We have here a Buy crossover on PPO from extremely oversold level. We have already discuss the theory that Credit Crunch could overstated the real danger of down turn in Real economy in China and Asia. Trade is based on Credit facilities and if you can not secure Letter of Credit for your trade operations Trade is just do not happen. With all that flood of liquidity making its way into system recovery could be not so far away in commodities. China stimulus package is a Major turning point here as well. Ben and Hank will talk today on the Hill, before every time they have testified markets were selling off. Will they make it different this morning?Tuesday, November 18, 2008
Trade is coming back: Dry Bulk Index shows signs of life. FCX, CZX.v, TNR.v, MAI.v
We have here a Buy crossover on PPO from extremely oversold level. We have already discuss the theory that Credit Crunch could overstated the real danger of down turn in Real economy in China and Asia. Trade is based on Credit facilities and if you can not secure Letter of Credit for your trade operations Trade is just do not happen. With all that flood of liquidity making its way into system recovery could be not so far away in commodities. China stimulus package is a Major turning point here as well. Ben and Hank will talk today on the Hill, before every time they have testified markets were selling off. Will they make it different this morning?
Monday, November 17, 2008
G20 "whatever further actions are necessary" - is it Intervention to weaken US Dollar? GDX, SSRI, SLW, AUY, FXI, EWZ
Nothing sensible came out of G20. One thing which can not be announced, but be done: intervention in open markets to weaken the US Dollar. Today at 6 am Pound and Euro have took off and continue to rise all trading day until close of Wall Street. Rally against the dollar were not spoiled even by markets going down. Tomorrow we will have more signs whether it is our Bold decision of G20. All indicators are at cross roads: US Dollar is ready to break down, but needs a push - risk is an assending triangle with upside break out if Double Top will not be confirmed; DOW DIA held closing Low of last Reversal day, needs to push up; VIX formed Dragonfly Doji, could be a strong reversal in the forming right shoulder - needs push down. Lost chance now will cost dearly everybody in the markets and US economy.
Saturday, November 15, 2008
US Dollar Last Wish and Favor to the World. Gold, Silver, GDX, SSRI, SLW, AUY.
This is the number one in all our analyses. US dollar last wish is to save US Corp. Without US Corp. it will be out of existence. Please check two previous charts why it is so important now. US dollar last favor to the new world - is to go down now, next week. Stronger dollar is a Deflation Monster, killing the US Economy and taking down world economy with it. Those with higher Debt are in the worst shape in deflation: real money repayed back are Increasing in value! US Corp is the Victim here. Inflation is the only way out. There is a chance to save US Corp. - it will never be an Empire again and it does not need to be any more. With new energy it could come back leaner, wiser and stronger eventually. Action is needed this weekend to help the dollar go down. Coordinated Cut which could be announced and Intervention in the Forex in Yen and US Dollar. Agreement could be cut and China could agree to manageable debasing of USD: everything is ready. US Dollar is at the Double Top, one definite action and it will break down. With weaker dollar we will have tectonic shift in Inflation expectations. With near zero short rates managed by FED and falling dollar long term rates in the form of Treasury Yield will go Up. Banks will be able to function and earn on their lending. With rising assets prices, fear will subside and greed will return back with changing perception of lost performance, all money on the sidelines will chase it again. Weak dollar - Lending recover - Velocity is Up - Inflation - Rising assets prices - Less redemptions - Less margin calls - No fire sells - Back to fundamentals - Debt is going down in real terms - Liabilities of US Corp to subjects are going down in real terms - Derivatives on the End of the world outcome are becoming worthless and could be isolated - Export is Up supporting economy with struggling consumer - Tax returns are up with inflation - Housing will bottom at lower level in nominal value (do not ask me about real value). Survival.
So where is out bottleneck for all those trillions and worthless money - as usual: Gold, Silver, Commodities. First time in this game for 7 years our interests aligned: FED should even Buy some Gold to push it up to 1000 to show that Inflation and not Deflation is coming. Will we get at least something of what we are talking here about: charts are telling that everything is ready, players have made their moves and we can see their footprints, tons of money will be made as usual by those in the know, but it is the only chance to save the world from lost decade Japan style.
