Is Everyone Calmer About China Now?


OK, has everyone calmed down on China? Did you see that Australia RAISED its estimates for iron ore exports — most of which go to China — by nearly 3 percent?

Get the point? Some very big money is betting on a soft landing in China, not a hard landing. Iron ore imports will continue to grow, just at a slower pace than the 24 percent average growth it saw between 2000 and 2010.

Overblown worries that Chinese iron ore imports were dropping into the single digits moved markets yesterday, though the information was well known to those in the business.

UBS: “We like iron ore in 2012...evidence exists of a lift in activity along seasonal lines.”

The big concern: Bearish anxiety causes a slowdown and/or delays in new iron projects that are on the drawing boards in the next few years.


1) It’s still shaky for Monti’s reforms: Italian Prime Minister Mario Monti is taking on Italy’s labor unions, and the winner is still not clear. Monti wants a change in the notorious Article 18 of the Italian labor law, which essentially prevents management from firing workers for economic reasons. While two small unions have voiced support, the third — and largest — is actively opposing the change.

Monti is offering a larger safety net for those laid off, which is a separate problem the country cannot really afford. But he needs that olive branch — and it still isn’t enough to satisfy the union!

The reforms will be presented to the Italian Parliament, hopefully sometime this week. Its passage remains uncertain.

There was an attempt to change this law 10 years ago, almost to the day. It came to a head with the assassination of Marco Biagi, a government adviser on labor law, then-Prime Minister Silvio Berlusconi backed down and 10 years of stagnation in the Italian economy followed.

Here’s a stat to ponder: Only 57 percent of adult Italians have a job, while 30 percent of 18-to-24-year olds are unemployed.

2) The U.K. will avoid recession : The British finance minister said the U.K. economy will grow 0.8 percent this year, and 2 percent in 2013. Remember: Part of the key question for global stocks in 2012 is, what side of the European recession debate are you on? Are you on the side of a mild recession in continental Europe, or a more severe protracted one? In the U.K., it now seems there is no recession at all.

3) Another cloud computing initial public offering: The hot IPO this week is what-else-another-cloud-computing-type company, ExactTarget, which will trade under the symbol “ET,” looking to price 8.5 million shares from $15 to $17 a share tonight for trading tomorrow. It will likely price above that, and open in the $20s, if recent history with cloud computing companies hold.

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