Yesterday, the Chinese Central Bank lowered interest rates, loosening money supply and effectively stimulating an economy that has been the consumptive engine behind the rally of the last five years. China chose to cut this rate because the economy is slowing - the Chinese stock market index is down 30% off the highs for the year.
Two months ago, China goosing the engine of economic growth with a rate cut would have been the most bullish occurrence I could have imagined, when thinking about crude oil's price direction. A cut would encourage consumption, and drive prices higher from $145.00. Instead, the rate cut has been ignored by the market, with crude down $6 today.
It seems that the contagion that started on Wall Street has rippled out throughout the markets of the free (and not-so-free) world...and is affecting even the Chinese in ways we could not have even imagined even 3 months ago.
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