stir fryThe Chinese CPI is not an apples-to-apples measure relative to the CPI (consumer price index) that is reported here in the US. Some are attributing the overnight leg-down in the S&P futures (down another 24 or 2.25% at 11:00pm) to the fact that Chinese inflation came in at 6.5% when the consensus was 6.4%. Crackerjack says: “bullocks”. This is just some more good old fashion market panic in our opinion. Chinese food inflation came in at +14.8%. Certainly high, but food inflation is much more volatile and both weather, crop, and commodity price dependent (notice how all commodities except for gold have been collapsing the past few days). Chinese inflation ex-food is running up 2.9%. Not too much different than inflation in the US, nor should it be with price levels in China quite close to what goods cost in the US  for a variety of branded items.

We are bullish the Hong Kong markets and advocate investors take advantage of recent market turmoil to buy some Hong Kong listed consumer stocks which are yielding 5-8%. We’ll have some detailed research on individual names soon…..But as far as being bearish in HK/China or the US because of the Chinese inflation print is absolute lunacy. Again, goods inflation is 2.9% and food/commodity inflation is about to roll over.

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