Morning from Europe!

The Chinese data overnight was a mixed bag of goodies. The consumer did disappoint in China as we highlighted with our retail nowcasts weakening through April (and May btw)..

The IP trend is though back at pre-pandemic levels and the minor soft patch in April didn’t really feed through in China. With the IP momentum as strong as it is in China, it seems unwise to go against the current recovery trend in Chinese equities. Especially since they never traded the recovery..

If the authorities manage to prop up the consumer sentiment via the fresh real estate initiatives, we have a decently bullish cocktail ahead of us.

Chart 1a: Nowcasting outside of Manufacturing fades in China

Chart 1b: Chinese industrial production has fully recovered while stocks have not