Fear Index VIX indicating Reversal Down, confirming Dow DIA Reversal Up. DIA, GDX
We have a very good picture confirming Bullish Reversal in Dow DIA: fear index VIX is forming a Bearish reversal with potential resolution Down. Dow retest of Low happen with less amount of Fear: market participants were ready to pay less premium for Put protection and Volatility expectation is going Down. For a definite move in the Dow from deflation to positive Inflation outcome next weak Rally must be fueled by this weekend action on key to all things now US Dollar. Fed is fighting Japan style Deflation and flooding the system with the money, in order that all these flood came into real economy you need to return normal velocity of money. Fear and panic is leading to Fire Sell, downward spiral in markets with Dow as indicator is leading to further margin calls, redemption and Risk not taking. Money are stashed at the Fed on banks accounts. Spiral became self reinforcing: panic - fire sell - prices down - more panic etc. Fed can not leave it to "effective market" any more. There is no such thing with Fed in existence and more practical importance is that all economy will be killed by derivatives, Lehman was a turning point which showed that collapse will take down all financial system. Everything is on the table now: turn markets into Inflation expectations and try to liquidate all "bad derivative positions". If velocity will not be returned now in the form of Weaker US Dollar, higher Long term Yield which will lead to steeper curve and Banks ability to make money by lending, Flood will eventually happen, but too late and with much more water when all economy will be submerged under hyperinflation. This money creation and record deficits for years to come already making all things are hardly manageable in US Corp. But there is a chance and it must be taken. Please follow to Us Dollar chart.DOW DIA is at a very important H&S Reversal point, time for Action. CS, FXI, EWZ, GDX.
We can see from the chart that we are half way there: saving the world from Deflation spiral Japan style for the next 10 years. Bold action is needed now over this weekend to kill the Fear, confirm H&S Reversal squared by Intraday Double Bottom. Dow must overtake 9653.95 on weekly close to diminish Bearish Flag. If not, we will have a waterfall, further assets fire sell and self reinforcing deflation spiral. Dow for us here is only a reference point, but very important now: it is showing whether FED efforts reinflating economy are working or not. Deflation will be forgotten in two weeks after move above 10000. But action needed now. All reinflation efforts are leading to "liquidity trap" if velocity of money is falling of the cliff: banks are not taking any risk and just keeping money at the FED. The key to all is US Dollar: it must be weaken immediately and everything is ready for it: just one push and world will be saved from Deflation Monster. We will refer to further charts on what must be done.Thursday, November 13, 2008
US Dollar at a Double Top? The main Drama moving the markets. SSRI, SLW, AUY, GDX
As we have discussed Dow Low Retest and VIX picture are giving a good chance to Form powerful Reversal in US Dollar - Double Top. Everybody needs a weaker dollar, it is time to remember old word - Inflation. Nobody wants 30 year Treasuries at Yield below 5% - if it is a surprise it is not on this blog for sure."By Cordell Eddings and Sandra Hernandez
Nov. 13 (Bloomberg) -- Treasuries fell, led by 30-year bonds, after investors shunned the government's $10 billion sale of the securities amid concern that U.S. debt sales will grow.
The bonds drew a yield about 9 basis points above the level in pre-auction trading. At 4.31 percent, it was still the lowest since regular sales of the security began in 1977. Investors have been favoring shorter-term debt, which serves as a haven in times of turmoil and a bet the Federal Reserve will lower interest rates. The U.S. sold $34 billion in four-week bills yesterday at the lowest rate on record.
``The 30-year is not a central bank product, and there's no real interest from pension funds'' at a yield below 4.5 percent, said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There's just no interest in it.''
The yield on the 30-year bond climbed 18 basis points, or 0.18 percentage point, the most since Sept. 30, to 4.35 percent at 4:17 p.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 plunged 3 1/32, or $30.31 per $1,000 face amount, to 102 1/2.
Ten-year note yields increased 13 basis points, the most since Oct. 28, to 3.87 percent. The two-year note's yield rose 8 basis points, the most in three weeks, to 1.24 percent.
The rate on the one-month bill was 0.05 percent, near yesterday's record low.
`Too Many Unknowns'
The bond auction followed yesterday's sale of $20 billion in 10-year notes. The $30 billion total of the two auctions is the biggest amount of the securities sold in a week since at least 1990, when Bloomberg began tracking the data.
The gap between yields on two- and 10-year government notes widened to 2.64 percentage points, the largest since October 2003. Traders yesterday pushed two-year note yields to the lowest level in five years, while the Treasury's sale of $25 billion of three-year notes on Nov. 10 attracted the highest level of investor bids relative to the amount offered since 1998.
``In the current market environment there are still too many unknowns,'' said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts, which manages about $500 million in assets. ``People are looking for the safety of the shorter-term securities.''
30-Year Sale
Today's bond auction forecast to draw a yield of 4.224 percent, according to the average estimate of seven bond-trading firms surveyed by Bloomberg News. The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.07, below the average of 2.19 times in the nine auctions since the bond was revived in 2006.
