China?s GDP growth continued at a blistering pace during the first quarter of 2011, rising 9.7 percent from the previous year. Once again this outpaced many forecasts and reignited the discussion of China?s overheating economy. While its robust growth may raise a few eyebrows, the economy isn?t in danger of ?red-lining.? Andy Rothman points out that the first quarter growth figures ?[aren?t] dangerously high given the GDP growth rate and strong income growth? After rising nearly 8 percent during 2010, inflation-adjusted urban incomes rose 7.1 percent during the first quarter.

This week, the International Association of Public Transport held its annual conference in Dubai. 2,000 delegates from 80 countries attended the 4 day event. Delegates took rides on the city public transportation, including the longest driverless metro line in the world. Long known as a city dependent on its cars for convenient travel, Dubai has been ramping up its infrastructure to relieve increasing traffic congestion driven by urbanization. Car traffic is forecasted to increase four times by 2020 as the population jumps from 1.2 million people in 2005 to more than 5 million by 2020.

It?s hard to grasp the growth China has had over the past few decades. The country?s GDP has grown tenfold since Deng Xiaoping?s reforms ushered in a new economic era in 1978. However, pessimists point to the very low base economic growth began and the fact that Beijing has manufactured this GDP growth via government subsidies. True, China?s economy in the 1970s was barely on the global radar, and the government has kept the country?s economy afloat when activity started to contract. However, these naysayers can?t deny that nearly every aspect of Chinese life has experienced a transformation.

Peruvians will take the first step in electing their new president on Sunday. The top-two finishers in this round will compete in a runoff election next month. The outcome is meaningful to improving the quality of life in Peru, continuing its strong historical GDP growth and making the most from its ample natural resources. Politics in Peru have a history of surprises and this year?s surprise is how left-wing candidate Ollanta Humala is leading in the polls, though one-third of Peru?s population is still undecided. Several local news services show Humala well ahead of opponents.

A number of forces continued to push oil prices higher this week, reaching their highest levels in the U.S. since September 2008. One factor fueling the run has been the continued decline of the U.S. dollar. Oil and the dollar historically are negatively correlated. This means that a rise in oil prices generally coincides with a decline in the dollar, and vice versa. The U.S. dollar has seen a dramatic decline since the beginning of the year as oil prices have moved some 30 percent higher. This could be due to fact that roughly two-thirds of the U.S. trade deficit is related to oil imports.

As part of our research, we track the fiscal and monetary policies of countries around the world. We believe government policies are a precursor to change and that this change can lead to economic devastation, such as the nationalization of oil companies in Venezuela, or generate substantial growth, such as Colombia?s successful efforts to encourage foreign investment. Historical context allows us to gauge the outcome of these situations. For example, these pie charts from Credit Suisse show the relative sizes of the world stock markets from two very different periods.

Naysayers started calling gold a bubble back when prices hit $250 an ounce and though gold?s bull market has tossed and flung the bubble callers around for almost a decade now, their voices have only gotten increasingly louder as prices broke through $1,000, $1,200 and now $1,400 an ounce. However, gold prices appear asymptomatic of the signs generally associated with financial bubbles.

Global crude oil and liquid fuel consumption grew at its second-fastest pace in over three decades in 2010, rising 2.8 percent to 86.7 million barrels per day, according to the U.S. Energy Information Administration (EIA). In fact, worldwide oil consumption surpassed 2007 pre-recession levels. For 2011 and 2012, the EIA forecasts that, around the world, we?ll use an annual average of 1.6 million barrels of oil per day. The EIA says this increase is expected to be driven by rising demand from the emerging world, mainly China, Brazil and the Middle East.

Over the next 15 years, the number of children in middle-class households in emerging market cities around the world may grow 10 times faster than those in developed countries. This future generation living in places such as China, Latin America and South Asia should drive the demand for goods and services, housing and transportation that extend beyond the basic necessities of life. In McKinsey's report, ?Urban world: Mapping the Economic Power of Cities,? the researchers focus on demographic and economic trends to determine which cities will provide the most economic growth in the future.

All ten sectors of the S&P 500 Index increased this week. The best-performing sector for the week was energy which rose 4.08 percent. Other top-three sectors were technology and materials. Financials was the worst performer, up 0.50 percent. Other bottom-three performers were utilities and healthcare.

The threat of disaster from the damaged Fukushima nuclear power plant unleashed a ferocious sell-off of Japanese equities, but the damage to other major markets has been limited. Already experiencing a slight pullback prior to the events on March 11, U.S. equities and emerging markets have held up quite well. The MSCI Emerging Markets Index has only pulled back 2 percent since the earthquake and the S&P 500 Index only 3 percent.

Over the past 30 years, the International Maritime Organization (IMO) has successfully lowered the risk of pirate attacks in other regions around the world. With the recent escalation of piracy around Somalia, governments and worldwide organizations including the United Nations are now working in concert with the IMO to curb these attacks. Their theme for 2011, ?Piracy: Orchestrating the Response,? represents an increased awareness of the world-wide political changes required to reverse this trend.

It?s been an eventful week in Asia. The world turned its attention to Japan as it copes with the most powerful earthquake in the country?s history. The markets reacted, with Asian shares declining and uranium sentiment negative as investors rethink nuclear power. We are optimistic that a resilient Japan will turn from tragedy to opportunity by stimulating its economy through a reconstruction of the nation. This week, China was recognized for an achievement of its own. The country has resumed the leadership as the world?s top manufacturing country by output over Britain and the US.

The figure below shows the performance of each sector in the S&P 500 Index for the week. Four sectors increased and six decreased. The best-performing sector for the week was utilities which rose 1.5 percent. Other top-three sectors were telecom services and consumer staples. Energy was the worst performer, down 4.0 percent. Other bottom-three performers were materials and technology. Within the utilities sector the best-performing stock was Constellation Energy Group which rose 6.8 percent. Other top-five performers were Exelon, First Energy, DTE Energy, and Duke Energy.