Big Trouble in China
A few bits of economic information rolled in today from overseas. CPI in China came in hotter than expected at 4.5%. This is bad because China battled inflation for the past three years, which hurt growth. In recent months China changed the policy that had been to raise rates and increase reserve requirements in order to fuel growth.
The higher-than-expected CPI number today was attributed to a Chinese holiday, but should inflation in China persist their loose economic policy may also reverse course.
Also from Asia, Japan reported orders for machinery decreased 7.2% in December. This is more bad news for a country that can ill afford more bad news. Japan has been crippled by a rising currency. And big businesses like Toyota (NYSE: TM) and Honda (NYSE: HMC) have expressed that a rising yen was a primary cause for poor growth. Look for Japan to intervene within the next few weeks and try to lower the yen against the dollar. FXY puts is an alternative trading method.
Additionally, in Europe both the ECB and the BOE kept interest rates the same. But new rumors about a deal in Greece hit the wires just after the rate update was announced. And investors are much more concerned about the affairs of Greece. Keep in mind, the Greek report is merely a rumor at this point.
