Monday, April 18, 2016

China Containerized Freight Index; What Greensboro's elites and purchased puppets don't see coming

"Relentless deterioration meets stunning overcapacity.

...This chart shows the continuing collapse of containerized freight rates from China to the rest of the world:

...China’s exports have plunged...

The amount it costs to ship containers from China to ports around the world, a function of the quantity of goods to be shipped and the supply of vessels to ship them, just dropped to a new historic low.

The China Containerized Freight Index (CCFI) tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world. It reflects the unpolished and ugly reality of the shipping industry in an environment of deteriorating global trade.

For the latest reporting week, the index dropped 0.6% to 636.14, its lowest level ever. 

Think Rick Lusk, Larry Davis or Jim Westmoreland see the implications?

I assure you they don't

They are too busy justifying taxpayer funded handouts to City Council's patrons

For the January through March period – to iron out the monthly volatility associated with the Lunar New Year holiday – exports are down 9.6% year-over year. 


To the US -8.8%
To Hong Kong -6.5%
To Japan -5.5%
To South Korea -11.2%
To Taiwan -3.7%
To the countries in the ASEAN -13.7%
To the EU -6.9%
To South Africa -29.6% (!)
To Brazil -47.2% (!!)
To Australia -1.9%
To New Zealand -12.4%.

...what had already been an overcapacity problem turned into a self-inflicted nightmare for carriers. They’d assumed ever since the bouts of QE and zero-interest-rate policies started that central banks had their back. They’d smelled the lure of cheap money. And they’d fallen for the central-bank propaganda that “bold” monetary policies could actually stimulate the real economy, the goods-consuming economy. And so, imagining years of big-fat growth, they ordered ships, including the newest mega-sized container ships. And as these new ships were delivered over the past couple of years, carriers embarked on a fight for market share by cutting prices.

This culminated in 2015 with the delivery of new ships that added a record 1.7 million TEU of capacity to the global fleet, just when growth in global trade was grinding down.

...The Chinese have among the highest savings rates in the world. But 75% of their wealth is in real estate. They’ve overinvested in one illiquid and bubbly asset that they wrongly believe can only go higher. But when prices break down, it will devastate consumer demand and reverberate around the world. 

...China’s unprecedented real-estate wealth implosion will make Japan’s look benign. Cities like Vancouver, Sydney, Melbourne, Singapore, San Francisco, L.A., New York, and London – anywhere that thrives on affluent Chinese laundering their money out of their country – will hear that sucking sound as well!

Real estate prices are beginning to plummet in many cities. With 75% of Chinese wealth tied up in real estate, the implosion of this bubble will trigger the domino effect, just when the foundations of the over-indebted economy are already cracking. It will devastate the economy and reverberate around the world.