Consumer durable sales are falling sharply:
Offline sales value across all three categories declined by double digits. Air-conditioner sales slid 19% from a year earlier after dropping 18% in December. Refrigerator and washing machine sales fell 15% and 13%, moderating from declines of 23% and 21% in December.
— Screaming Buy (@LimDown) March 14, 2019
And from Trivium China:
Premier Li Keqiang reiterated that big stimulus isn’t coming:
“An indiscriminate approach may work in the short run but may lead to future problems.”
“Thus, it’s not a viable option.”
“Our choice is to energize market players.”
….It’s a decidedly different tack than the credit-fueled stimulus of yesteryear, and the practical outcomes of this new policy response are two-fold:
- Given that it’s a new strategy, the transmission channels from policy to actual economic growth support are not well understood.
- The one thing we do know – this approach will take longer to impact the economy than the credit-driven responses of previous cycles.
The bottom line: It will take China’s deceleration longer to bottom out than markets and businesses currently expect.
China’s stated intention is to avoid big stimulus, so a policy reversal, if we see it, would signal that the slowdown is far worse than expected.