Soft Landing In China Could Spark Commodities

China is back to kicking the rest of the world's butt, posting year-over-year GDP growth of 9.5% last quarter. The boost was down a hair from first quarter's 9.7% but up from the expected rise of 9.3%. I shudder to think what Obama would do for one quarter of 9.7% growth... Overall, the picture in China is rosier than analysts expected, particularly in light of the inflation fears that surround the Chinese economy. It looked like the economy could be in for a hard landing, particularly with Beijing easing off on manufacturing to slow inflation a bit, but those fears never materialized. With the Chinese economy still doing well despite tapping the brakes, officials there can now focus all their immediate efforts on inflation concerns. It appears the growth section of that equation will be fine, at least for now. It's entirely possible that the Chinese could see another one, two, or three reserve ratio rate hikes in the near future, depending on how out of control inflation gets. It could also signal some real rate hikes in the near future, including (possibly) one as soon as third quarter 2011. Will that move, if it comes to bear, trigger future moves in the interest rate? Or, as some expect, will that be enough to slow inflation enough to let China step back on the gas? Whatever the future holds, this was good news today. In a world where it seems like everything is a crisis and we're all going to hell, it's nice to see one corner of it all doing well.

This is extremely bullish for industrials and cyclical stocks, including commodity stocks. Here are a few to consider:

This could be bearish news for some of the food stocks such as Tyson (

) and Dean Foods (

). Chinese demand could continue to drive food costs higher, compressing margins at food companies.