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Steen Jakobsen, chief economist and CIO at Saxo Bank, expects US president-elect Donald Trump to employ near-replica political policies of former president Richard Nixon.
Squawk / 18 July 2016 at 9:58 GMT
Saxo Capital Markets China
China
Shanghai rebar futures plunged by 6% today as China steel output increased 3.2% year-on-year to a record high at 100.72 million tons in June in spite of the efforts of supply-side reform. Steel mills boosted supply as steel price rebounded strongly in the second quarter. Dalian coke futures slumped 5.22% and coking coal declined 3.77% today.

China shares traded in a tight range for the 3rd consecutive day and trading volume declined significantly from a week ago. Shanghai Composite Index declined 0.35% to 3043.56. After recent rally, many positive factors might have been priced in and valuations of most industries have approached long term average level after recent rally. The market needs new catalyst to break April high at 3097 and such catalyst is not found yet. On technical side, both MACD and stochastics indicator gave bear divergence signals on daily chart of Shanghai Composite Index. Initial support lies at 10 day moving average and the upward trend line since June 24.
19 July
Tepord Tepord
Following the crash after March/April's 'mania', Iron ore prices have resurged to 2-month highs on the heels of stimulus-hype and rampant speculation. However, this echo-bubble appears to be bursting as Macquarie sounds the alarm that prices are "getting carried away again" with fundamental support entirely lacking as China inventories soar 30% year-over-year to 20-month highs.
19 July
Tepord Tepord
While speculation about stimulus in China has helped to lift prices, Macquarie said it’s skeptical about fundamental support for the recent move higher, analysts including Ian Roper wrote in a report received on Wednesday. The note asked whether iron ore was "getting carried away again?"
19 July
Tepord Tepord
this echo-bubble appears to be bursting as Macquarie sounds the alarm that prices are "getting carried away again" with fundamental support entirely lacking as China inventories soar 30% year-over-year to 20-month highs.
19 July
Tepord Tepord
Iron ore holdings at China’s ports just posted the longest run of gains this year, expanding for five straight weeks to 105.4 million metric tons, according to Shanghai Steelhome Information Technology Co. The swelling pile signals robust supplies, and banks including Macquarie warned this month that prices may be set to weaken after rallying 34 percent in 2016.

“The rising port inventory is definitely a dark cloud looming over prices,” said Zhao Chaoyue, an analyst at China Merchants Futures Co.
19 July
Tepord Tepord
Furthermore, steel demand in China is shrinking for the first time in a generation as growth slows and the government steers a transition away from a metal-intensive economy reliant on investment to one where services play a bigger role.
19 July
Tepord Tepord
“We would need to see ever-accelerating credit growth just to maintain the same level of steel consumption, which is unsustainable and unlikely,” the New York-based bank said in the July 12 report, referring to the country that makes half the world’s steel. "This is at the core of why we expect Chinese steel demand to fall in coming years."

Still as long as the dream of stimulus is still alive, then why question the recent resurgence.

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