All over the world yesterday, bulls could find confirmation. The earnings announcements from corporate America are far in excess of market predictions, with Intel and JPMorgan Chase only the latest examples. This is a reliable catalyst for stocks to rally.
But there was more, much more. In China, imports of iron ore reached a new all-time record in August. This is at least in part because the expansion of new loans reached giddy new heights. Broadly defined, the Chinese money supply is growing at an annual rate of 29 per cent.
Judging by the increase in its foreign reserves, China has also been so kind as to increase its holdings of US government bonds. For the long run, this could deepen the “global imbalances” between the US and China; for the short term, it handily keeps US bond yields down, and aids the bulls' case.