" if China continues to tighten credit while increasing fiscal spending. Recent data indicates that, despite claims of injecting liquidity, they are actually withdrawing funds from money markets, suggesting a tightening of conditions rather than economic stimulation"
China is just trying to support its consumers affected by the downturn in the Real Estate market without creating a new bubble in any other assets and especially without looking to be printing money because the PBOC has to be considered as the new Bundesbank in the world as the Chinese economy is not managed by equity investors but for fixed income investors as most of the economy is relying on banking loans to grow rather than bond and share issuance like in the US. For the Chinese government, the level of the stock market does not matter because the stock market remains mostly in the hands of a few HNWI rather than retail investors like in the US. What matters in China is to keep the currency stable and also to keep the banks afloat for them to continue to finance the manufacturing expansion in key technological sectors to conquer markets in the global south.
I agree with you regarding almost everything besides debt. Having large debt is one of the best things one can have during (hiper) inflation. but it's a must, that is long term debt, with interested rate fixed for a long period going forward. It probably also good or even necessary, that the company in question has a good pricing power.
As the US is heading into an inflationary bust rather than a deflationary bust, the economy will inevitably slowdown so those indebted companies can only benefit from inflation if they are able to raise prices and margins in the upcoming slowdown. Also beware that most of the debt was taken during the 0% interest rate times of Covid so even if the company has the economic MOAT to raise margins in an economic slowdown refinancing will inevitably be at much higher interest rates and interest rate cost will impact profitability.
My advice is to stick with low leveraged balance sheet companies with a MOAT or a quasi monopolistic business model and able to generate FCF and rise prices in any economic environments. I advise to stay away from consumer discretionary in general because the consumer inflation driven misery has just started.
" if China continues to tighten credit while increasing fiscal spending. Recent data indicates that, despite claims of injecting liquidity, they are actually withdrawing funds from money markets, suggesting a tightening of conditions rather than economic stimulation"
Why arw they tightening credit conditions ?
China is just trying to support its consumers affected by the downturn in the Real Estate market without creating a new bubble in any other assets and especially without looking to be printing money because the PBOC has to be considered as the new Bundesbank in the world as the Chinese economy is not managed by equity investors but for fixed income investors as most of the economy is relying on banking loans to grow rather than bond and share issuance like in the US. For the Chinese government, the level of the stock market does not matter because the stock market remains mostly in the hands of a few HNWI rather than retail investors like in the US. What matters in China is to keep the currency stable and also to keep the banks afloat for them to continue to finance the manufacturing expansion in key technological sectors to conquer markets in the global south.
is there any free resource available, for measuring total Global liquidity?
You can find the data on the FED and Treasury websites for M2; the FED balance sheet, the RRP and the TGA but it s not made to be user friendly.
That's probably only for the USA.
is anywhere available for free for all main the countries (together)?
Unfortunately not the data for other countries is not so readily available from what I know.
The thing is .. China is f789ed https://fasteddynz.substack.com/p/overcapacity-and-price-wars/
I agree with you regarding almost everything besides debt. Having large debt is one of the best things one can have during (hiper) inflation. but it's a must, that is long term debt, with interested rate fixed for a long period going forward. It probably also good or even necessary, that the company in question has a good pricing power.
As the US is heading into an inflationary bust rather than a deflationary bust, the economy will inevitably slowdown so those indebted companies can only benefit from inflation if they are able to raise prices and margins in the upcoming slowdown. Also beware that most of the debt was taken during the 0% interest rate times of Covid so even if the company has the economic MOAT to raise margins in an economic slowdown refinancing will inevitably be at much higher interest rates and interest rate cost will impact profitability.
My advice is to stick with low leveraged balance sheet companies with a MOAT or a quasi monopolistic business model and able to generate FCF and rise prices in any economic environments. I advise to stay away from consumer discretionary in general because the consumer inflation driven misery has just started.