Watch out for Chinese deflation exports

The new note from Société Générale’s Albert Edwards will not disappoint his fans.

Heaven knows the market Morrissey is miserable now!

“China is about to join Japan in exporting its increasingly troublesome economywide deflation to the west,” he warns, adding that renminbi devaluation will exacerbate this trend.

When China’s first-quarter GDP data were released last week investors missed the most important bit of news.

Nominal GDP growth fell from 9.7 per cent in Q4 to 7.9 per cent year-on-year.

“That is the weakest nominal growth since the 2008 Great Recession. Very few people tend to focus on these nominal data and what they imply for economywide inflation,” Mr Edwards notes.

Watch out for Chinese deflation exports –

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