Salient to Investors:
Jeremy Grantham at Grantham Mayo Van Otterloo said:
- There is a 25 percent chance that China will stumble by 2013 over imbalances such as too much capital spending, an overheating real estate market, or accelerating inflation. China may slow to considerably less than the 9.7 percent pace in Q1 2012.
- China has the ability to get everybody to change the game on a dime.
- If the Chinese housing market takes a break, you will have a lot of banking losses because many loans look incredibly suspicious.
- A decline in China’s economy would hurt the commodity markets, and if accompanied by better-than-expected weather globally, would break the commodity markets en masse.
- Global demand for energy, metals and crops is outpacing supply, creating brilliant long-term prospects for commodities.
In January, Grantham said the US stock market rally is living on borrowed time, driven by low interest rates and unprecedented Fed stimulus, that the S&P 500 is worth 920. and that when the Fed eventually runs out of money, the US stock market will fall.
Edward Chancellor at Grantham Mayo Van Otterloo has said since last year that China has displayed symptoms of a great speculative mania. Jim Chanos said in March that the property bubble in China is as big as or bigger than what we saw in the West when compared with the size of the economy.
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