China’s short lesson is sending a powerful message

Stock shorters were caught short in resources shares when China cut its rates, and there could be more good news to come.

It’s always great to see the shorters get routed. And that’s exactly what happened when the Chinese central bank caught everyone by surprise by lowering interest rates.

The hedge funds were shorting resource shares, punting on depressed global growth, led by a slowing China. But if China is cutting rates to stimulate consumption and economic expansion, being short the resource producers becomes very dangerous.

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