Bad, bad, bad news. And not just for Chinamart (sic) but for the "Chinamerica" economy. It means that things are tightening up all around, so there is bound to be an effect on all sectors of the economy, including unemployment levels. Following this back to Chinese manufacturing you can expect some easing in commodity prices as their manufacturing demand and output slows.
This will also give the Fed more reasons not to fool around with its easing policies or change rates. The real big question now is: what lies ahead? Was February just an anomaly or is it the start of a trend? I suspect that the US consumer is pretty much tapped out so there is more in the offing.
This type of news is likely to trigger a sell-off in stocks, particularly if the trend continues into ensuing months. Here's a kicker. What if prices continue to rise regardless due to shortages in raw materials? We should all pay attention to this early warning signal and heed its implications - there is a smell of troubles to come.
I will be watching...
Dr. Peter G Kinesa
February 19, 2013