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This morning's consumer price inflation report (CPI) out of China came in much better than we or the Street were expecting. At +4% inflation growth for the month of October, the Chinese are seeing inflation rates at almost 1/2 of that seen prior to the Olympics - this is good!

The October report is down from September's deflating reading of 4.6% (see chart). Alongside the $586B stimulus package, fundamental economic "Trends" in China are starting to improve, on the margin.

In our macro models, everything that matters most occurs on the margin.
KM