Thread by @Trinhnomics

#China said to be preparing to buy more USA 🇺🇸 pork 🐷🐽. Food inflation is off the chart because of the protein shortage while PPI is deflated. Need to get food deflation down ASAP!

*Should be food inflation not DEFLATION. Woops. Deflation is in PPI while CPI is rising from food prices.

Stocks are reversing some losses as it at the margin means that hopefully there is more pork supply to ease some out of control pork prices onshore and hopefully that will lead to inflation easing (not soon but light at the end of the tunnel) & hopefully space to ease by the PBOC

Some are thinking this means de-escalation of trade-war. Maybe. Maybe it is just a convenient move to kill two birds with one stone. Note that I called for this to ultimately happen anyway as the room for China to move is more narrow than people think.

https://twitter.com/Trinhnomics/status/1014791235452588032?s=20

Regardless of which side of the aisle you sit, this is a positive move. Why? Because it'll ease the decline of supply pressure on average Chinese consumers. The poorest are always spending so much more of their income on food as a share of their household expenditure. So good!

HSI & SCHOMP bounced fast on that news (almost a 1% move here & almost reversed losses - almost)

Key chart on the impact of FX move on essentials in Asia - everyone ex Malaysia, Vietnam & Indonesia are net importers. Biggest net importer of essentials?
#1 🇨🇳
#2 🇯🇵
#3 🇮🇳
#4 🇰🇷
But Japan & Korea rich so food part of CPI is smaller. Not China & India. FX as a tool? Hmmm 🤔