May 27 (Bloomberg) -- Stocks surged and the euro snapped a three-day decline against the dollar as China said it remains a long-term investor in Europe, damping concerns that the region’s debt crisis will worsen. Commodities jumped and Treasuries fell.
Why does the market believe China's claim on the commitment to the euro but doesn't believe the Chinese government when it comes to statistics or yuan's "undervaluation"?
Mr. Market can and will believe whatever they want, no matter how contradictory, as long as it would be convenient for him.
For those who do not know about Mr. Market...
[Benjamin] Graham's favorite allegory is that of Mr. Market, an obliging fellow who turns up every day at the share holder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but sometimes it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price. (Source: Wikipedia)
