johnthebear

China: Is Domestic Demand Rising or Declining?

I follow FXI/FXP and was very surprised at the disconnect the past couple of days. I expect that FXI will head back to 19 tomorrow as the economic reality of reduced earnings forcast are put back into investors equations along with the slight reduction in interest rates around the world. The question I face, is will FXP resume it's loft status that corresponded with the FXI a few days ago?

Earnings and a bottom on the home price decline seem more important than interest rates at this point in time. It is hard to understand the logic for the market being up today.

I like the idea of making new low interest 30 year mortgages available to qualified buyers, but do not like the idea of bailing out mortgages to those that had no business buying a house in the first place.

It seems that the US led the world into the crisis and it will not end until the US is able to slow the drop of residential real estate prices, which will be tough to do if unemployment starts rising sharply.

Waiting in the wings is the problem of overvalued commercial real estate which will hit the financial press in the next few months. How to find financing for buyers looking to buy real estate with huge loans of failing REITs and hedge funds will be a monster of a problem, and could long delay the turn around, both for US as well as China.