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January 2, 2013 – 6:03 pm

dow_jones_stock_market_results (1)As the market rallies over the predictable outcome of the fiscal cliff mess, i.e. tax increases for the rich and kicking the main issues of over spending down the road, there is little attention being paid to China.

Yes, it is important that our government came up with a last minute deal but as investors didn’t we all know that was going to happen? Also, reported this morning, which is just as important, is what is going on economically in China. They released two reports: the official PMI report that came in at 50.6, a seven month high and the HSBC purchasing managers’ report with a reading of 51.5 for December from 50.5. Anything over 50 is expansion. Also the new orders component hit a 23 month high of 52.9.

However, what was significant besides the gaining strength in China was a shift reflecting stronger internal spending, away from exports and toward infrastructure. To be sure, exports are still a large portion of their economy but the change is important.

Growth in China for the new year is expected to be 8.6% a far cry from the 10% growth figures of the past but as economies expand growth slows and China has been expanding at above 10% for many years.

These China reports are just as important as solving the fiscal cliff for anyone that wants to understand what is going to happen beyond the news events of the day.

Good Trading
Steve Peasley

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