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Europe, Asian markets surge on China stimulus plan

Discussion in 'Political Discussion' started by reflexblue, Nov 10, 2008.

  1. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    Finally a little good news about the world economy. I can only hope it spreads here.

    Europe, Asian markets surge on China stimulus plan - Yahoo! News

    LONDON – European stock markets opened higher Monday after Asia's markets were boosted by China's $586 billion plan to stimulate its economy, a main driver of global growth.

    The FTSE 100 index of leading British shares was up 153.35 points, or 3.5 percent, at 4,518.31, while Germany's DAX was 178.10 points, or 3.6 percent, higher at 5,116.56. France's CAC-40 was 133.70 points, or 3.9 percent, higher at 3,6029.82.

    Europe's gains follow across the board increases in Asia. Tokyo's Nikkei 225 stock average surged 498.43 points, or 5.8 percent, to 9,081.43, while Hong Kong's Hang Seng Index gained 501.20 points, or 3.5 percent, to 14,744.63.

    In mainland China, where the benchmark Shanghai Composite Index has fallen by more than two-thirds since peaking October, the index soared 7.3 percent to 1,874.80. Markets in India, Australia, Singapore and South Korea joined the region's advance.

    And U.S. stock index futures were up, suggesting New York trading would open higher. Dow futures were up 139 points, or 1.6 percent, to 9,136, following Friday's 250 point increase.

    The gains come in the wake of Chinese government's unveiling of a massive 4 trillion yuan ($586 billion) stimulus package to help stave off much of the economic slowdown. The package involves a mix of spending, subsidies, looser credit policies and tax cuts.

    China's economic growth slowed to 9 percent in the third quarter, the lowest level in five years and a sharp decline from 11.9 percent the year before — perilously low for a government that needs to create jobs for millions of new workers and for other Asian countries that have come to depend heavily on Chinese demand.

    "This boost in sentiment looks likely to carry over into European trade too in the coming hours with all the major indices expected to rally hard at the open although as always the question will be whether the rally can be sustained," said Matt Buckland, a dealer at CMC Markets.

    China's announcement came as economic officials from 20 leading nations called Sunday for increased government spending to boost the troubled global economy.

    At a meeting in Brazil, finance ministers and central bank presidents from the Group of 20, which includes major wealthy and developing nations, also said emerging economies deserve a prominent role in talks to overhaul the world financial system.

    Britain is also expected to unveil a fiscal package this month, while President-elect Barack Obama has indicated that new stimulus measure will be announced soon after he moves into the White House in January.

    Though the markets are welcoming government attempts to shore up global economic growth, upcoming data releases around the world are likely to continue to paint a very gloomy picture.

    "The inevitable and continued deterioration in global economic data may prove to be a rather overwhelming test of the market's mettle in the meantime," said Neil Mellor, an analyst at the Bank of New York Mellon.

    So far the main beneficiaries from the Chinese plan have been resource stocks, which have jumped strongly as metal prices recover on hopes of greater demand. Companies like Rio Tinto PLC, Xstra PLC and Antofagasta PLC have all seen their share prices rise by around 10 percent.

    In addition, energy stocks have bounced back alongside an increase in the price of oil. Total SA and Royal Dutch Shell were both up around 4 percent in early European trading.

    Oil prices were $2.44 a barrel to $63.48. The contract settled at $61.04, up 27 cents, in Friday trade on the New York Mercantile Exchange.

    Some sort of stability in stock markets has emerged with the ongoing decline in interbank lending rates. On Friday, the rate on three-month loans in dollars dropped 0.10 percent to 2.29 percent, its lowest level since November 2004, while the equivalent European and British rates have fallen further following last week's interest rate cuts from the European Central Bank and the Bank of England.

    A further fall in all three rates may reassure stock markets further that the worst of the lending crisis is over.

    The dollar was up 0.9 percent, at 99.15 yen, while the euro was 1.1 percent higher at $1.2863.

    ___
     
  2. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    No, no, they're all cheered up because the President Elect is visiting the White House today!
     
  3. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey

    That's nice, but the Asian markets have had 5+ days in the past 4 weeks where they gained over 4%. It's just another day on the roller-coaster.
     
    Last edited: Nov 10, 2008
  4. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    "Irrational exhuberance"!

