China looks to be the first major economy to beging to see the effects of its stimulus plan, and my guess is that this bull will affect commodity prices worldwide. Here are some interesting facts that were published in a Bloomberg article today.
-China has a balanced budget and has much more ammunition of cash due to its foreign exchange reserves. It's overall debt is only 18.5% of GDP. It can relentlessly ramp up spending to create jobs and increase growth.
-China's banks can lend more effectively to businesses because they aren't saddled with the toxic debt that the American banks are.
-Coca Cola's sales in China rose 29% in the 4th quarter. McDonald's is reporting strong growth and is expanding its restaurants.
-Steel and Iron Ore prices are starting to rise as demand for infrastructure commodities increase.
Watch this economy closely because if it starts to show more signs of recovery the demand for oil may turn around the price of oil. With all the cutbacks on oil expansion it has the possibility of spiking quite fast.
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