The stock markets of the 2 most economically influential countries in the emerging world, China and India, have modestly broken out. The Shanghai index closed higher by .8% to a 3 month high and the Indian Sensex index traded higher by 1.1%, closing at the highest since Feb ’08. Copper in response is at a 2 week high. European stocks are higher after the Bundesbank raised its ’10 GDP estimate to 3% from 1.9% after the strong Q2 report. July retail sales in the UK were above forecasts. Combining these 2 items with a higher than expected July PPI # in Germany has European bonds modestly lower and Treasuries are following. With 20 yrs of malaise, a Japanese newspaper is saying the BoJ may expand further a credit program and they are still evaluating the economic impact of a stronger yen. From Jan ’03 to Mar ’04, the BoJ spent 35T yen (about $320B) intervening and it failed miserably and the experience will influence what the BoJ may or may not do.

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9 Responses to “Shanghai and Sensex break out”

  1. wally says:

    “..it failed miserably and the experience will influence what the BoJ may or may not do.”

    Acceptance. Understanding what you can change and what you cannot. Works for people; works for countries.

  2. Mike in Nola says:

    The Shanghai breakout may not last long after they see our employment numbers. They still are dependent on Westerners to buy all that stuff they are making in such vast quantities.

  3. VennData says:

    McAfee may break out today too. What are those idiots at Intel thinking? Don’t they know Obama has stopped business in its tracks?

    When APPL dips into its cash hoard and buys Logitech, that’s it… I meant that’s absolutely it. I’m going to have to tell them corporate American’s not reading the blogs no more. Don’t they know American’s been destroyed?

  4. winstonw says:

    Can’t say Sensex or SSE are going anywhere in a hurry according to MACD, MFI, RSI, and Slow Stoch.
    I know a lot of people think EMs lead DMs currently, but still too much uncertainty re Euro and US fundamentals imho.

    The most positive sign I see is TNX and TYX yields have paused on their way downwards.
    My money is with the adult supervisor, not the EMs.

  5. rootless cosmopolitan says:

    Where have the treasuries been following lower today? I guess after the initial claims went to 500,000 again, this didn’t hold.

    Here goes Obama’s economic recovery. Here comes the recession again. It’s already in the data. Wishful thinking still prevails among economists, stock market analysts, and in the media, though.

  6. Joseph Martinez says:

    As growth continues in China and India the price of raw materials will continue with it’s upward pressure. This will help the downward pressure of deflation but it will add to the slow down of the USA economy. The USA is in a balance sheet-costing cutting recovery and with the pressure of price increases in raw materials the money supply will continue to show it’s unusual weakness. As the flow of money through the USA economy continues at a slow pace the number of hours worked will remain at or below it’s current level and the unemployment rate will remain high. This will also add to the slowness of the money flow. This is what I call a hellish economic cycle.

  7. sinomania says:

    The modest uptick in Shanghai could just be due to the new restrictions on investment property transactions and putting more money into shares. The proof will be if the SSE Composite stays above the 2,700 pyschological barrier.

  8. Joseph Martinez says:

    To add more support to my assumption this if from briefing.com about today’s contraction of the manufacturing sector in the Philadelphia region: “All of the subindexes that make up the general business activity indicator entered a contraction phase except for prices paid. Unfortunately, the combination of increased supplier costs and lower selling costs will hurt manufacturers profitability.”