So which quote belongs to which economy?
'Flash China Manufacturing PMI at 50.3 in August (51.7 in July). Three-month low. Flash China Manufacturing Output Index at 51.3 in August (52.8 in July). Three-month low.'
'Flash Japan Manufacturing PMI at 52.4 (50.5 in July). Modest improvement in growth registered in
August. Flash Japan Manufacturing Output Index at 53.2 (49.8 in July). Output increased at solid pace.'
Now the logic dictates that struggling Japan is the former and strategic growth China is the latter...but the reality is the other way around. Now there is no point in over-appraising one month's numbers but looking at the detail the feeling of a need for further opportunistic Chinese stimulus is apparent:
For me, however, the most interesting insight came from prices. At least in China companies generally have more of a chance via investment, innovation or superior internal policies to make a good margin with balanced input/output prices...
So given a choice...back China and despite some of the initial headlines above Japan needs more stimulus and a weaker yen. Neither is flawless which - when combined with uncertainty in the Eurozone and debates over how strong the US/UK economies really are - makes the return of a low VIX even more head-scratching:
One final interesting chart consistent with some of the conclusions above. I continue to really like the microeconomic reform agenda in China (which improves the ultimate strength of the economy and its medium-term growth potential)...but it comes at a cost as nicely summarised here:
Beijing needs to retain opportunistic stimulus options...