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March 1, 2010
DJIA:
10,325
China . . . most love it, some hate
it. Most love China for its growth which, despite the recent tightenings, is
projected at nearly 10% this year versus 2.6% for the US. But some question the
nature of that growth – enough office space for every man, woman and child;
appliance sales in areas without electricity; increasing car sales and declining
gasoline sales; and good old fashion materials stockpiling. Most observers
worry little about the recent tightening moves, though clearly officials there
are worried about something. Mounting inflation pressures in the emerging
markets, especially India, could cause even China to cave and raise rates.
That’s not something that’s “priced in.” While China’s growth is real, China’s
growth is a concept that’s embraced, it’s taken as a given. Problems there –
rates, growth, whatever – almost certainly would wreak havoc with the world’s
investment psyche. Why anticipate problems you might ask, and the answer is
simple. Stock prices lead economies and the market there peaked last August.
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