Skip to main content

Chinese bubble, Wall St. correction

Couple of stories on the recent action in the stock market. Let's look at what's happening with two of the biggest players on the world stage, the U.S. and China.

"Wall St. falls ending 5-week rally". FT.com noted during the afternoon trading session that a down performance on the day would end "a winning streak that had driven blue-chip stocks on their best run since 1927.".

And that's what happened, as CNNMoney.com reports in, "Dow's record run done". An excerpt from that piece:

The Dow Jones industrial average closed lower Tuesday, ending its bid to claw out the longest up streak in Wall Street's history.

The Dow (down 7.07 to 13,305.90, Charts) ended about 4 points lower, after finishing with record closes for five sessions in a row. The blue-chip barometer has risen in 24 of the last 27 sessions - a feat last achieved almost 80 years ago.

Meanwhile, things are getting very hot again in China. The country's mainland stock exchanges are registering huge gains, with the Shanghai composite index up about 50 percent thus far in 2007.

Despite recent one day market drops of 8 percent or more, China's investor population is shrugging off fears of a bubble and piling into stocks, as FT reports.

China’s stock market brushed off a central bank warning about the danger of an asset bubble on Tuesday and rose to another record high in a sign of the government’s waning ability to control share prices.

At least three state-run newspapers ran prominent stories about the warning from Zhou Xiaochuan, governor of the People’s Bank of China, in Basle on Sunday. When Mr Zhou was asked if he was worried about a bubble forming in the stock market, he said he was.

But his comments, the latest in a series of official public statements expressing alarm about the level of the market, were ignored by investors, who bid up the index by nearly 3 per cent.


Apparently, warnings from government officials do not carry the influence they once did in this red-hot Chinese share market.

See this week's Financial Sense Newshour interview with Puru Saxena for more info on the Asian economies and the current mania in mainland Chinese share markets.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.

Moneyball: How the Red Sox Win Championships

Welcome, readers. To get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter.

The Boston Red Sox won their fourth World Series titleof the 21st century this week.

Having won their first Series in 86 years back in 2004, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it?

Quick background: in late 2002, team owner and hedge fund manager,John W. Henry(with his partners)bought the Boston Red Sox and its historic Fenway Park for a reported sum of $695 million.

Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship.

This brings us to one of my favorite scenes from the 2011 film, Moneyball, in which John W. Henry (played by Arliss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pitt) over to Boston with an excellent job off…