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Before the Bell: Asian Malady; Economic Data Shows Ugly Picture


China's stock exchanges have dropped 12% this week.

Morning Perspective: Asian Malady

According to Bloomberg, Asian trading is having its worst week in recent times. The CSI 300 Index, which tracks the 300 largest companies on China's two exchanges (Shanghai and Shenzhen) declined 12% this week on concerns government measures to fight inflation and slow growth will hurt corporate profits. China's central bank said it was raising the minimum reserve requirements of commercial banks to a record 16%, reducing the amount of funds available in an effort to cool the economy. Further, the country's inflation has risen close to an 11-year high. In all, the index has fallen 44% from its October 16th peak. Todd mentioned China in yesterday's Random Thoughts.

From the Bull Pen: Bulls still see a play in China Mobile (CHL). Sell-stops can be set below support ($80).

From the Bear Cave
: Bears can play the upside in the inverse ETF FXP. This security tracks twice the inverse of the China 25 index. Sell-stops can be set below recent lows, $75.

Data Shows Ugly Picture

According to Bloomberg, economic data yesterday showed little signs that a slowdown of the U.S. economy was abating. The Federal Reserve of Philadelphia reported that its general economic index fell in April to -24.9, marking the biggest drop since 2001. Economists had forecasted -15.0. In addition, the Labor Department said initial jobless claims ticked higher by 17,000 to 372,000 with the total number of Americans receiving benefits coming in at a four-year high. The one bright spot was the Conference Board's index of leading indicators which points to the economy's direction over the next 3-6 months. That figure increased 0.1% in March. For more, read Professor Kevin Depew's Five Things You Need To Know.

From the Bull Pen: Bulls can look to Coca Cola (KO) in a slowing environment. Sell-stops can be set below $58. The Consumer staples ETF (XLP) is also another option; sell-stops below $27.70.

From the Bear Cave: With a struggling consumer and rising prices, bears see an opportunity in Whole Foods (WFMI); downside entry near $35 with buy-stops above $37.

For more ideas, check out Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed with the Hang Seng -0.25%, Nikkei +0.58%, Sensex +1.46%, Taiwan -0.18%, and Shanghai -3.97%.

A quick check over in Europe, we find the CAC +1.7%, FTSE +0.96%, DAX +1.86%,

As of 8:40 AM EST, S&P futures are higher +16 points to 1388, and Nasdaq futures are up +22 points to 1889.

A Look At Commodities

In commodities, Gold is lower -29 points to 914.00. Crude is down -1.76 to 113.10. Silver is off -0.52 to 17.79 and copper is lower -6.2 to 388.

The dollar index is higher +0.442 to 72.125.

No events on the radar today. Have a happy Friday! Good luck!
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