Yet another stockbroker

The Chinese growth was 11,1% for the first quarter and the core inflation was up 3,3% which is twice as much as 6 month ago and the risks have been increasing in the Chinese economy.

The China central bank, The People Bank of China, will probably start increasing the interest but there might not be enough and I predict that China will start appreciate the Yuan and by that try to balance the economy and keep the inflation on hold. With a 25% increase in investments on Chinese soil the challenge to keep the economy in balance and the inflation low without appreciate the Yuan is in my view not possible.

Interesting numbers when it comes to GDP is that studies have pointed out that 5000 GDP per capita is an level where the economy increase there growth helped by the consumers starts moving up as an important force to keep the growth strong. When looking at the GDP Numbers region by region some interesting data can by found.

Regions as China, India and many countries in the Eastern Europe region have for an example been achieved the 5000 GDP number per capita or are very close to do so. Private consumption is and will always be a very important issue for wealth and economic growth and when regions as China and India is getting there where more than 1/3 of the worlds population lives, that will have a global effects on growth and wealth.

The market theory mentioned as the “supercycle” where there will be a soft landing or no landing at all before the growth coming back and pushes the global economy forward might be a fact. The US economy have been weakening but there is not any definite signs of an recession and good signs from Japan and Europe and the fact that Russia and China moving on stronger than ever eases the fact that the US economy have been going into an slowing phase.

The US housing market is still something that worries the market but the today’s tighter lending policy helping the housing market getting out of hand. The GDP numbers in the US for the first quarter is down two 2% growth, down 0,5% from the weak fourth quarter 2006. We don not want any more downside on the GDP numbers to keep the markets confident up.

To make money at this stage there seems to be wise to going short the US. Mentioned before the dollar is a strong case going short and long the Chinese Yuan as well as other Asian currencies seems to be a rather high probability to make some money, bur other currencies can be very interesting as well.

The companies are overall rather positive regarding the future and big things are happening. GM are no longer the worlds biggest car manufacturer and China have becoming Japans, (the worlds second biggest economy) most important trading partner and the Dow Jones is pushing through 13000.

Is the “Supercycle” a fact or is there the 2000^{th century} “new economy” in a new shape and form?

This entry was posted on Monday, April 23rd, 2007 at 4:19 pm and is filed under Weekly Market Update. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.