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Taming the Chinese Tiger

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The world in your hands: An overnight, overseas update

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Electric power is obviously not the only thing China aims to reign in; today's big overseas news is the central bank in Beijing telegraphing its intention to control runaway growth with higher yields. Asian equities are off on the news as the specter of rising rates and tighter lending in an engine of the world's economy takes hold. International investing expert Mark Mobius, speaking on CNBC's Worldwide Exchange early this morning, pointed out that "interest rates in China are still quite low". That said, the first half of 2010 could be as good as it gets for Chinese stocks as an unfriendly monetary trend starts to emerge in Asia, one that could soon spread west. Australia has been quietly raising rates for a few months now and although its move hasn't yet dragged equities Down Under, with a hike in Korea up for discussion tomorrow and China also turning to tightening, American investors should start to brace themselves for when Ben removes our own punch bowl of liquidity.

Britain's finances are controlled by a Darling and daring is how that country's flagship financial newspaper described the choice of Naoto Kan as his counterpart in Japan. Certainly Kan-san wasn't shy about talking down the country's currency on his first day in office, the yen taking a tumble today after an inaugural address in which a wish was expressed for further "correction".

The Nikkei Index edged down but Japan Airlines (JAL) tumbled 10% in Tokyo trading today after a global travel group announced its opposition to a proposed combination with Delta (DAL). The carrier currently bleeds red ink, but at its founding in August 1951 it was a key component of Japan's famous Postwar Miracle of economic recovery. This week's passing in Nagasaki of a remarkable man who survived both atomic blasts on the island in 1945 brought the era briefly back to life. His survival instinct shows there's always a way when there's a Will.

Modern Christmas trees and much else about the festivities just celebrated got their start in Germany, but a just-released report shows its shoppers were more Scrooge than Santa as the year came to a close. That the continent's largest economy showed such a surprising drop in retail sales is one reason why, even as the US financial system continues its recovery, a clutch of recent data seems to suggest Europe has gone backward.

No positions in stocks mentioned.
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