    Seriously, China is THE supply source to the world. China does not create a lot of worldwide demand. If the markets end "UP" today, it will just be another day as you stated.

    Whether one is an optimist, a pessimist or a realist, we have to accept the fact that there are many more dark & cloudy days to get through before "sunny days are here again"
     
  5. sdaniels7114

    sdaniels7114 Experienced Starter w/First Big Contract

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    Seems to me that we need to re-define what a recession actually is if China's government is gonna have a bird over GDP growth dropping to 'only' 9%
     
  6. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    I think their concern is more likely the 70% drop on the Shanghai Index over the past year (the above article wrongly says "since October" - they mean, since October 2007)).
     
    Last edited: Nov 10, 2008
  7. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    Definately that...and probably this as well;

    "Toy makers are among the hardest hit. More than 3,600 such factories have closed -- about half the industry's total, government figures show. Most were small operations, but last month Smart Union Group's three huge factories stopped production, leaving more than 8,700 workers jobless"

    "Chinese exports remained brisk through September, except for a few categories such as apparel, which fell 3% in September from the same month in 2007. But many exporters aren't making a profit, and others are seeing shrinking orders or are starving for cash. Newspapers in Hong Kong, which is close to Guangdong, have been running virtually daily reports of the latest factory to falter."

    "Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year's end, he said, more than 100,000 plants will have closed."


    I'd say, China is reading the writing on the wall. There economy is going down just as the rest of the world is.
     
  8. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    I'm not very knowledgeable in the investment arena. I work for a vitamin manufacturer. I'm telling you this because so far, vitamins sales have not been affected by the economic downturn.

    Everywhere you look, you'll see that vitamin products and products with vitamins & supplements added to them are growing rapidly. Look at yogurt with acidophilus added or heart health supplements like Omega-3 being added to various foods.

    This might be worth your while investigating. I can tell you that sales have been growing at an accelerating rate for the past 3 years. The consumer base is growing and becoming more stable. It used to be that the vitamin customer was over 50 years old but now the fastest growing user is under 35. That is due to products like "Vitamin Water" that are booming with the younger generation and that has carried over into the vitamin & supplements category.

    It may be worth looking into. My company is private, but you can look at GNC or US Nutrition which owns Nature's Bounty, Sundown brands and all the Vitamin World stores.
     
    Last edited: Nov 10, 2008
  9. Real World

    Real World Moderator Staff Member

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    Countries like China will be the hardest hit when the [​IMG], cuz they are, like PR said, suppliers to the demand side.
     
  10. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    #75 Jersey


    Love the emoticon!!!!!! :D :D :D
     
  11. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    I agree (plus I love Vitamin Water - - they have a great spokesperson/QB!). Long-term, I think your industry will do very well (only hang-up is if the FDA tightens its regs on the industry and its claims - - they may hold statements of health bene.s a bit more stringently - - more like prescription pharma in the future). I also believe long-term care providers/medical equipment - - anything geared towards gerontology - - will also (for obvious reasons) do well in the future. And, as you know, I firmly believe alternative energy will be the Personal Computer/Internet of the next 20-30 years.

    I don't do any individual security recommendations. I'm just a boring Financial Planner who does analyses for individuals/families based on asset allocation/budgeting/estate planning etc. Mainly use Morningstar Workstation for sifting only 4 and 5 star rated funds, consistent top-third % in category performance return rankings, alpha's, betas, sharpe ratios, etc. ETF's, asset allocation, rebalancing, along with cash reserve strats, insurance, etc.

    By time I get any inkling about a stock.......it's way too late. I tell my clients "If I give you a stock tip - - run as fast as you can the other way". Even those on Wall Street with the resources and teams of analysts - - to be a God, they only need to be wrong 49.9% of the time.
     
  12. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    you come up with some sick sheeeeeiiit RW....but I do like it!
     
  13. maverick4

    maverick4 Banned

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    That makes zero sense that China will be hardest hit.

    We don't make anything in this country anymore, China makes almost everything.

    Who is better positioned 3 years from now, the country that doesn't make sh*t and whose currency and debt nobody wants anymore, or the country with all the factories that could become self-sufficient as its domestic base becomes more affluent?
     
  14. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    The stricter regulations you may be referring to are called "Codex Law" which has been adopted all across Europe but not in Asia or the US. Codex laws would us out of business and vitamins would be manufactured and sold by pharmaceutical co's. We do NOT want that to happen. Codex laws rip off the consumer because if they were adopted, you would only be able to buy 250mg of vitamin c rather than any strength you please.

