Wednesday, Nov. 11 2009 @ 4:44PM
Behind today's happy, happy news for investors that the S&P 500 hit a 13-month high is that, among other reasons, China's industrial production soared.
More on China in a moment, but meanwhile, no one believes Treasury Secretary Tim Geithner, currently on a world tour and, as the WSJ says, "sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend." The dollar is dolor (despite a small uptick today), but there's probably a method to his madness:
Lack of major changes in his tone indicates that, while he doesn't want any dollar freefall to shake the recovery in the U.S. economy, he may find it comfortable as long as the currency declines at a manageable pace. A weaker dollar could boost U.S. exports by making them less expensive abroad, lifting the nation's growth and cutting its trade deficit.
Back to China: Check out Der Spiegel's excellent backgrounder, "Reluctant Partners: Global Crisis Makes US More Dependent on China than Ever."
Are the U.S. and China joined at the hip? Yeah, our two economies are making the springs squeak. And the two countries' inevitable spats will take on more and more importance. A divorce is highly unlikely, but everything just short of domestic violence between the two is, especially when it comes to trade issues.