Global stocks slid, following the biggest drop in Tokyo since 2008, and Treasuries gained amid concern Japan’s biggest earthquake on record will hurt economic growth. The euro rallied as European leaders agreed to expand the region’s rescue fund.
The Standard & Poor’s 500 Index fell 0.6 percent to 1,296.39 at 4 p.m. in New York, paring a drop of as much as 1.4 percent as energy shares rebounded. The Nikkei 225 Stock Average plunged 6.2 percent, with about $285 billion in equity value erased from the Japanese market. Ten-year Treasury yields lost 4 basis points to 3.37 percent. Oil reversed losses after dipping below $99 a barrel. The euro rose against 15 of 16 major peers.
Companies that operate nuclear power plants or supply the fuel helped lead stocks lower, with Entergy Corp. down 4.9 percent in New York and Cameco Corp. tumbling 13 percent in Toronto, while natural gas rallied amid speculation that the atomic-energy industry will suffer as Japan works to contain radiation at damaged reactors. Tiffany & Co. and Coach Inc. lost more than 5.2 percent for the biggest declines in the S&P 500 on concern sales of luxury goods in Japan will slow.
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Right now, China is where America was back at the dawn of the Industrial Revolution, and into the 1800s. Development is highly concentrated in the coastal regions, the financial system is maturing and the country’s economy is characterized by rapid growth across the board. And everything – from intellectual property to real estate values – is under tremendous pressure … to grow. So there are some real parallels. China is not going to stop growing anytime soon nor is it going to fail. But it is likely to have some hiccups…again, just as we did with two world wars, the Great Depression, 20 or so recessions and all manner of boom-and-bust cycles. Some of those hiccups will be quite wrenching in nature.
The key will be to “follow the money” into the best profit opportunities. And no matter what happens, there will always be opportunities – if you know what to look for.
I am convinced that China will affect every asset class on the planet – even if only indirectly – for the rest of our lives. I am also convinced that it represents the single-greatest-wealth-creation opportunity of our time, which is why I have spent a good portion of my life and career in the Pacific Rim – studying, participating and actively investing in related markets.
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