When China opens up its hippo-sized mouth and gulps, it sucks in a lot of commodities.
That’s why the Asian and European markets rocketed higher overnight – especially the stocks of companies that mine and trade commodities. China announced a huge fiscal stimulus package – almost US $600 billion – and anyone mining or sitting on stocks of copper, steel, concrete, or any other building supply all of a sudden heard that lovely ka-ching sound in his head.
But the euphoria didn’t last long. By the time North American markets opened the glee had turned to just general happiness, and as the day has progressed glumness has set back in. Crop futures prices had opened nicely up, but have trickled lower as the joy as slowly drained from the overseas rally.Â
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We’re still stuck at what might be this year’s crop market lows.Â
It’s been a scary pattern: governments announce massive, unprecedented financial boosts and interventions and get only a few hours of gratitude from the markets. It’s hard to say what it would take to decisively turn world markets higher, but at a certain point markets had better turn around, or governments will run out of money and their supposed ability to manipulate the market. It’s as if grim recessionary news is in a face-off with historic government intervention and as they each equally hack at the puck, it can’t break free.Â
The hope and fear is that when one side does get a clear shot at it, it’ll shoot out fast and possession will be clear. For those selling crops to worldwide consumers who need money with which to pay, let’s hope the government intervention side wins.Â
Perhaps the Chinese have another $600 billion they can throw into the pot.
