Dear Fellow Investor,

It's been an incredible two months for the global stock markets. Since March 9, we've seen many of the major stock markets rally strongly. Just take a look:

• Shanghai's stock exchange, up 22%
• Europe's FTSE, up 25%
• S&P 500, up 34%
• India's Sensex, up 43%
• Russia's RTSI, up 48%
• Hong Kong's Hang Seng, up 51%

And after such a strong rally, I'm not surprised that many are wondering if we've finally reached a bottom -- especially considering that the S&P 500 has now erased its losses for the year and is up 0.7%.

Well, with the Fed's quantitative easing, there's plenty of liquidity in the banking system to avert a collapse of the global financial system. Considering this and the positive developments over the past few weeks, I believe the March intraday low of 666 on the S&P 500 will be the low for this year.

Exciting News!

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Please note that I said the low for 2009, not the bottom of this market.

I'm not betting on U.S. economic recovery in the second half of the year like others, as there are too many negative factors still plaguing the U.S. economy. All of which have the potential to weigh heavily on the U.S. stock markets this year and into 2010.

While there's been a slowdown in the pace of contraction in the U.S., the economy is still contracting. And it will likely take more than a year before the U.S. economy really starts to recover, especially when you consider these factors:

• Obama's economic stimulus package will not go into effect until 2010 – at the earliest.
• Weakness in the U.S. auto industry, as bankrupt Chrysler is in the process of restructuring and General Motors is on the verge of bankruptcy.
• Less consumer spending and a lack of lending is making it unlikely for the U.S. long-term growth rate to return to 2.5% any time soon.
• First-quarter GDP clocked in worse than economists were projecting at -6.1%.
• Rising unemployment -- it is not at its highest level since 1981 and likely to reach double digits by 2010.

Taking into account all of these factors, I find it hard to be optimistic about any U.S. economic recovery before 2010. I think all of the above bullet points will hinder economic growth -- U.S. GDP growth will likely still by -1% to -2% in the second half of 2009.

Ultimately, this will affect the state of the U.S. stock markets. I expect the U.S. markets to rally until summer and then sell of in the fall. And if economic weakness persists in the U.S., I wouldn't be surprised to see this year's low revisited and possibly broken in 2010.

Bet on China's Economic Recovery

Now, while I don't think that we've seen a bottom in the U.S. markets, the Chinese stocks markets built a bottom back on October 27. Since then, the Shanghai stock exchange climbed 50% and Hong Kong's Hang Seng jumped 55%.

The divergence between China's and the U.S. stock markets is due to the economic differences in both countries. So China's economic recovery is already boosting its stocks and will continue to provide support to them throughout 2009.

Recently, we saw evidence of China's improving economy with three positive developments: 1) Urban fixed asset investment jumped 30% in March from a year earlier; 2) Lending remains strong in China, as banks lent out $673 billion in the first quarter; and 3) China's manufacturing level expanded for a second month with the Purchasing Managers Index rising 53.5 in April from 52.4 in March.

All of this shows that China's recovery is already underway and the country is on track for a full recovery in the second half -- which bodes well for Chinese stocks.

That's why I have continually advised focusing your investments on companies profiting from the economic turnaround in China. My China Strategy subscribers have already gained handsomely by betting on the Chinese economy this year.

Here are five reasons to invest in China right now:

• Reason #1: Our Major China ETF is UP 85%
• Reason #2: The Google of China is UP 83%
• Reason #3: China's Leading Aluminum Producer is UP 70%
• Reason #4: Our Leading Chinese Solar Company is UP 49%
• Reason #5: The Largest Airline in China is UP 43%
• And that's just to name a few winners so far this year.

Don't miss out on the next big winners in China! In today's China Strategy weekly update, I provided my readers with a brand-new way to profit from the economic turnaround in China. And if you join us today, you won't miss out on a single move higher. Learn more now!

Sincerely,

Robert Hsu

P.S. There are incredible things happening in China today, and I want to make sure you're taking advantage of the profitable opportunities there. That's why I'm extending my special offer -- join China Strategy today for just $99. That's 52 weekly updates and 12 monthly issues containing all the information that you need to profit from the strength of the Chinese economy.

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