Kitco News

8 August 2011, 8:52 a.m.
By Debbie Carlson
Of Kitco News
www.kitco.com

(Kitco News) -- Stock and most commodity markets around the world have fully reflected a U.S. recession, European recession and Japanese recession, says Shawn Hackett, president of Hackett Financial Advisors. “What the markets have not yet fully factored in is a recession in China. When looking at the recent numbers it is very clear that the Chinese economy is in fact contracting as we speak especially when adjusted for inflation,” he says.

As evidence, Hackett points to the Chinese purchasing managers index falling under 50, which means manufacturing is contracting; a drop in the Chinese small and medium enterprise index, which means liquidity strains; falling car sales; rising copper inventories on the London Metal Exchange; and rising bankruptcies. It may take another two months for markets to factor in a Chinese recession, which will lead to further market weakness.