Keeping fully in mind that NOBODY knows what happens next as well as the Zurich Major Axiom 4: On Forecasts..Human behavior cannot be predicted. Distrust anyone who claims to know the future, however dimly. Nobody has the foggiest notion of what will happen in the future. Nobody. Never lose sight of the possibility you have made a bad bet….I do recommend that you take a look at ALL the Zurich Axioms at your leisure. They can be found here.  

Or in the immortal words the great Yogi Berra: The future ain't what it used to be. That being said, making predictions is so much fun, I cannot resist doing it. I think predicting the future is hard wired into us as a specie. What we CAN do is take a look at probabilities about the future and attempt to come to some idea of what the higher and lower probabilities of what happens next to be. That is what I will attempt to do with this post. These are my views and observations.

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Data released today (Monday) shows that Money Supply dipped in
October in China, as shown on the graph below.

"Early in the economic
cycle an increasing supply of money leads to additional spending and investment,
and later in the cycle expanding money supply leads to
inflation." Since it has been in an early cycle since the
beginning of 2012, this latest dip may or may not be a warning of further
weakness to come…one to consider monitoring over the next few months.

New
Loans also fell for October, as shown on the graph below. "Consumers and
businesses tend to seek credit when they are confident in their future financial
position and feel comfortable spending money." This data is
showing that loan demand has been on the decline since April of this
year.

So, although
there has been an expansion of money supply this year, loan demand has been
declining. Unless loan demand picks up and is sustained, how can there
be economic confidence and expansion in China?