Summary :
Three things we learned last week:
1. Optimism toward China’s growth recovery got a reality check last week, when the Politburo meeting made two things clear: the Covid Zero policy is here to stay and large stimulus is unlikely. Details may differ, but the underlying theme for all these plans is the same: saving unfinished projects to protect homeowners, instead of developers. While bad news is bad news for markets in China, it apparently is good news for US investors. With financial conditions easing, the risk now is that inflation doesn’t come down as quickly as markets expect.
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