Evergrande crisis and stocks rise: what are Yanks smoking?

3 min read
fairly easy
How can we be 'going to hell in a hand basket' on Monday with the stock market diving and now we're buying stocks like there's no tomorrow?
The Dow Jones index spiked more than 500 points overnight, which raises two questions. First, what happened to the Lehman Brothers/GFC fears about the collapse of China's Evergrande property group?

And second, what are the big stock market playing Yanks on Wall Street smoking?

The chart below shows the U-curve on market sentiment over this week.

S&P/ASX 200 Index

We're down 130 points on the week and today could be telling, as the market awaits what Evergrande does with its second interest payments to a US dollar denominated bond. Stock markets roared positively yesterday because the second biggest property developer in China made its interest repayment to Chinese lenders and there's a belief that the Beijing leadership won't let Evergrande fail to such an extent that it hurts their economy.

Of course, President Xi Jinping would love to stick it to the West and its capitalist/financial system, but China is a big player in all that. Surely it can't believe that smashing its customers by helping to create a financial system-created recession is a smart move!

By the way, on my TV show last night, S.T. Wong, fund manager at Prime Value,…
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