The U.S. is in a Recession

Robert Hsu, December 02, 2008

No kidding! Anyone who has been following the U.S. economy this year knows that the U.S. has been in a recession for months. This shouldn't have come as a major surprise.

But when the Bureau of Economic Research announced on Monday that the U.S. has been in a recession since December 2007, Wall Street took the news hard. The Dow plunged more than 7% on the news, practically giving back all of its gains from last week's four-day rally.

And then overnight, Asian markets followed suit. Japan's Nikkei index plummeted 6%, Hong Kong's Hang Seng index dropped 5%, and Russia's RTS index fell 2%.

As I've been saying for weeks and months now, this is not an easy environment to be investing in. And I'm anticipating even more bad economic news for the U.S. in the final month of 2008. But on a good note, the U.S. stock markets should develop some resistance to these headlines over the next four weeks -- that means there may be less volatility in store for stocks in December.

And since the Chinese government is dedicated to taking action to support China's economy and stimulate growth within the country, I expect Chinese stocks to hold up even better than U.S.-traded shares.

Case in point, last week, China's central bank cut interest rates again. This time a whopping 108 basis points. And I look for China's government to continue easing its monetary policy and take action to support its economy. All of which will benefit Chinese stocks.

To learn which Chinese stocks I'm recommending right now, become a member of China Strategy today.

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