Wednesday, November 21, 2012
A couple morning news notes
BI - housing starts "go vertical". OK, the minute BI gets this hyperbolic on a topic, we can assume it's entirely baked into the market. Too bad; I was starting to like the idea of the S&P going up from here.
Reuters - China banks turn blind eye as bad corporate debts pile up. I put this forward because I still think the third crash of this secular bear will be caused by China. They have a demographic cliff coming up in just a couple years; the same kind of demographic cliff (short-term, which has since reversed) was associated with the US housing crisis. The Chinese banking industry is weak in the same way that the US banking industry was in 2005-6 when the prescient folks started warning of a US collapse.
This'll be the thing that caves in commodity prices, and heck maybe we'll even see $800 gold as the Chinese economy falls to bits. The only way to avoid this is if the new Chinese leadership can do something radical that purposefully violates the rules of economics.