Goldilocks in China!? China’s state weighted July PMI manufacturing index fell to 51.2, the lowest since Feb ’09 and a touch below expectations of 51.4. The glass half full view though is that Chinese officials will back off from tightening policy and the softness is as they have planned in terms of cooling the overheated part of their economy, aka property. Chinese stocks rallied to a 10 week high and copper is at 3 month highs. Also rallying in conjunction with commodity prices are the commodity currencies. The C$ is at a 6 week high and the Australian$ is near a 3 month high. The strength in Asia spilled over into Europe which got a further boost to bank stocks from the good earnings from BNP and HSBC. Outside of another slew of US corporate earnings this week, the double dip debate will get plenty of ammunition as we see ISM, ISM services, vehicle sales, and July payroll data.
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