Daily Data Flow: Agreement Boosts Stocks; Chinese Investment; Cliff Deal Benefits Dollar

Daily Data Flow

U.S. Stocks Rally as Lawmakers Pass Budget Agreement (Bloomberg)
U.S. stocks rose, giving the Standard & Poor’s 500 Index its biggest gain in more than a year, as lawmakers passed a bill averting spending cuts and tax increases threatening a recovery in the world’s biggest economy. “We sold off on the uncertainty of what it means to go over the fiscal cliff and that’s been removed,” said James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management. “We’re re-valuing the market based on what’s closer to the underlying economy and most of the economic reports have been pretty good.”

Chinese Investment in the United State May Break a Record in 2013 (CNBC)
Chinese investment in the United States likely will break another record in 2013, according to research firm Rhodium Group. That’s after a record year in 2012 with deals worth more than $6.5 billion, a 12 percent increase from the previous record of $5.8 billion in 2010. The number reflects direct investment in U.S. businesses and does not include the estimated $2 trillion in U.S. Treasurys held by the Chinese government. “Given that we already have $5 billion worth of deals lined up, it is very likely that 2013 will be another record year. Policy action in China that demonstrates commitment to structural reforms could further add to the momentum, as Chinese firms are seeking access to technology and know-how to prepare for a new era of Chinese growth,” said Thilo Hanemann, author of a new Rhodium report about Chinese foreign direct investment in the United States.

Dollar Turns up on ‘Cliff’ Deal (MarketWatch)
The dollar turned up against the euro and stayed higher versus the Japanese yen on Wednesday after Congress passed a bill to avoid much of the fiscal-cliff tax increases and delayed spending cuts threatening U.S. economic growth. But technical levels in the currency markets still held, said Boris Schlossberg, managing director of FX strategy for BK Asset Management. “FX markets are much less enthused than equities about the cliff” deal, he said.

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After Monday's big rally in the stock markets, and yesterday's news that the United States managed to avert the dreaded “fiscal cliff,” global markets are rallying sharply today. And it's when markets rally sharply that options enjoy their biggest gains. So, today I am recommending that you sell half of your February $43 call options in the iShares MSCI Emerging Markets Index (EEM) for a 66.4% gain and half of your February $40 call options in iShares FTSE China 25

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