    We are having a war with the pharmacueticals because we are threat to them. We make people healthier and oftne offer alternatives to prescriptions (such as natural cholesterol reducers for $15 vs. $200 prescription).

    The Pharma industry resents us because they have to go through the FDA approval process and we don't. But that's the way it should be.

    I truly don't believe codex laws will ever pass in the US or Asia. vitamins and supplements are classified as a food in both places. That won't change because consumers/citizens won't let it. There are over 120 million vitamin users in the US
     
  15. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    As I posted previously, China is already being hit hard and will get much, much worse. Below is just the beginning;

    "Toy makers are among the hardest hit. More than 3,600 such factories have closed -- about half the industry's total, government figures show. Most were small operations, but last month Smart Union Group's three huge factories stopped production, leaving more than 8,700 workers jobless"

    "Chinese exports remained brisk through September, except for a few categories such as apparel, which fell 3% in September from the same month in 2007. But many exporters aren't making a profit, and others are seeing shrinking orders or are starving for cash. Newspapers in Hong Kong, which is close to Guangdong, have been running virtually daily reports of the latest factory to falter."

    "Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year's end, he said, more than 100,000 plants will have closed."


    China had DECADES to go before their citizens become affluent enough to sustain there economy. Once they begin to become "affluent", then the cost of labor will rise and make them less competitive. Right now, the best way to position our country for growth is through technology.

    America can't lose sight of alternative energies even though oil has come down so far. There is no country better positioned for emerging technologies than the US.
     
    Last edited: Nov 10, 2008
  16. shmessy

    shmessy Maude Staff Member PatsFans.com Supporter

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    Thanks for the viewpoint. I have only a superficial knowledge about the Vita vs. Pharma wars. Is there a way for there to be some sort of standardized measurement for the consumer that is not as draconian as Codex, but that is more informative than the current (what seems) Wild West, Anything Goes situation? I would imagine the Vitamin Waters and GNC's of the industry are pretty p.o'd at the Grandma's Miracle Juice makers.
     
    Last edited: Nov 10, 2008
  17. maverick4

    maverick4 Banned

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    There is no way supplements will be regulated in the US or Asia like they are in Europe, pharma won't be able to make it happen.

    As for China, half of its toy companies went out of business due to bad worldwide PR, global spending declines, and other significant factors, but overall its economy still had 9% growth last quarter.

    It has more people who can do a better job of something for a cheaper price than anyone else in the world, and this will be true for the next 15 years.

    It is no doubt getting rocked because it is still mostly dependent on exports, but there is no way the US can compete except on innovation and new technology, which will mostly be in biotech. 10 years from now we will still lead in biotech and entertainment, but fall behind in everything else.
     
  18. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    Never underestimate the home team Mav...look at all those who said we weren't ready to vote Obama into office. They were idiots. Don't say "we can't....", say

    "YES WE CAN!";)
     
  19. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    You may know more about this than I do. I do know that my company supported a recent law that was passed that forced the industry to adopt stricter quality standards.

    My company also will not make "cutting-edge" new products if there is little scientific reserch behind it. Look at Red Yeast Rice which is selling like crazy but we don't make or sell it and we won't until it's proven to lower cholesterol.

    With products like vitamin C, there is no need for a standardized strength. Also, there is new evidence every week about the miraculous powers of vitamin D. If you're not aware of this, you should look it up (anti-cancer).

    It is very, very rare that a person takes too much of any vitamin product. As a matter of fact, I've never heard of a single case...although I'm sure it's happened.
     
  20. maverick4

    maverick4 Banned

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    I hate to make these gloomy predictions but I am trying to detach hope from reality here.

    We have a mostly sub-educated population here, who is wildly overpaid compared to world salaries, who have been buying way more than they can afford for decades, and it is all going to reach equilibrium very soon.

    It makes no sense that you have these billions of Indians and Chinese who can do the same work (even highly technical work) for 1/8 the price, and over time free markets and trade will shift to a new equilibrium where the main hurt is in the US.

    I also hate the way this country has been managed the past 8 years, especially fiscal and economic policies. But even with new management just elected, I don't see how anything can be changed.
     
    Last edited: Nov 10, 2008

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