Bullish investors began the New Year betting last year’s best trades would continue to outperform in 2011. Commodities and mining companies soared this morning as investors continued to bank on China demand to raise the price of everything from aluminum to wheat.
The Fast Money traders were taking a different tact. They were watching some of last year’s worst performers: namely Europe and Japan.
Emerging Money.com’s Tim Seymour had his eye on Europe. A European rebound could compensate for slowed manufacturing growth in China, said Seymour. China’s manufacturing activity — measured by an index from the China Federation of Logistics and Purchasing released over the weekend — posted its first drop in five months. But,Euro-zone manufacturing activity increased in December from the prior month, according to a survey released early this morning.
“Do Europe and the U.S. takeover for a decelerating China?” asked Seymour. “The China PMI was weaker…meanwhile the Europe PMI was fantastic.”
Kanundrum Capital’s Brian Kelly was evaluating investor enthusiasm for Japan. The land of the rising sun has been shunned by investors for the better part of the past two decades. Yet some contrarians are starting to come around, saying that Japanese stocks are once again a buy 20 years after the nation’s banking crash.
Kelly, however, was not so sanguine about Japan’s prospects. The country, which has a large elderly population, has more debt than it can service, cautioned Kelly. “Come March, Japan has a big debt refinancing which would kind of debunk the Japan rally,” said Kelly.
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CNBC.com with wires.