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Minyanville's Before The Bell: China's Inflations Surges, Global Bulls In Charge


Global Markets shrug off China's 4% loss. Stocks are up all around the world.

U.S. stock futures are higher this morning. As of 7:20 AM EST, S&P futures are trading up 4.8 points to 1460, and Nasdaq futures are up 8.5 points to 1976.

Stocks were higher in Asia. Japan's Nikkei 225 closed up 0.7% as government data relieved concerns of the Japanese economy. Japan's July machine orders increased 17% vs. a 5% consensus. The gain was led by a demand for electric machinery. (From Bloomberg)

Australia's ASX 200 finished the day up +0.72%; Hong Kong's Hang Seng closed up +0.34%; Taiwan's TAIEX gained +0.73%; and India's Sensex lost -0.35%.

In China, the country's top securities regulator, Shang Fulin, of the China Securities Regulatory Commission warned of the risk of investing in the country's stock market. (From WSJ) The warning comes as China's Shanghai Composite fell -4.5%.

China's CPI surged to 6.5% in August, its highest level in more than a decade. Food prices accelerated 18.2% with meat and poultry increasing 49%. China's PPI data was also released increasing 2.6%, 0.2% greater than July's level. In addition, China's trade surplus climbed 33% in August to $24.97 bln. (From WSJ) Please read Professor Rohrlich's China's Year Of The Pricey Pig as he gives more of a context of China's soaring food prices.

European markets are all trading in positive territory. The CAC is up +1.46%, the DAX is up +1.17%, and the FTSE is up +1.47%.

The positive sentiment comes even as the European Union cut its growth estimate from 2.6% to 2.5% after the collapse of the subprime market raised global borrowing costs. (From Bloomberg)

Here in the U.S. markets are digesting comments from a number of Fed officials. The latest was Fed governor Frederic Mishkin who reiterated the positive signs of the economy with annual inflation staying in the 2% range. Mishkin reassured the markets the central banks are prepared to act as needed to limit the effects of housing and that the current reassessment of risk would eventually help the economy. (From BTIG) Make sure you read our Fed package title Ben In a Box in our Economy Section.

In other news, commercial paper traders from the U.S. and Europe have decided to have an important meeting on ways of restoring confidence in the short-term debt market. According to Rick Watson, managing director of the European Securitization Forum, the meeting will focus on getting commercial paper issuers and dealers to disclose their holdings of subprime debt. Just yesterday, the London Times reported approximately $110 bln worth of commercial paper was set to mature this week. Read Professor Depew's analysis in his daily column Five Things You Need To Know.

In equity news, senate investigators have sent letters to Merck (MRK), Johnson & Johnson (JNJ) and Wyeth (WYE). The probe is led by the Senate's Permanent Subcommittee on Investigations as they seek more details on tax-cutting arrangements. (From WSJ) For company specific news, please click on our Stocks to Watch.

On today's radar, we have trade balance data due to be released at 8:30 AM EST. OPEC is also meeting today as the organization grapples with increasing output. Saudi Arabia, the group's biggest producer, is said to be pressuring for an increase of 500,000 barrels per day. Investors, however, are waiting for a speech by Fed Chairman Ben Bernanke who is set to take the stage in Berlin at 10AM EST. Please click here for the full trading radar.

Good luck and good trading, Minyans!
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