Is China adopting a U.S. strategy – sanctions?
Monday, February 1, 2010. 9:15 am.
As all countries do when they become larger and more dominant, China is increasingly flexing its economic muscles to convince others to follow its wishes. Smaller nations have been finding that out in recent years. Google has been finding that out in recent weeks.
Import/export sanctions, such as the U.S. has had against Cuba for decades, and as the U.S. and its allies have against Iran and others due to their nuclear ambitions, are a typical tactic.
And China apparently feels strong enough now to challenge the U.S. with economic sanctions.
China threatened yesterday to impose trade sanctions on U.S. weapons manufacturers if the U.S. goes forward with a $6.4 billion arms deal with Taiwan. Taiwan is just off the coast of China and has been in a decades long dispute with mainland China.
The deal includes 60 Blackhawk helicopters, 114 Patriot missiles, and weapons systems supplied by Boeing, United Technologies, Lockheed Martin, and Raytheon.
Sanctions could hurt the U.S. companies. Boeing sales to China have accounted for 4% of the company’s total revenue over the last three years, and the company estimates that China will need 3,700 new aircraft, worth $400 billion, over the next 18 years.
Global leaders are calling for talks between the U.S. and China to prevent a crisis over the issue.
Asian markets were mixed last night.
The DJ Asia-Pacific Index closed down 0.3%.
Among individual countries:
Australia closed down 1.1%. China closed down 1.6%. Hong Kong closed up 0.6%. India closed unchanged. Indonesia closed down 0.9%. Japan closed up 0.1%. Singapore closed down 0.3%. South Korea closed up 0.3%. Taiwan closed down 1.5%.
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Markets this morning.
European markets are up some, on average of about 0.3%.
Oil is up $.71 a barrel at 73.60 at the moment.
Gold is up $4.30 a barrel at $1,088 at the moment.
Markets in the U.S.
This week brings another heavy schedule of potential market-moving economic reports, the ISM Mfg Index, Pending Home Sales, and the ADP Jobs Report among them.
And the schedule ends on Friday with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a one to three-day triple-digit move in one direction or the other.
To see the full schedule of next week’s reports click here, and look at the left side of the page it takes you to.
The report on Consumer Income and Spending was released at 8:30 a.m.
It showed that incomes rose a seasonally adjusted 0.3% in December, while spending rose only 0.1% after a 0.4% gain in November. The result was that the savings rate rose 4.6%, its highest level since 1998, as consumers apparently remain nervous and reluctant to spend.
There are two more reports due out today, the ISM Mfg Index, and Construction Spending, both at 10 a.m.
Our pre-open indicators this morning are positive, pointing to the Dow being up 60 points or so in the early going.
Unfortunately, positive futures prior to the open have not meant much recently. They also had futures pointing to the Dow being up 60 points on Friday, but it couldn’t hold the early gains past 11 o’clock, and closed down for the day again.
Stock Market Patterns.
The next ‘monthly strength period’ was due to begin last Thursday, and to run through this Thursday, Feb. 4. It sure has not shown up this time so far.
Interesting Charts of the Morning.
I’m sorry but I don’t have time to provide interesting charts of the morning this morning.
Please scroll down to see Saturday’s ‘Interesting Charts of the Morning’ and commentary.
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