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Steno Signals #121: Whatever It Takes—In the US, but NOT in China

While the Chinese fiscal briefing was a huge nothing burger, we are starting to see pockets of the USD-denominated asset space behaving as if a USD "whatever-it-takes" moment is just around the corner.
2024-10-13
<a href="https://stenoresearch.com/author/andreas/" target="_self">Andreas Steno</a>

Andreas Steno

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Happy Sunday from Copenhagen!

I spent most of Saturday morning discussing the fiscal briefing with clients. Even though I’m admittedly not as actively involved in business with China as I was a few years ago, I still feel relatively comfortable assessing the ramifications of the briefing.

It was exactly what I feared: a big nothing burger. China keeps bringing supply-side measures to a demand fight, which is unlikely to work. What China really needs is to force an increase in demand throughout the system, but instead, they’re focused on trying to incentivize demand for assets or reshuffle credit profiles.

The “whatever it takes” moment is much closer in U.S. markets than in Chinese markets, and those fixated on China may miss the train. Here’s why!

Chart 1a: We got an activity spike after the initial stimulus, but it was small

Chart 1b: Fund flows into China have mainly been centered around Technology cases

While the Chinese fiscal briefing was a huge nothing burger, we are starting to see pockets of the USD-denominated asset space behaving as if a USD “whatever-it-takes” moment is just around the corner.

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