Some of you might be saying, Jack, 6+% inflation—that still seems high. And you’d be right. But the expectation was over 7%. Moreover, the prediction is that they’ll get that number down to 4% going forward.
For the time being, it appears that inflation in China is under control. While we may not get an official announcement about a monetary easing policy until later this year, I believe we’ll at least see a quiet end to the tightening. And a China that’s back online with spending and lending, my friends, is very bullish.
What isn’t bullish, however, is this garbage bill approved by the U.S. Senate earlier this week called the Currency Exchange Rate Oversight Reform Act of 2011. The bill, which is being presented as a way to even out imbalance with our second-largest trading partner and help U.S. producers, would impose tariffs on China for the way it manipulates its currency. But really, it’s another example of protectionist policy coming out of Washington at a time when we can afford it the least, and it could seriously disturb Sino-U.S. trade going forward.
Raising the price on Chinese imports is not going to bring production back to our shores. All it’s going to do is make goods imported from China more expensive for U.S. consumers. In an economic climate that’s already fragile at best, how does this make any sense? I don’t see this bill creating a single job here in the States—all I see is a first shot in a potential trade war.
This is not the way the world’s strongest economy is supposed to act, and anyone who supported this bill—republicans included—should be voted out of office. Just as we took a step forward by getting the free trade agreement with South Korea through Congress, we decide to get tough with our bankers and fastest-growing customer base? Folks, that’s just not the way it works. This is just another example of legislation that hurts America and Americans, and I am sick and tired of it.
The market seems to be holding its steady gains and getting right into the teeth of that resistance level of 1215-1220 in the S&P. The key now is whether we can punch through it—and continue to punch through it on a weekly basis going forward.