Thread by @Trinhnomics

Morning - China'll open after a wk off & got Caixin services at 945am (expectations of a minor slowdown). The real news is of course the fact that property sales slowed during Golden Week. Tourism grew for domestic while overseas fell. Meaning, households tightening purse strings

Meanwhile colleague came back from Japan & said felt the consumption tax hike (VAT is now 10% from 8%). 10% is pretty easy to calculate as everyone can mentally do 10% of any price & will feel 10% poorer even though the actual increase is only 2% from 8%.

Shirt price 100👉🏻110😱

Japan latest consumer confidence, or shall I say lack of, is 35.6, which is le low as 50 is supposed to be the threshold (like PMIs). I wonder why. Consumption taxed at 10%, which is a pretty nice round # for anyone to understand the costs & so would be like, nah, I'll save 10%👇🏻

Short-cut to mental math. People get stressed when they see a big # or #s w/ many decimals/fractions. But don't worry, think in 1, 10, 100.

Ex: Japan nominal GDP is ~5trnUSD. If this is 100 then 1% is 0.05trn & 10% is 0.5trn or 500bn

To get 2% u take 0.05*2 = .1trn or 100bn

So if whatever # u look at is 100 (think of 100% of the #), then 10% is just moving the decimal 1 place over & that means any child can know what a 10% VAT hike is.

Say price = JPY1,395,965,868 =100%
10% = JPY139,596,586.8

And u're like wow, maybe'll save my precious 10% JPY 🤗

China services PMI slowed to 5.3 from 52.1 & composite rose because of manu to 51.9 from 51.6 (Caixin a weird # because the state contracted for manufacturing).

So the contraction of manufacturing is filtering through to services & this is a global trend 👈🏻.

Should be 51.3 not 5.3! Typed too quickly. Here is the presser which is pretty strange because it jumbled services w/ manufacturing (which rose off the chart while state manufacturing contracted).

The slowdown of services to 51.3 from 52.1 is a sharp slowdown & not much details

Time series of soft data for China manufacturing & services. Look at the grey & black lines. They are pretty odd relative to the state that show divergence of the 2 sectors while Caixin converged 🤷🏻‍♀️

I smoothed this out by taking a 3-month average of everything we got in terms of September data & it looks like this:

Bottoming of manufacturing (contraction of state seems to be stabilizing) but services SLOWING DOWN 👇🏻

Let me put them side-by-side for you (note that there is a dashed line at 50 to mark the contraction/expansion pt vs previous month). I think the smoothed data is a bit better to see trend as it takes a 3-month moving ave 👇🏻