Morning Perspective: China Slowdown?

FT reports the World Bank cut its forecast for China’s growth from 10.8% to 9.6%. The bank lowered its forecast from the previous figure originally released last September due to expectations of a weakening global outlook and decelerating exports. The World Bank added, however, that the Chinese economy is well-positioned to weather any effects of a global slowdown due to its strong domestic economy and the government’s relatively stable financial position. Professor Kevin Depew mentioned China in yesterday’s Five Things You Need To Know.

From the Bull Pen: Bulls expect the dollar to rally against other currencies should global growth slow and may play the upside in the dollar bullish fund (UUP); sell-stops below $23.


From the Bear Cave: Bears see a downside entry in the China 25 Index (FXI) at $160. Sell-stops can be set above.



Sallie Mae Cut by S&P

Bloomberg reports SLM Corp’s (SLM) credit rating was cut by S&P last night two levels to BBB- from BBB+ and the ratings agency said the student lender may have its ratings cut further. SLM Corp, known as Sallie Mae, will remain on “credit watch negative” even after a consortium of banks agreed to provide over $31 bln in financing to the company. S&P said the move reflects concern that the lender will not receive the financing because it is subject to various conditions, but the outlook will be revised to "stable" once the deal is done. For context, read Mr. Practical’s The Great Moderation of Debt.

From the Bull Pen: In challenging financial markets, bulls may look to the pharma space as a safehaven. Bulls may play the upside in Merck (MRK); sell-stops below $45.


From the Bear Cave: Should Sallie Mae not receive the financing it needs, bears can expect this news to weigh on the financial sector. Downside play in the financial ETF (XLF); sell-stops can be placed above $30.


For more ideas, see Minyanville’s Spotlight Stocks.

Quick Check Around the World

Traders saddle up for the Tuesday ticks and find foreign markets skewed to the downside.

Asian trading closed mixed with the Hang Seng -0.89%, Nikkei -0.82%, Sensex +0.02%, Taiwan +2.03% and Shanghai -1.55%.

A quick look towards Europe finds the CAC -0.81%, DAX -0.51%, FTSE -0.62%, ATX -0.44%, Swiss Mkt. -0.76% and Stockholm -0.87%.


A Look At Commodities

Commodities are weak this morning. Crude oil is trading down -0.93 to 89.09. Gold is off -16.2 to 888.70. Silver is down -0.305 to 16.475 and copper is lower -4.05 to 324.75.

The dollar index is up +0.607 to 75.979.

As of 8:30 AM EST, S&P futures are down -4.5 points to 1374, and Nasdaq futures are lower -2.75 to 1824.


On the Radar

Economics

10:00 ISM Non-Mfg Business: 53.0 cons
10:00 ISM Non-Mfg Composite: 52.5 cons

Click here for Minyanville's full trading radar.


Happy Mardi Gras! Have a great day!

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