Smoke in China means there's fire

A number of signs seem to be telling us that the Asian giant is stirring again.

By Jim Cramer Sep 19, 2012 8:54AM logoImage: Hong Kong at night, Allan Baxter, Digital Vision, Getty ImagesThe day rates I follow are suddenly gapping up. The shipping rates for oil are among them, as are the day rates for Baltic Freight, which suddenly jumped 34 to 697 points after a month of negatives. Copper won't stay down either. Then there was Tuesday night's surprising Japanese stimulus, a real overload to get a moribund country moving. It's something that can only make these three sensitive indicators -- oil tanker rates, Baltic freight and copper -- go even higher.


These say to me that China is coming back. I know, I know. It's been said before way too many times. The stock market doesn't seem to agree with it, although it does feel like the dark days of huge China declines are now past. The trade war that might go on doesn't agree with it.

But there are nascent signs, green shoots, that say the bottom has been put in.


Think about last week's comments from Mike Sutherlin of Joy Global (JOY) on Mad Money. Many pundits think that all we get out of China are lies and that the numbers are all inflated. However, Sutherlin looks at electricity numbers, and electricity usage fell dramatically for months before bottoming out in July and improving in August.


The iron-ore stocks are also forecasting a bottom, and the copper breakout couldn't be more definitive. I am not even counting the breakout in gold, because there are so many quantitative-easing programs going on that it could have nothing to do with China. But it sure isn't a contra-indicator.


These are the signs we have been waiting for, so I can't foment new ones that say it isn't happening. The derivative American stocks say it, too. General Electric (GE), Freeport McMoRan (FCX), Vale (VALE) -- they're all saying it's happening now.


We keep waiting for something big out of China, something bigger than the $158 billion infrastructure spend we had seen so far.


I have become convinced that the Chinese won't do anything until Europe has gotten its house in order, because 20% of its exports go there. I also think China wanted to see what the U.S. was up to. We know now that Fed chief Ben Bernanke is about reflating. Europe seems that way, too, and now Japan is joining the party.


Maybe we are looking for the wrong things out of China. Maybe all we need to do is look at how well everyone else is doing and see if China can't or isn't already piggybacking off that.


We're seeing too many positive data points. One of these days, China will issue a stronger-than-expected official number, and then these prices will be justified.


That day isn't here yet.


But these numbers are too strong for me to believe that there's no fire where there's a ton of smoke.




Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long GE and VALE.



More from

Sep 19, 2012 10:34AM
The sheeple have regrown their wool ....time for cramer and his cronies to start a fleecing again !
Sep 19, 2012 12:17PM



Sep 19, 2012 1:56PM
GE at a 52 week high. FCX in the process of completeing a head and shoulders pattern. VALE off a fresh all time low. While I personally own GE I bought in the $16 to $17 range and see no reason why I would add to my position at this price. Especially considering the fact that since 2009 the stock has reached this price range twice only to drop back down to a $15 range. We'll have to see what happens in a few months to see if this plays out again... As far as FCX, the last ime the ship hit the fan it lost close to 90% of it's value (as did GE) and considering the uncertainty that awaits the stock market in the next few months seems like a completely speculative call. It has only come up recently due to the hope of QE3, and eventual news of it earlier this month. While QE3 may be good for anything gold, it only to points to weakness with the overall economy, not the improvement Cramer states. And I don't have anything to say about VALE except for the fact that it is a Brazilian based company not American as Cramer writes. Either way his entire article smells of pump and dump.
Sep 19, 2012 11:35AM


Another article about China.



Sep 19, 2012 11:59AM
almost everyone knows about this scam artist
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