As China goes, so goes…

Another rise in the July manufacturing indexes for both state owned and privately held businesses in China sent Chinese stocks to a fresh 13 month high and has erased the 5% selloff last Wednesday. The July PMI in India was unchanged but remains firmly above 50 at 55.3. In response, copper is at a fresh 10 month high and crude is back above $70. Also, the final July Euro area PMI was a touch better than estimated. The July US ISM is expected to rise to 46.5 from 44.8 and it would be the highest since Aug ’08. Better than expected earnings from HSBC helped to lift European stocks and global automakers are being lifted by the Clunker program. While the Clunker plan is gaining excitement, government borrowing that has to be repaid with other peoples tax dollars and giving it away for free to help one specific industry where the government happens to own a large stake is not a healthy path to prosperity. July vehicle sales are expected to total 10mm SAAR up from 9.7mm.

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