Chinese stocks just turned in their best evening in years! And while there was globally good news to be found in So. Korea’s October-so-far export numbers, China’s rally was all about positive/calming jawboning by the powers that be. Unfortunately, history shows us that big bounces are most common during decidedly down markets, and, yep, they’re generally sparked by the promises of panicky politicians.
Bottom line for Chinese, and, ultimately, American equities, is that, sure, both governments can blow their debt levels through the roof (both are, by the way) and promise more than the moon, but there’s this thing called the marketplace, and the markets of the world’s two largest economies are, well, too large to survive on their own. Yeah, I know, globalism has become a bad word for many, but, my friends, the U.S. — in terms of labor as well as customers — just isn’t big enough to support its big companies; the ones that more than dot your equity portfolios. I.e., while the underlying setup remains decent, and Chinese stocks look really cheap — and U.S. stocks are getting cheaper — until trade negotiations are back on, we remain skeptical of stock market rallies…
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