Wow! The Chinese President doesn’t appreciate being caricatured as children’s character Winnie the Pooh so it’s censored from Chinese social media. A Financial Times article noted “attempts to post the Chinese characters for Winnie’s name on Weibo returned the message ‘content is illegal’ although some users appeared able to circumvent the block.” Regardless of whether some of the posts were able to avoid the censors, the point is the same I have been making for eight years on Notes From Underground. A country that does not allow Google to freely operate makes me suspect of all official government data. The greatest comedy was that the financial media was poking at President Xi and the ruling Communist Party Politburo while at the same time citing the most recent economic data as if it was “truth.” The GDP data came in at 6.9%, exceeding guesstimates of 6.8%. Retail sales followed GDP and also beat consensus guesses.

There is no shame in the world of access journalism! Yra’s first law: MONEY IS FASCIST. It holds that global finance global respects economic growth with political stability regardless of the cost to political freedoms. The Davos crowd has applauded President Xi’s free market speeches, a juxtaposition to Donald Trump’s “Make America Great Again.” Participants at the recent G-20 meeting in Hamburg, Germany also sought to portray President Xi as the greater free trader in his efforts to promote the Chinese Government’s “one belt, one road” policy. While I respect China’s economic miracle initiated by Deng Xiaoping, I do not support the political repression of the ruling Communist elite.

The lap-dogs of the global financial media react in a fashion similar to that criticized by Marx in response to Thomas Malthus: shameless sycophants of the ruling classes. President Xi feeds upon the honey pot of free trade but stomps upon the freedoms of political critics. Top down management keeps the money flowing until the next government release.

***Last Wednesday, Richard Bonugli of Financial Repression Authority and I sat down for another PODCAST. I am posting it today as it provides a thorough discussion of many issues previously discussed in NOTES. Enjoy and please feel free to discuss any of the items presented through the efforts of Richard and the FRA.

***European interest rates were lower today as equity markets were soft following upon the selloff of the Chinese markets. Also, because the Italian 10-year notes had the steepest drop in yields it seems that the ECB was intervening. We’re about halfway through July and the ECB has bought EUR27 billion in assets so far so it has 11 days to complete its EUR60 BILLION monthly target. This week we have an ECB meeting but the current policy of QE is not expected to be tapered. The problem for Lael Brainard and other FOMC members is that the fungible nature of global capital prevents the long yields in the U.S. from rising.

In a brief Bloomberg article today, Alexandra Harris (proud papa, here) raises the issue, “Don’t Rule Out Fed Balance Sheet Announcement Next Week: JPM.” She cites JPM analysts Alex Roever and Kimberly Harano argue why it’s possible for the Fed to commence Quantitative Tightening (h/t Boockvar). Read the article to understand why sooner may be better, especially because of the activity of president Draghi’s ECB. Enjoy the PODCAST and TTFN. (Tigger says, “Ta Ta For Now.”)