I Wish I'd Finished Writing this Before the Mkt Fell

The Marché continued to rally hard yesterday and extended its middle finger one more time in the direction of the Bears. Exasperation is etched all over their furrowed brows. How can the news BAC needs $34bn be greeted with a 34% increase in its stock price? Don’t ask me but one thing is for sure, whatever your conviction may be, you have to respect the trend of this market.

Amazingly, the Jobless number estimate was yet again unerringly accurate in its prediction, with the actual coming in a bit ahead of consensus. The market actually greeted this with a small sell off. Caveat vendor however, we’ve had plenty of these of late only to see the market snap back up in a heartbeat. Still, perhaps we’re starting to expect better numbers (we should be, they’ve been one way for 2 months now) and we’re now going to need REALLY good/less bad numbers to push onwards.

A couple of things caught my eye today in relation to China. I mentioned the other day how I struggled to find how Asia was going to lead us out the doldrums given the export driven nature of the economies. Nevertheless, a lot has been made recently about the surge in Chinese bank loans. WSJ however, points out something which shouldn’t be that much of a surprise (using the PBOC’s latest monetary policy report as a source), that most of this new credit is coming from the state owned banks, and that much has been devoted to government stimulus projects. Ex the government projects, demand for credit is not actually very strong.

The second thing is a follow on from this. Power generation and consumption, a leading indicator, having bounced in Feb and the first half of March, dropped again in April. The detail is in the article linked here so no need to go into that but it makes interesting reading and certainly tempers my already muted enthusiasm for an Asian led recovery.