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How Long Will China Float The Global Economy? Last night the Shanghai Index rallied higher by nearly 3.0 percent. The rally in the highly followed Shanghai Index occurred after the Chinese central bank failed to raise interest rates as most economists had expected. Inflation fears have come over the Chinese economy as reports such as the CPI surged by over 5.0 percent. Recently the Chinese have increased bank reserves to try and curb speculating in real estate. However, the failure by the Chinese to increase actual interest rates has caused a spike in most commodity stocks this morning. Stocks such as Freeport McMoRan Copper& Gold Inc.(NYSE:FCX), and Southern Copper Corp.(NYSE:SCCO) are rallying this morning after the action by the Chinese. Oil, gold, and silver are also surging higher as this action by the Chinese has helped the U.S. Dollar Index to decline. As we all have seen before when China rallies the world seems to inflate higher and rally. This is really just an extension of the current inflation rally as the central banks around the world continue to keep interest rates artificially low in order to create inflation. Leading commodity stock Cliffs Natural...more
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