Good morning from Copenhagen! 

Here are a few key updates for you:

China continues to disappoint, with Industrial Profits down a substantial 10% year-over-year. This aligns with our analysis over the past weeks, where we’ve emphasized China’s attempts to “artificially” sustain GDP growth. This effort has created a clear divergence between Industrial Production and Profits.

Notably, there have been no significant developments on China’s liquidity front in recent weeks. Our liquidity nowcasting points to an accelerating deterioration, casting doubt on the recent uptick in growth. Adding to the uncertainty, the potential imposition of a 10% additional tariff on China by the Trump administration on day one reignites the need for more robust, well-targeted, and sizable stimulus measures.

We are in other words not overly convinced of the retracement rally seen in Chinese risk assets this morning.

Chart 1.a: Chinese PPI vs profits