Morning Reading – December 20, 2010

China Financial Markets: Chinese growth in 2011

I already wrote in early November an entry suggesting that we were starting to see some leading Beijing policymakers and advisors warning about a rapid slowdown in growth – the numbers bandied abut were in the 6-7% range.  This is till very much a minority view, but I have almost no doubt that during 2011 all the growth expectations are going to be revised sharply downward.  By the end of next year, I suspect that the consensus will be that for the rest of the decade we should expect growth rates in the 6-7% range for China.

Do I believe these lower numbers?  Not really.  About a year and a half ago I wrote in a Financial Times article that, assuming consumption growth could be maintained at 8-9% a year, Chinese GDP growth would average 5-7% annually over the rest of the decade.

The Big Picture: Winding Down with an Xmas Rally

Here we are beginning the final 2 weeks of the year.

The economy continues to limp along, improving, albeit rather slowly. “Recession fatigue” is likely to make this holiday consumption spree appreciably better than the past 2 years.

Markets have looked a bit tired — and yet — every opportunity to see big whackage has been met by liquidity driven buying. The bid beneath equities remains firm. The bias remains firmly to the upside.

The Big Picture: FusionIQ S&P 500 Technical Snapshot

As seen in the attached report the S&P 500 is still above a support zone in the 1,227 to 1,220 area. Yesterday the index traded down close to the aforementioned support near 1,227 and reversed. Lately the tape has seen absorbed some bad news and managed to buckle but not break, which is encouraging. With the index still above support and its uptrend line from the summer lows we have to give the bullish bias the benefit of the doubt here. Secondary support lies in the 1,199 area. Again as long as these levels are not violated one has to respect the current trend which remains up…

FT Alphaville: Those crazy, crazy CACs

In addition to creating a two-tiered sovereign bond market in Europe, those Collective Action Clauses (CACs) beloved by ze Germans — and meant to force debt restructuring losses on private investors — could well end up increasing a country’s chance of defaulting.

FT Alphaville: An audience with Lloyd Blankfein

Nomura’s banking analyst Glen Schorr recently caught up with the Goldman boss (plus chief financial officer David Viniar).

And Schorr was able to quiz him on some of the pressing issues of the moment: the eurozone, regulation, emerging markets, etc.

FT Alphaville: Saxo’s outrageous predictions for 2011

Saxo Bank — inspired by the black swans of Nassim Taleb — have drawn up their 10 ‘outrageous predictions’ of the year. The idea is that these are unpredictable (eh?) events with potentially massive impact. And, as you might imagine, drawing them up is an admittedly unscientific exercise. Nevertheless, Saxo Bank suggests clients might use them to stress test portfolios, or to think about far out-of-the-money options.

FT BeyondBRICs: Chinese train driver manual – in English?

But, it now seems the engineers who have come up with all this authentic intellectual property are even smarter than the ministry would have us believe. After designing and building the new high-speed trains proliferating across the country they apparently decided to write the instruction manuals for train drivers in English, instead of their native Chinese.

Daily Options Report: VIX-Piracy Time!

Zerohedge chimes in on our beloved VIX. Since he has about 4 billion times my audience, I feel some sort of civic duty to elaborate on a few of his points.

This entry was posted on Monday, December 20th, 2010 at 7:34 am and is filed under Daily Reading. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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