Wednesday, November 11, 2009

China is Ripping... Bears are Smoking Dope

The equity markets opened up huge this morning with strong news coming out of China. Bloomberg details:

Production in China rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said today. The trade surplus almost doubled from September, to $24 billion, as a drop in exports eased.

Separately, Japanese machinery orders, an indicator of business investment in three to six months, climbed 10.5 percent from a month earlier, according to the Cabinet Office in Tokyo. The median estimate of 25 economists surveyed by Bloomberg was for a 4.1 percent increase.

And the analysis of the day goes to Jeffrey Saught, chief investment strategist of Raymond James.
You got people out there saying the bear market rally’s over, I think they’re smoking dope.
Source: Haver


  1. Jake, why do you think that, despite the strong data, the Equity markets in both these countries have not put in strong performances over the course of the last 2 months? They seemed to have both rolled over.

    Also do you think that global imbalances still persist and that the global economy still depends on a strong US consumer?


  2. Not sure which markets you are referring to. Since September 10th (2 months ago) the S&P is up more than 5% (or more than 35% annualized. That is HUGE... especially after the massive run up.

    If not the US consumer, then who? On the margin EM countries are adding incremental demand, but if the US consumer disappears overnight (unlikely) or over the secular time frame (more likely), the global economy won't grow as it had in the past...

  3. You need to be aware that in Chinese accounting it is normal to book it as "sale" when goods move from the factory floor and into storage.

    The Chinese are massive gamers of The System - whatever it happens to be at the time - and they have been at it for 5000 years, surviving!

  4. Until I see an explanation of how cars sales in China are through the roof yet gasoline sales are depressed (Nobody driving them? Collectors items?) I will chalk up meteoric recoveries to communist controlled data flow. I think Soviet GDP was 8% right before they collpased.

  5. .... sorry forgot some more. Oil, Copper (check out copper inventories both in London and Shanghai)....

    I agree with getyourselfconnected. Somethin wrong here.