Thread by @Trinhnomics

Good morning - hot & humid day in 🇭🇰. Korea unemployment went UP to 4.1% from 3.8% (Moonomics not working🙄). We wait for China April data, Indonesia trade; and Philippines remittances.

China April data likely to slow after strong March 👇🏻 (look forward to decompose FAI 🤗)

The 4.1% is SEASONALLY ADJUSTED so actually 4.4% 🥶. Can't say I didn't warn Moon (already wrote about this in 2017 & how it's really bad economics of Moon to raise costs of production in Korea - yes, firms can offshore & they do).

US 👗👜👞retail sales tonight (likely slowed).

Let me give u some color on Korean employment or shall I say lack of employment (up📈to 4.4%). Who's down?

a) Manufacturing -1.2% YoY (been declining for a while)
b) Construction -1.5% (real estate downturn)
c) Retail sales -0.6% (yes, higher wage costs = SMEs ✂️cut headcount)🥶

I'm getting people say, wutev, who cares about unemployment. Look, EMPLOYMENT IS KEY b/c it means wages & that means consumption & that means investment

When jobs CONTRACT, people feel bearish & don't make babies, buy stuff & firms don't invest

Korea growth 📉Investment📉🥶👇🏻

Oh just so u know, Korean investment hasn't been this BAD SINCE 2009. Yep, like wayyy worse than 2009. Its contraction was -8.4% YoY in Q1 2019 after contracting 3 previous quarters (so 1 yr of contraction 🥶👇🏻)

Moonomics not working & Korean investors are voting w/ their feet.

While we wait for China data, let's look at something rather interesting: AUD/USD, which has been languishing for a while now. AUD is a proxy China trade b/c freely floated while CNH & CNY is heavily intervened (CNY has daily fix & 2% band trading limit)

Meaning, AUD reflects commodity (& also domestic conditions such as real estate, consumption, employment). China is the largest commodity importer so it is a PRICE MAKER of commodity & so Chinese growth expectations is reflected in AUD too (not all but a lot).

AUD is interesting

Ouch. Huge disappointment, esp retail sales. China FAI rose 6.1% from 6.3%; IP📉5.4% from 8.5%YoY & retail sales📉 7.2% from 8.7%YoY (btw all nominal not real)

All below expectations & don't expect a V-shaped recovery. Everything is L-shapy 😬

Let's look at FAI 1st (nominal) & it tells u about the FUTURE b/c investors invest on expectations of the future. Bad news, private investment 📉 ytd %YoY (meaning Jan - April 2019 vs same period last yr).

State investment 📈to put a floor on slowdown but ROA lower than POE.

Retail sales are horrible no matter how you slice & dice it. Ytd, it's down to 8% (will share chart later). Let's look at %YoY (April 2019 vs April 2018) 📉

Everything is 📉 ex medicine 🥶 . Chinese consumers tightening their purse strings. Btw, u knew this b/c POE investment📉

Industrial production is horrible too (I told u that GDP was bad b/c of the bad roots). IP output 📉:

a) Manu 📉to 5.3% from 9% & ytd is 6.7% (not good cuz nominal)
b) Everything down ex pharma & telecom
c) Auto & textile contracting.

Meaning, BOTH INVESTMENT & OUTPUT BAD.

Here is a time series of China retail sales %ytd YoY & %YoY. A 8% growth is a HISTORIC LOW & some ask why fret. 1st, it's NOMINAL. Real growth LOWER. 2nd, u must evaluate an econ vs itself for trend & debt sustainability. Meaning, firms take out debt based on expects of growth.

Let's continue this uplifting Asian econ story: Indonesia reported April exports & it's WORSE than expected down -13.1% YoY; IMports down too & trade deficit widened (IDR weakened - our call is that it weakens after elections🙌🏻).

Japan P Machine Tool orders COLLAPSED -33.4%🤢🤮

Want to see it? This is what a -33.4%%YoY looks like (and yes, after MONTHS of contraction).

Global manufacturing is in big trouble & the data from Korea tells you that May unlikely to be pretty either.

Oh yah, markets up somehow 🤗

Let me show u Asian trade up to April. I smoothed China exports by taking a 3-month average b/c it is too volatile (Jan +9.3%; Feb -20.7%; March 13.8%; April -2.7%).

Basically, DOWN 📉

Okay u say wutever. But Korean data shows weakness in May too!!!