Great chart from Fathom Consulting at the Alpha Now Thomson Reuters with the following observation: (bold mine)
Data published on last week showed that house prices have now fallen for nine months in a row – the longest run on record, under this relatively new measure. Mudanjiang, one of the 67 Chinese cities that registered house prices falls over the past twelve months for second-hand residential buildings, experienced a 13.9% fall. The US entered recession around two years after house price inflation had peaked. After nine months of recession, Lehman Brothers collapsed. As our chart illustrates, house price inflation in China has slowed from its peak in January 2014 at least as rapidly as it did in the US.
Should the US housing bubble bust experience serve as a model, then a sustained housing deflation in China means that the latter's economy may fall into recession by mid 2016.
But if the rate of the unwinding of the Chinese housing bubble accelerates, then this may shorten the time window.
However, the Chinese government has been preemptively easing. The Chinese government has been joined by many other global central banks who appears to have also been frantically easing.
Will such joint actions help extend or delay the process? Hmmmm.
It’s a complex world with manifold factors. But the writing is clearly on the wall.
Record stocks in the face of record imbalances at the precipice.
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