China

China recently tested a new, advanced type of guided missile in the sea near the Korean peninsula, the Chinese defense ministry said Tuesday cited by the Times of India, just as South Korea concluded its presidential elections amid rising regional tensions. The test in the Bohai Sea was conducted to “raise the operational capability of the armed forces and effectively respond to threats to national security,” the ministry said in a brief statement.

After two days of disappointing macro data out of China, with trade numbers missing expectations on Tuesday following by another drop and miss in producer prices overnight, the "great decoupling" between China stocks and both the S&P500 as well as the rest of the world continued, and the Shanghai Composite dropped another 0.9% to 3,052 to the lowest level since mid-October.

With the entire world's focused on the last remaining reflationary dynamo in the world, China, today's inflation data out of Beijing, fabricated as it may be, was closely watched.  After all, just one month ago, UBS declared China's reflationary phase over, and a dark, deflationary era of negative credit impulse-driven deflation would soon be unleashed on the world. Again.

It wasn't quite so dramatic.

"Iron ore doesn't have good fundamentals," warns one analyst as while the crackdown on leverage in Chinese capital markets (which has tightened liquidity everywhere) is the immediate catalyst, "supply-side pressure is huge as ever, and mills are still seeking to draw down inventories."

Some market observations courtesy of the latest "Morning Porridge" from Mint's Bill Blain

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Blain’s Morning Porridge – May 9th 2017

“I’ve met the Emperor of China and the only British working miner, but I’ve never…..”