Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Looks like this is going to be another one of “those” rallies. You know the type – almost entirely in premarkets. I did the math yesterday and from the Dec 18th high, the S&P 500 was actually down 43 points excluding the two monster days up sandwiching the New Year’s. Judging from today we’ll have the only other decent up day since December 18th outside those two sessions, so it’s definitely a very concentrated rally ala the early summer of 2012 – all the juice in a very few days. This morning traders are geeked as China’s export growth came in much better than expected. As was the belief one year ago today, the current thesis is China shall lead us out of global economic morass. This is going to be important to watch because even German economic data has slowed considerably the past few months, and some of the data printed in the last week has people talking recession for them. But bulls can play the “can’t get worse” card in Europe. As always the 180 degree shift in sentiment amazes – just over a week ago the world was on the edge as U.S. politicians couldn’t figure out a thing, but one kick of the can for two months and it’s all happy time again. As an aside the ECB held rates flat again, instead of cutting – interesting.
- China’s export growth rebounded surprisingly sharply to a seven-month high in December, a strong finish to the year after seven straight quarters of slowdown, but subdued global demand means that the spike may not herald an enduring recovery. Trade data showed the value of China’s exports grew 14.1 percent last month compared with a year earlier, racing past forecasts of analysts polled by Reuters, who had expected annual growth of 4 percent.
- The value of imports grew 6 percent on the year in December, also handily beating market forecasts for a 3 percent rise and quickening from zero growth in November, lifting the trade surplus a two-month high of $31.6 billion.
- On an annual basis, exports to the European Union climbed 1.9 percent last month in their first rise in seven months.
Potentially not as positive as it sounds however as Europe is a major market for China – we’ll see in the coming months:
- Economists said the pick-up in exports growth from November’s 2.9 percent rise was likely accentuated by lower comparison figures a year ago and exporters clearing year-end orders, factors that do not suggest a sustainable turnaround.
- The customs office, which released Thursday’s data, agreed. “China trade still faces uncertainties in 2013,” said Zheng Yusheng, a spokesperson for the customs office. “But we expect the trade situation will be relatively better compared to 2012.”
- “If you look at the fundamentals of U.S. and Europe, this could be a temporary rise. In coming years, we expect export growth to remain at a low level, below 10 percent for 2013.”
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