I want to bring your attention to something I think isn't getting enough press but could be a marked moment in China taking center stage on a global economy. It is openly noted that China's Central Bank is incredibly concerned about the bubble brew in the equity-market pot, with a sizzling GDP growth of over 11%. The government is trying to intervene without overtly doing so, leaving many wondering if a fallout is in the making, what effects will that have only local economies and markets...
Today China announced it will open qualified institutional investors FROM China to invest in stocks around the world! Realize this: Foreign companies were only allowed to invest in Chinese equities in 2005! Now for the first time the Chinese Government is relaxing its rules and are letting Chinese money flow the opposite direction.
In doing so, they are dove-tailing with another albatross: they want to diversify their foreign currency holdings, especially into dollars, but other assetts as well...It currently stands at $1 trillion!
For investors, the question becomes a) how much will flow into the myriad stock (equity) markets around the world and b) which markets? It's like a tidal wave of capital that has been pent up behind a gigantic concrete dam and finally was cracked today. Where will the Chinese want to invest? What is the psyche of the average chinese investor as eventually, like me sitting at my laptop who can trade global funds, adr's, and eft's, so will the 200,000+ new daily online brokerage account holders in China have the ability to trade US stocks. Which ones will they want to buy? Currently there are rules on how much of a foreign company a Chinese company to buy, but this is the beginning I feel of a real moment in the history of the Global Economy. China not only consumes the world's commodities at a growing pace and fuels trade in the region and globally, it now can consume the world's equities!
When you add the changing demographics and diaspora of jobs, especially as noted in the recent jobs data, our economy is slowing just as global attention shifts to the Bric's of Change...
Throw in a sacking of Blaire, and we have to scratch our heads. I was hoping for Royal in France. Hopefully Guilliani won't receive the same fanfare here in the US for being a voice box for the Bush camp. His pro-war banter just hopefully won't sit well with an American public tired of coffins, no WMD's, and the conservative estimate of 450,000 dead Iraqis. If nothing else, Bush spent $100's of Billions of our money unwisely. He should be held accountable for all of these things, and the saddest part is he'll finish his term and his brother might run?
My hope is that Bloomberg runs as an Independent and ask Obama to be his Vice (if Hillary beats him on the Democratic side); that ticket would be unstoppable. Bloomberg is best equipped to find a solution for Social Security, the health care mess, and negotiate with the Chinese rumble economically. Right now we don't need a military president, we need an economic genius to realize the adage now is the familiar 'If you can't beat em', Join em'. Bloomberg is the only one running who could put in place the staff to help smoothe China's entrance, rather than fight it with Tariffs on goods such as the recent Shiney Paper fiasco.
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