On cue with our weekend summary, all commodities exploded to the upside this AM and this is the sector de jour along with emerging markets, off of a positive factory report from China. While I find it amazing investors cling to the veracity to China’s data, it is what it is. Last fall as everyone was using FIFO (First In, First Out) to claim the US would lead the world back out of the recession i.e. be the first to recover; I said it would be Asia – specifically China. To think that a country hit by the twin towers of the (near) destruction of its financial system AND a deep recession would recover ahead of a country that only was facing (perhaps) a serious slowdown or worst case negative GDP would be the height of narcissism. But that was the daily talk of the punditry back then. Now they’ve changed their tune.

However, I thought first China’s real estate bubble would have to deflate and this “recovery” would happen much farther into the future. But as we’ve outlined step by step, China has no qualms building things when there is no need for them and their loan growth is stratospheric and they shove money into the system in a way that would make Bernanke proud. With apparently far less corruption than here in the US, the money is getting where it needs to be much quicker than it is here (ironic isn’t it). I still don’t really believe the data myself based on a lot of what I’m reading EX government reports in China, but in the casino nowadays it’s all about headlines and knee jerk reactions to government data. So it is pointless to argue it.

It is very difficult to buy coal stocks up 30% in 3 session or pile into all these fast moving groups. I am getting a whiff of parabolic desperation by under invested people. Now with that said, I’ve been repeating that same old song for a few weeks now, sounding ridiculous. But as I wrote on the weekly summary with so many people looking for a pullback, the natural course would be up to frustrate those people. And so we have done it again.

So many companies I follow are nowhere near any support line – just like 2 months ago they were nowhere near any resistance… it is remarkable what a 180 we’ve done. I am going to dump almost all of my HDFC Bank (HDB) here (Indian bank) on the piling into of all things Asian. This is approaching a double in under 2 months; I am cutting it back to a holding position.

HDFC had earnings last week, but really – fundamentals mean very little right now. Up here at $82 it’s at 24x earnings – it was 13ish 2 months ago. Similarly, Shanghai (the entire index) is up from 13x earnings to 27x… etc. But people can’t get enough.

• India’s HDFC Bank Thursday said strong loan growth boosted its fiscal fourth-quarter profit by 34% from the year-earlier period, in spite of a surge in loss provisions. The private-sector bank, which has a strong focus on the retail segment, said net income for the quarter ended March 31 jumped to 6.31 billion rupees ($125 million) from 4.71 billion rupees, although loss provisions climbed to 6.57 billion rupees from 4.65 billion rupees.
• HDFC Bank’s total deposits climbed 42% during the year to 1.43 trillion rupees ($28.4 billion) as of March 31, with low cost savings and current-account deposits consisting of more than 44% of total deposits.
• Retail loans soared 55.5% during the year.

Long HDFC Bank in fund; no personal position

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