Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Obviously this market was extremely overheated an needed an excuse to come in a bit. Today’s reason is “China slowing” – even though there is no surprise there, just 2 weeks ago when China downgraded its target of GDP growth from 8% to 7.5% certain stocks sold off on the news in serious fashion. Then the past week and half those same stocks have rocketed. And today they are being hit hard – you know the names and sectors by now.
The reality is there is little new news other than a comment from a mining executive – but really is this a shock? When China slows, iron imports will droop? Whodda thunk it!
An executive from Australia’s mining giant BHP Billiton warned demand for iron ore from China will flatten as the world’s second-biggest economy slows.
It is sort of funny to watch the push pull on news already known. Some days we push the news we know to the background and ignore it, other days it matters. Knowing when which is which is impossible. And in the new era (post 2009) even when the news is “bad”, we don’t know if we want to cheer it, because bad news = more easing. Keep in mind immediately after that downgrade to Chinese GDP the speculator class began cheering because it means the potential for more easing from China’s central bank and government.
It is very different than 5-10 years ago when bad news actually meant bad news….. with the sword of Bernanke (or foreign counterpart) Damocles hanging over every selloff.
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Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
