China macro

China’s existing home prices continue to fall. New was down as well…

…and the money supply data was also quite negative, suggesting things remain challenged on the economic front.

This seems to have caught metals by surprise, although it shouldn’t have. Alumina and copper spiked so dramatically it was hard to credit it to fundamental causes (given China, the largest source of incremental commodity demand) was a net seller of copper, and iron and steel prices are particularly leveraged to new news on China’s property and infrastructure story (which in turn is a function of money and credit growth).

Not adding to the environment of “fears we might be due for a pullback” as French elections weigh on Europe, and some of the (slightly) softer US data (which isn’t at all bad, as it pertains to slowing inflation) causes investors to pause at the margin.

I don’t think buying European equities at 12x is a bad thing to do, with an eye to the medium term. The short run will do what the short run does (i.e., be volatile, and somewhat unknowable) but valuation is the longer run guide here.

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