China Makes the World Go Round China's central bank announced it was raising reserve requirements for the third time this year. After holding relatively well during the crisis in 2008-09, China's GDP rose 11.9% in the first quarter. While still keeping its currency pegged to the dollar, China's central bank is trying to "fight inflation and unbridled lending practices in the real estate market," The NY Times reports. The Shanghai Composite was flat and Japan's Nikkei rallied sharply Monday but other Asian proxies tumbled in reaction, including Hong Kong's Hang Seng.

U.S. stocks rose early Monday but are subject to rapid mood swings these days. As Henry and I discuss in the accompanying clip, there are concerns that Europe's sovereign debt crisis has merely been postponed and that China's central bank may overshoot with its efforts to curb the nation's burgeoning credit bubble.

On the other hand, the United Airlines-Continental deal is the latest in a string of M&A deals that typically boost bullish sentiment by removing supply of stock from the market. The deal-making also shows corporations have tons of cash burning a hole in their pocket, which should benefit shareholders in the form of buybacks, dividends and/or premium takeover bids.

To wit, Avis this morning says it may top Hertz's bid for Dollar Thrifty.