Investment Outlook - America in 2010
Michael Hartnett: My Favorite Indicator
Why do I like this indicator? Because China stimulates its economy through real estate. From a global perspective, if China is building, commodities will go up. Since these companies are sensitive to prices, they'll be among the first to detect inflation.
Currently, these stocks aren't as unambiguously positive as they were three months ago. If they start to decline, it would indicate that investors expect the Chinese to tighten monetary policy. It was the first to ease interest rates, and the most aggressive. They got it right, and their stock market was the first to start to recover. When China raises rates, that will have a ripple effect through global equity markets.