I always find Russell Napier’s comment interesting and can only recommend his books “anatomy of the bear” to any investors interested in investing and not gambling. The correlation Napier’s points out between China’s reserve as an engine to to global growth is quite relevant but… since we live in a world where governments and central banks “intervene” constantly in the market place…. what could look like correlated… might no be that much correlated at the end.
here we go fot the article : http://www.efinancialnews.com/story/2012-11-22/slowdown-in-chinese-reserve-growth-heralds-global-downturn
Hopes for an early recovery in the global economy may be overoptimistic, according to a well-regarded economic strategist who says the expansion of China’s reserves, which has been an engine of global economic growth, is about to come to a shuddering halt.
The attached chart shows how the growth of Chinese reserves has decelerated dramatically over the last five years and is now close to zero.
The chart was put together by Russell Napier, a consultant with stockbroker CLSA Asia-Pacific Markets, and the author of a course at Edinburgh Business School called a Practical History of the Financial Markets.
Napier said of the graph: “It is the most important chart in the world. The growth in Chinese reserves has determined all the key developments in financial markets in the last two decades. It printed lots of currency and artificially depressed the US yield curve. It has been the cornerstone of global growth, and now it’s over.”
The last time the Chinese reserve growth rate was below 10% was at the end of the 1990s, just before the bursting of the technology stock market bubble and a recession. The recovery in the growth rate from 2001 onwards was followed by the economic boom of the last decade. The growth rate turned down decisively in 2007, just before the onset of the financial crisis.
China’s reserves have come from a trading surplus, and the Chinese authorities have used the money to buy US Treasury bonds. The finance that China supplied to the US helped fuel economic growth in that country and the rest of the world.