China Letters

Top Ten Market Themes for 2013Goldman

“…stocks don’t always provide the inflation protection investors seek, especially over time periods relevant to most of us; i.e. less than 20 years. When valuations are high and/or falling, and real, inflation-adjusted earnings remain stagnant, history tells us that stock market returns can be quite negative…”  Sitka

Included in Bill Gross’ latest Investment Outlook:

He would know:  Dow Chemical CEO Sees Signs of China Pickup at WSJ.

The New Shape of China’s Economy (Project Syndicate) and China’s Coming Growth Tests (Project Syndicate)

Ambrose Evans-Pritchard:  The world’s commodity supercycle is far from dead at The Telegraph.

Copper Shortage Seen Extending as China Accelerates: Commodities at Bloomberg.

“In 2006 the U.S. was the number one country in the world as the trading partner of the world.  The U.S. WAS the largest trading partner for 127   countries, versus just 70 for China.  Now. skip ahead to 2012.  The two   have traded places! China now is the larger trading partner for 124   countries while the U.S. has slipped to 76.”  Chuck Butler

“I think we need to be very cautious and refrain from allowing ourselves to get too caught up in the huge sigh of relief that the sell side is having. Growth rates in China will continue to slow dramatically in the next few years, and if there are temporary lulls, as there must be, these do not represent any sort of “bottoming out” at all. They simply represent the fact that Beijing cannot afford politically to allow the adjustment to take place too quickly, and from time to time Beijing is are going to step on the investment accelerator to speed things up temporarily.”  Michael Pettis

Meanwhile, yesterday’s blockbuster FCX announcement to purchase PXP and MMR had the stock get clobbered, while TCK has been strong.

“…The shale revolution is changing the global energy landscape…oil prices will no longer  prove a brake on growth…”  BI