, note that Hong Kong exports snapped a 13-month streak in contraction in December, data out Thursday showed.

As alluded to above, this may well end up being a false dawn. In addition to the very real possibility that the virus further cripples an already hamstrung Hong Kong economy, civil unrest remains a key risk. The city fell into recession late last year, while retail sales and PMIs have plunged. Stimulus efforts have generally been described as insufficient.

Still, it does speak (albeit meekly) to the recovery narrative that prevailed prior to the virus outbreak, and although South Korea’s exports may be impacted by the unfolding crisis too, numbers out of Seoul recently showed signs of improvement.

Meanwhile, in the epicenter of the global factory slump, the number of Germans out of work fell by 2,000 this month. Economists had expected an increase. The jobless rate stuck at 5%, close to its record low. And, inflation printed 1.7% YoY, up from last month. Harmonized, the print was 1.6%, a shade lower than forecasts, but we’re moving in the right direction.

Does any of this matter? Well, yes. Otherwise, I wouldn’t have wasted my time writing it.

What you’re going to see over the next two months is analysts trying to parse the incoming data for the virus effect, and separate that out in order to get a “clean” read on where things stand. What the data from December and January generally (and I emphasize generally) shows, is a tentative inflection. The numbers mentioned above underscore that.

The question is whether it’s durable. That would have already been a debatable point, but it’s even more so now, given the distinct possibility that the global health scare will be Roundup on the “green shoots”.


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4 thoughts on “Look, Green Shoots! And Just In Time For Viral Roundup

  1. History will show that China was on the verge of imploding now,virus or no virus. Sometimes it is better to shoot the horse early, rather than later.

      1. I think he is likely basing his views on Peter Zeihan’s apocalyptic take on… well, more or less a global collapse, sans America. Zeihan sees the current world order falling apart as America turns inward and has predicted the complete disintegration of China as an economic and political entity. He also sees the breakup of the EU with the concurrent implosion of the German economy. He surmises that the United States will be the primary beneficiary of global disorder as a secure and self-sufficient safe haven.

        Zeihan is an expert on global trends in energy, demographics and security (as he is never shy to proclaim) and aggressively peddles his apocalyptic vision (and books) whenever he is presented with the opportunity to do so.

        Zeihan is both intelligent and glib and his analysis has merit even if his conclusions are assuredly less inevitable than the fait accomplis that he presents them as. He is something of a one trick pony as all of his presentations (and books) are riffs on the same global collapse theme.

        After having seen a handful of his talks, I would add that his easygoing glibness does not wear especially well. Over time his style oozes an off-putting amount of smirking smugness. All the more so as he tries to keep things light and humorous while he talks about events that signify death and dislocation on an unprecedented scale.

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