Tainted Alpha

The trading in Asia and Europe today was dominated by China export data. Apparently China exports rose 17.7% y-o-y for December almost reaching pre-crisis levels. The consensus was at 5%. In the same time imports grew 55.9% y-o-y, vs. the consensus
forecast of 32.5% .

The trade surplus reached $18.4 billion in December, about 60% of the pre-crisis level. Since the first quarter last year, exports have risen 60%, but the trade surplus has remained almost flat. Export prices fell 7.5% y-o-y in November while import prices fell by just 1.3%. A clear margin pressure. Everyone jumped on the headline. The news flow has a pre-crisis top sentiment and even this kind of articles are allowed: China May Overheat With 16% Growth, Government Researchers Say.

Well, I’m sure this is unsustainable, the question is only when will all broke down.

The U.S. markets weren’t impressed by the news, closing almost flat.

VIX broke down, closing at 17.6. Historical volatility is at 10.

Chart 1. VIX

Bulls have the control. I am skeptical on all the action.

China, VIX

This entry was posted on Monday, January 11th, 2010 at 3:30 pm and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.