It seems that China’s stimulus package might already be working some magic. China’s stock market touched 7-month highs on reports that both housing sales and construction starts are on a mild upswing.
And the New York Times says construction is also well underway on new highways and rail lines.
This is crucial because the world's metal and oil markets are dependent on Chinese demand; and not surprisingly, both experienced a jolt.
Not only are there signs that China’s stimulus is starting to work but some pundits feels that China is in an enviable position for the years to come.
They say, as compared to many other countries including the US, China has piles of cash and a strong banking system. That could ultimately make China an even stronger competitor than it was before the crisis.
What’s the trade?
Joe Terranova thinks a large number of American companies stand to benefit and he recommends long positions in the following: Joy Global, US Steel, IBM, Exxon Mobil, ConocoPhillips, Hess, and/or Potash.
Or if you’re looking for a currency play Terranova suggests getting long Australia’s dollar through the FXA.
And in case you’re wondering Terranova is putting his money where his mouth is. Following are his disclosures: Terranova Owns (JOYG), (X), (IBM), (XOM), (COP), (HES), (POT).