What can counterbalance the gloom in Europe? What can offset worries about Greek bonds, or Italian and French banks or the potential collapse of the euro?
That's right. The narcoleptic giant might be awakening. JP Morgan, in an incredibly important note, is talking about a slowdown in inflation there, something that would end the self-induced slumber that has made it impossible to offset the woes presented by a faltering Europe.
You stop slowing China down, you get the heads up that credit will no longer be tightened, then suddenly you can buy the big Chinese plays like Caterpillar (CAT), Cummins (CMI) and Joy Global (JOYG). You can own Coach (COH) and Starbucks (SBUX), higher-end consumer plays. Yum (YUM) works even if Darden (DRI) doesn't.
Ha, funny thing. Those stocks are all higher. Some of them up huge. The buyers aren't waiting to see. They know a string of numbers comes out beginning Thursday at 10 pm ET.
They don't want to wait.
They know that this is as important as Europe, particularly to the banks. It's always been an ephemeral linkage to our big industrials. Kind of like, hey, the numbers they are showing, they won't hold up if Europe collapses. Same thing with the oils. They can't go up if Europe collapses. The coppers. Freeport (FCX). The techs, Yes, the techs! Whatever you think it is going to earn, it won't because of Greece and Spain and Portugal.
The reason why the bears are so confident is China is that they know they don't have to worry about anything bullish happening here -- we are pretty pathetic on the economic front -- or Asia, because it has been a one-way interest rate ascent.
But if you get the pause, or if you get credit easing, you might not care all that much about Italian orders, or German imports.
Yes, China is that powerful. It is the sun our companies revolve around. Europe's just a planet.