Atlantic International Partnership Financial Headlines:Bad China, good weather will bust commodity market ‘en masse,’ Grantham says

http://altlanticinternationalpartnership.net/2011/05/atlantic-international-partnership-financial-headlinesbad-china-good-weather-will-bust-commodity-market-%E2%80%98en-masse%E2%80%99-grantham-says/

Jeremy Grantham said there is a 25 percent chance that China, the world’s second-largest economy, will “stumble” by next year over imbalances such as too much capital spending, an overheating real estate market or accelerating inflation.
“You could have a financial stumble, a housing stumble, a stumble from rebalancing of capital spending, or any combination thereof,” Grantham, chief investment officer of Grantham Mayo Van Otterloo & Co., said in an April 26 interview in Boston.
China’s economic growth may “slow to considerably less” than the 9.7 percent pace reported for the first quarter, Grantham said. Inflation accelerated to 5.4 percent in March, the fastest pace since July 2008, adding more pressure on officials to tighten monetary policy.
Grantham, 72, is best known for his bearish outlook and for spotting asset bubbles early. He correctly forecast in 2000 that U.S. stocks would decline in the coming decade, and as early as July 2007 predicted that a large global bank would go bust amid credit market declines. He recommended buying U.S. stocks for a five-month period starting in early 2009 in what he called “my very short life as a bull.”
“I find it intellectually convincing,” Grantham said, referring to the idea that China’s economy will slow. Still, “they have the ability to get everybody to change the game on a dime.”