Tuesday, September 13, 2011

China to the rescue?


     European stocks rose today after Italy reached out to China to invest in its stock and bond markets.   Italy is trying to convince investors that it is safe to invest in their markets and are looking to the Chinese for help.  Chinese officials have expressed interest in helping out the European situation.

     "Europe will continue to be one of China's main investment markets," said Foreign Ministry spokeswoman Jiang Yu at a regular news briefing. "We will also expand financial and economic cooperation and investment cooperation with European countries to jointly address the financial crisis."

     There were no signs of Chinese buyers in today's 5 year Italian bond auction.  The yield came in at 5.6% on 4 billion worth of 5 year Italian bonds.  Demand was weak according to CNBC.

      Meanwhile, Angela Merkel in an attempt to reassure markets expressed determination that the EU will not let Greece default.

     “The top priority is to avoid an uncontrolled insolvency, because that wouldn’t just hit Greece and the danger that it hits everyone, or at least a number of other countries, is very big,” Merkel told Berlin-based broadcaster Inforadio. “I have made my position very clear: that everything must be done to keep the euro area together politically, because we would very quickly face a domino effect.”

     European stocks were up on the news today with the German DAX up 1.8%, the French CAC up 1.4% and the London FTSE up .9% at the close.  European banks were the main beneficiaries of Merkel's new resolve as "Barclays [BCS  9.54    0.36  (+3.92%)   ], UBS [UBS  12.55    0.63  (+5.29%)   ], Deutsche Bank [DB  32.23    2.31  (+7.72%)   ], ING [ING  6.54    0.27  (+4.31%)   ] and others [were] up 2 percent to 4 percent," according to CNBC.

     US stocks were higher as of 11:31 AM PST on European optimism.  The DJIA was up 69 pts and the broader SNP 500 was up over 1% and the tech heavy NASDAQ up almost 1.5%.  Small caps were outperforming up almost 1.5%.  Gold was up 30 dollars to 1843 and oil rose above 90 dollars.

     It may be risk on again for now as we trade back and forth in the range.

4:13 PM PST Update
     Markets closed on an upnote today building on gains from yesterday.  I am looking for more gains tomorrow as long as the European situation stabilizes.  Merkel saying the things she said today gives me the go ahead to put more risk on so I went ahead and purchased a small amount of Emerging Market stocks in my long term portfolio.  Foreign stocks are very cheap right now as long as the European situation doesn't spiral out of control.  I will be looking to buy more stocks tomorrow if we can keep rallying.  Of course I am looking at AAPL if we can get past 392 and XLE looks good here as well.  CAT may make a good trade here up to 90 bucks.  MCD looks good on this dip and so does IBM.

13 comments:

  1. china does seem to be getting a lot of power and influence these days...

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  2. I gladly accept our new Asian overlords.

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  3. This would be an interesting turn of events if China saved us. These guys certainly are becoming an increasing power.

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  4. Super China to the rescue in south america too. China will invest 10 billion here, which is pretty big for us.

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  5. Well, they'll own us when they get a decent Navy, Army, and Air Force, and own all of our businesses.

    Otherwise, its just numbers that are changing around. At least thats how I see it.

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  6. in the early 90's, everyone said japan was going to take over the world. Then their real estate crashed and they haven't been the same since. I suspect the same thing will happen to the Chinese and once again the US will stay at the top.

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  7. heh, China needs to keep Europe(and the US) in a state where they have enough spare cash to buy their stuff. the downside to high exports.

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  8. Best of luck to the Europeans, I guess. Thanks for the updates.

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  9. Commies to the rescue, yay!

    China has really come around...

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  10. china wil rule the world someday, yeah right!

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