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Asian Strength


Last night I wrote that we were waiting on the stock market to make a turn to invest in the stronger economies in Asia, Canada, Australia, et al.

I didn’t think it would be so quickly that we’d get news out of China that their economy is likely to hit that ever-elusive soft landing (an economic slow down that avoids rampant inflation but that continues economic growth). The news today indicates that they may have actually engineered it – their exports were up 50% indicating that the European problems so prevalent in the news are not negatively impacting economic activity on a world-wide basis as most economists think, and that their bank loan growth has slowed to 21% Y-O-Y which is higher than they want but definitely down from past readings.

This good news has sent the stock market in general up > 2% so far today, but the sorts of Asian-centric investment I mentioned in yesterday’s post are up even more: Norfolk Southern (transporter of commodities that ship to Asia) up 3.9%, Australia ETF up 4.76%, Canadian ETF up 4.97%, Brazil ETF up 3.73%, Mosaic (fertilizer imported for Asian Agriculture) up 4.96%, National Oilwell (Chinese oil imports were up 4.5% last month) up 4.18%, Owens Illinois up 4.45%. The list goes on.

So, one day does not a trend make – but it can mark a turning point. It will certainly take more than a couple of positive economic reports out of China to make a change in the recent correction-trend.

As things progress, I will keep you informed of what we are doing and how it is working – so in that vein, I want to update you on the status of the buys that we made in the “Buy Zone” that I showed you on a graph a few posts ago. You’ll recall that I wrote that our plan was to put some cash to work in some of our favorite names when stock market activity was within the purple box that I drew and named the “Buy Zone.”

Today, those trades on average are up 2.57% while the market is up 1.84% at this second, or about 40% better than the market. Focusing on the growing economies and those companies that benefit from economic growth pays off.