Asian markets posted strong gains today led by Chinese Equities.
It appears that steroid addicted markets has found another inspiration from rumored or unofficial plans for a railway stimulus by the Chinese government.
From Bloomberg:
The government may spend more than the originally planned 650 billion yuan ($106 billion) on railway construction this year, the China Business News reported today, citing an unidentified person close to senior government officials. New high-speed rail lines could help reduce over-capacity in industries such as steel and cement, the Shanghai Securities News reported today, citing railway officials.
The Shanghai composite leapt by 1.95%. ASEAN markets spiked too.
The floated rumors are signs that the policies of the newly installed Chinese officials will hardly distinguish from the previous administration in terms of bailouts and rescues, except via the form of interventions. Policies to "reduce over-capacity" will extrapolate to short term gains that would lead to capital consumption and that will exacerbate on the current unsustainable imbalances.
But the good news is that the Chinese government has also liberalized caps on lending by the banking system last Friday. This should be positive over the long term growth.
But this will hardly resolve on the current debt based malinvestments and the runaway property bubble brought about by the previous policies which has prompted a shift towards the huge $2.4 trillion shadow banking system.
One thing seems clear, there has to be promises for more inflationary interventions by global governments to guide the markets higher. And this collective jawboning-the-markets communications strategy appears to have become a daily activity.
Yet, my question is will these constant promises of easy money policies experience diminishing utility or diminishing returns? We will see.
Nonetheless, interesting developments.
Regional Banks, KRE, Emerging Market Financials, EMFN, Far East Financials, FEFN, and Chinese Financials, CHIX, rallied, to produce what is likely a grand finale completion of liberalism’s fiat wealth seen in the charts ofWorld Stocks, VT, US Stocks, VTI, Nation Investment, EFA, and Small Cap Nation Investment, IFSM, and as is seen in the combined on going Yahoo Finance Chart of KRE, EMFN, FEFN, CHIX, and EUFN. Banks, BPOP, SMFG, LYG, all rose to a new rally highs today. Investment Banker, JPM, and Stockbrokers, IAI, rose to a new rally high.
ReplyDeleteThe Small Cap Countries which have recovered the most in the last month include EPHE, THD, KROO, EWW, EZA, and EGPT, seen in their combined ongoing Yahoo Finance Chart. The Major Countries which have recovered the most in the last month include, NORW, EWD, EWL, EWT, and EWY, seen in their combined ongoing Yahoo Finance Chart.
Aerospace, PPA, and Automobiles, CARZ, rose to new highs.
In yield bearing equities, International Telecom, IST, and Leveraged Buyouts, PSP, rose to new rally highs. Global Utilities, DBU, and Electric Utilities, XLU, rose strongly
China recovery, FXI, recovey over the last month is seen in the rallying of the following, CHXX, 9.1, CHII, 6.5, CHIX, 6.4.
Emerging Market, EEM, recovery over the last month is seen in the rallying of the following:
Emerging Markets, EEM, 8.6%, with EWW, 14.0, EPHE, 13.5, EZA, 11.0, THD, 11.0, KROO, 9.0.
Far East Financials, FEFN, 11.9 %, such as WF, and SHG.
Emergning Market Financials, EMFN, 7.9
Brazil Financials, BRAF, 7.9
China Financials, CHIX, 6.4
Emerging Market Small Cap Dividend, DGS, 6.1
India Earnings, EPI, 5.9; of note IBN traded 1.7, and HDB, traded 2.2, lower today; the latter is a train wreck waiting to hasppen.
Emerging Market Technical Leaders, PIE, 9.2%
Emerging Market Infrastrcture, EMIF, 9.1
Steel, SLX, 8.8, which has taken practically all of the following US Metal Manufacturing companies, STLD, RS, NUE, CRS, GTLS, WOR, NWPX, VMI, MLI, GHM, CMC, PCP, ITW, PKOH, seen in this Finviz Screener to rally highs; giving zombie life to BUT, WLT, CLF, as well as SLC..
Industrial Mining, PICK, 7.3
Emerging Market Mining EMMT, 7.1
A recovery from debt deflation, reflecting somewhat of a recovery in sovereignty, is seen in the rallying of the seigniorage of democratic country governance over the last month.
World Treasury Bonds, BWX, 2.5
Emerging Market Bonds, EMB, 6.7
Emerging Market Currencies, CEW, 2.8
Aggregate Credit, AGG, 1.2
And a recovery from debt deflation is seen in the Inverse of the Japanese Bonds, JGBS, trading to a two month low, with Business Week reporting Japan bonds rise to 2-month high after elections, BOJ purchases.
A recovery from interest rate increase shock, specifically the sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, on a Steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, is seen in the rallying of the following over the last month,
Small Cap Real Estate, ROOF, 8.4
Residential REITS, REZ, 9.1
Commercial Office REITS, FNIO, 12.1
The short selling opportunity of a lifetime has developed. Look for strong derisking to come out of fiat asset invesment leaders, XIV, FDN, CARZ, PBS, IGV, IBB, RZV, PSCI, PBD, PPA, IAI, SPHB, SMH, XRT, PJP, EWN, PSP, UJB, KRE, TAN, RXI, WOOD, FLM, TAN, LNKD, LYG, SMFG, BPOP, SLM, JPM, NNI, UBS, BLK, NMR, MKTAY, seen in this Finviz Screener. The days of risk on investing, ONN, are over, though, done, and finished. Small Cap Pure Value, RZV, and Biotechnology, IBB, both traded lower today from market highs. And Banks and Creditors such as NMR and SLM are disasters waitning to happen.
Volatility, ^VIX, finally rose. The walking dead market, that is the zombie market is likely over. Liberalism’s schemes of credit liquidity, AGG, FLAT, and carry trade, ICI, funded safehaven investing probably came to an end today, Tuesday, July 23, 2013.