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MV Weather Report: China Gets Cold Shoulder


Rain or shine, we reivew the day's biggest stock stories.


Today's top story was that the US is slowly ruining its relationship with China -- purposely or not.

On Friday, President Obama ordered tariffs on Chinese tires for tree years (35% in the 1st year, 30% in the 2nd, 25% in the 3rd). The President made this move because the United Steelworkers said that more than 5,000 tire workers have lost jobs since 2004. As a result, China has now started an antidumping investigation on imported US auto and chicken products. The results of the investigation could lead to trade restrictions being placed on those products.

As a result of the news, US tire makers like Goodyear Tire (GT) and Cooper Tire (CTB) traded higher while chicken producers such as Tyson (TSN), Smithfield (SFD) and Sanderson Farms (SAFM) traded lower.

Today on the Buzz and Banter Professor Ryan Krueger gave his thoughts on China.

"With the focus on flying tires and grounding chickens in this back and forth contest between the US and China making Jake Delhomme and Jay Cutler look poised in the pocket, I am looking at another potential interception instead.

I am watching the Chinese Investment Corporation looking to pick off yet another in a growing list of energy and other natural resource investments around the world. This one is just down the road from the political football fields of Congress, in Virginia – eyeing AES Corp (AES) which develops power plants around the world and operates utilities.

With plenty of reasons to question numbers coming out of China and the often pointed to electricity numbers – I'd once again suggest paying more attention to what they are doing more than what they are saying."

I think Professor Krueger is right and this story will eventually disappear. I would expect the situation to be handled by negotiators in a few months time.

The stock market seemed to have this view as well. After initially selling off on the news, the S&P 500 rebounded to close the day higher by 0.63%% to 1049.

On today's Buzz and Banter, Minyanville Professor Mike Paulenoff gave his thoughts on the market that just won't go down.

"Once again, the market attempts to sell off (perhaps triggered by the imposition of tariffs on Chinese tires by the Obama Admin), but the weakness does not stick. From a medium term perspective, the daily chart of the S&P 500 e-mini contract remains remarkably and potentially explosive on the upside as it fulfills the long standing target zones projected off of the huge base pattern -- at 1100 and then 1200.

"It is days like today, when the market ignores otherwise bad news, reverses weakness, and climbs into positive territory that returns me to the extraordinary -- and as yet unfulfilled -- upside potential of the inverted Head and Shoulders pattern. This picture also reminds me to continue to consider the possibility, if not growing likelihood, of an upside blow-off... a vertical assault on 1100+ in the hours/days directly ahead. Bullish, in particular, for ETF traders of the S&P 500 Depository Receipts (SPY)."

Click to enlarge

While frustrated, the bears may get their shot at taking the market down tomorrow with PPI, Retail Sales, and Best Buy (BBY) earnings all out before the open.

I'm exhausted, what a great weekend, USC football Saturday and NFL on Sunday. Monday night football tonight.

Have a great night!

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No positions in stocks mentioned.

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