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The Second Most Important Economic Engine Is HummingThere is a lot of stimulus spending taking place in China and the current economic data suggest that the economic expansion there is accelerating once again. Watch out oil! Even General Motors is doing great in China. In a recent report from the company, GM said that its sales in China grew a whopping 50% in April, achieving a monthly record of 151,084 units. GM's "Buick" brand is very popular in China and sales of Buicks soared 64% in April to 38,071 vehicles. According to the company, GM expects its sales to double in China to about two million vehicles a year within the next five years. Along with improving economic data, there has been a substantial improvement in investor sentiment, which is still related to the oversold conditions of the market back in March. The broader market is vulnerable to a pullback because of its recent run, but I have to say that I find the changes in sentiment are becoming significant enough to suggest that the rally might continue for a while. Of course, we have a long way to go just for the stock market to get even with itself before the subprime mortgage collapse. I don't know any mainstream Street analyst who is sticking his or her neck out to predict where the stock market is going to go this year. If there are any, it's just plain guesswork. The fundamentals are still too poor and uncertain for anyone to make a learned prediction. My best guess is that we'll experience a major pullback soon, followed by another rally. My best indicator so far this year is what's happening in China. Because of that country's heavy reliance on exports, its economic condition is like a temperature gauge on global demand for goods. Similarly, China's growth is directly responsible for the trading action in commodities. While China's economic engine may help the global economy come out of recession, it may also contribute significantly to inflation down the road. Pricing pressures in China from demand for raw materials to workers' wages are inevitable. Accordingly, pricing pressures at home will become a very real circumstance that we have to be prepared for. Over the near term, I think the best portfolio mix in equities consists of Chinese stocks, domestic technology stocks, oil/gold/agriculture commodities, one or two solid dividend-paying banks, and a pharmaceutical pick. Oh, yes, let's not forget there's always room for a special situation or two. Profit Confidential --- http://www.profitconfidential.com/ LOMBARDI PUBLISHING CORPORATION News, Analysis, and Information Services Since 1986. One Million Customers in 141 Countries. Lombardi Publishing Corporation Financial Publications Division 350 Fifth Avenue, Suite 3304 New York, NY 10118-3304 --- Copyright 2008; Lombardi Publishing Corporation. All rights reserved. No part of this e-newsletter may be used or reproduced in any manner or means, including print, electronic, mechanical, or by any information storage and retrieval system whatsoever , without written permission from the copyright holder. Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHORMitchell Clark, B. Comm., Senior Editor at Lombardi Financial, specializes in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for eleven years, is currently authoring a book on how to pick small-cap stocks for maximum profits. Prior to joining Lombardi, Mitchell was a stock broker for a division of one of the largest financial institutions in North America.
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