Before The Bell: China Steamin' Ahead; Fannie Joins Freddie
China's inflation accelerated the quickest pace in 11 years. Fannie and Freddie are preserving capital. Futures are up.
Morning Perspective: China Steamin' Ahead
Bloomberg reports China's consumer prices rose 6.9% in November from a year earlier after climbing 6.5% in October. The inflation rate marked the quickest pace in 11 years. In the first 11 months of this year, the trade surplus reached a record $238 billion. Analysts believe this trade surplus, along with surging food and energy costs, are what is contributing to the overheating economy. Professor Bennet Sedacca mentions China in Buyouts, Bifurcation, Bailouts, And Bankruptcy.
From the Bull Pen: Professor Sedacca said energy companies are doing well because China has turned into a legitimate developing nation rather than an emerging market. Those who agree and believe such stocks will continue that trend may look to Exxon Mobil (XOM) for a play; short term sell-stops below $89.89.
From the Bear Cave: Those who believe the Chinese government will act to cool the economy may play the downside in iShares China 25 Index (FXI); buy-stops above $197.50 (downtrend from October high).
Fannie Joins Freddie
Freddie Mac (FRE) said that it will reduce the number of delinquent loans it purchases from investors of mortgage securities. The move will preserve capital by avoiding the large, immediate losses realized when Freddie buys these types of loans. Following the move Fannie Mae (FNM) announced it will implement the same strategy. Last week, Professor Mike Shedlock wrote about these companies in Little Hope For Hope Now Alliance.
From the Bull Pen: Investors believing the worst-case-scenario is already priced in for these companies may play the upside in FRE and FNM, sell-stops below $34.26 and $36.55 respectively.
From the Bear Cave: Professor Shedlock was skeptical on these companies given last week's "Paulson Plan." Those still bearish on Fannie and Freddie may play the downside with buy-stops above recent highs ($39.48 and $35.04 respectively).
Click on Minyanville's Stocks To Watch for more company-specific ideas.
Quick Check Around the World
Asian trading closed with the Hang Seng +2.55%, Nikkei +0.76%, Sensex +1.81%, Taiwan +0.47% and Shanghai +0.25%.
A quick check across the pond finds the CAC -0.44%, DAX -0.16%, FTSE -0.41%, ATX -0.33%, Swiss Mkt. -0.32% and Stockholm -0.39%.
A Look At Commodities
Crude oil is up this morning 0.82 to 88.68. Gold is lower -1.0 to 812.00. Silver is down -0.03 to 14.82, and copper is down -5.6 to 303.65.
As of 8:30 AM, S&P futures are up by +1.80 points, and Nasdaq futures are higher by 5.00 points.
On the Radar
10:00 Wholesale Inventories: 0.5%
2:15 FOMC Policy Statement
Click here for the full trading radar.
Have a great day, Minyans! Good luck!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter