It helps to think of the economic recovery like a good barbeque. It doesn’t come from being cooked fast; rather, it requires patience and time. So even if progress is slow in this “barbeque economy,” growth will continue.
Following negative data last week, investors were clearly concerned about global growth and anxiously anticipated government actions. While Europe and the US disappointed investors, China surprised on the upside by cutting interest rates.
What’s important for investors to consider is that the trend is your friend: It is the fourth month in a row where China's Purchasing Managers' Index landed above the three-month PMI, and shows the economy is on the right path.
To paraphrase the great Steve Martin, today’s investors are very passionate people and passionate people tend to overreact at times. An overreaction is exactly what’s happened in gold and global markets in recent weeks.
With inflation now under control, China is stocked with other possible monetary policy actions to help growth in 2012, as opposed to the central banks of the U.S., Europe and England, which have run empty.
The supercycle of growth across emerging markets will continue with rising urbanization and income rates. This bodes well for commodities, especially copper, coal, oil, gold and companies that will benefit the most from these much-needed resources.