Indirect bidders, a class of investors that includes foreign central banks, bought 18 percent of the securities offered, down from 43 percent at the last sale.
The sale was a reopening, meaning the bonds pay interest at the same rate and mature on the same date as those in the August auction. They mature in May 2038.
Futures on the Chicago Board of Trade show an 80 percent chance the Fed will lower its 1 percent target rate for overnight bank lending by a half-percentage point at its Dec. 16 meeting. The odds were 58 percent a week ago.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 1.96 percentage points, compared with 4.57 percentage points a month ago.
Record Deficit
The federal budget deficit in October, the first month of fiscal 2009, climbed to a record $237.2 billion, spurred by U.S. purchases of stakes in some of the country's largest banks. It exceeded the budget shortfall for President George W. Bush's first full year in office.
Banks and securities companies globally have reported almost $1 trillion of losses and writedowns tied to a meltdown in the credit markets since the start of 2007. The U.S., Japan, the U.K. and the euro region are headed for their first simultaneous recessions since World War II, according to the International Monetary Fund.
Initial claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession. They increased to a larger-than- forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington.
``The jobs data isn't having much impact on the market,'' said Theodore Ake, the head of Treasury trading in New York at Mizuho Securities USA inc., another primary dealer. ``The weakness in the economy is not a surprise. We know we are heading into a recession.''
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Sandra Hernandez in New York at shernandez4@bloomberg.net."
Nov. 13 (Bloomberg) -- Treasuries fell, led by 30-year bonds, after investors shunned the government's $10 billion sale of the securities amid concern that U.S. debt sales will grow.
The bonds drew a yield about 9 basis points above the level in pre-auction trading. At 4.31 percent, it was still the lowest since regular sales of the security began in 1977. Investors have been favoring shorter-term debt, which serves as a haven in times of turmoil and a bet the Federal Reserve will lower interest rates. The U.S. sold $34 billion in four-week bills yesterday at the lowest rate on record.
``The 30-year is not a central bank product, and there's no real interest from pension funds'' at a yield below 4.5 percent, said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There's just no interest in it.''
The yield on the 30-year bond climbed 18 basis points, or 0.18 percentage point, the most since Sept. 30, to 4.35 percent at 4:17 p.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 plunged 3 1/32, or $30.31 per $1,000 face amount, to 102 1/2.
Ten-year note yields increased 13 basis points, the most since Oct. 28, to 3.87 percent. The two-year note's yield rose 8 basis points, the most in three weeks, to 1.24 percent.
The rate on the one-month bill was 0.05 percent, near yesterday's record low.
`Too Many Unknowns'
The bond auction followed yesterday's sale of $20 billion in 10-year notes. The $30 billion total of the two auctions is the biggest amount of the securities sold in a week since at least 1990, when Bloomberg began tracking the data.
The gap between yields on two- and 10-year government notes widened to 2.64 percentage points, the largest since October 2003. Traders yesterday pushed two-year note yields to the lowest level in five years, while the Treasury's sale of $25 billion of three-year notes on Nov. 10 attracted the highest level of investor bids relative to the amount offered since 1998.
``In the current market environment there are still too many unknowns,'' said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts, which manages about $500 million in assets. ``People are looking for the safety of the shorter-term securities.''
30-Year Sale
Today's bond auction forecast to draw a yield of 4.224 percent, according to the average estimate of seven bond-trading firms surveyed by Bloomberg News. The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.07, below the average of 2.19 times in the nine auctions since the bond was revived in 2006.
Indirect bidders, a class of investors that includes foreign central banks, bought 18 percent of the securities offered, down from 43 percent at the last sale.
The sale was a reopening, meaning the bonds pay interest at the same rate and mature on the same date as those in the August auction. They mature in May 2038.
Futures on the Chicago Board of Trade show an 80 percent chance the Fed will lower its 1 percent target rate for overnight bank lending by a half-percentage point at its Dec. 16 meeting. The odds were 58 percent a week ago.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 1.96 percentage points, compared with 4.57 percentage points a month ago.
Record Deficit
The federal budget deficit in October, the first month of fiscal 2009, climbed to a record $237.2 billion, spurred by U.S. purchases of stakes in some of the country's largest banks. It exceeded the budget shortfall for President George W. Bush's first full year in office.
Banks and securities companies globally have reported almost $1 trillion of losses and writedowns tied to a meltdown in the credit markets since the start of 2007. The U.S., Japan, the U.K. and the euro region are headed for their first simultaneous recessions since World War II, according to the International Monetary Fund.
Initial claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession. They increased to a larger-than- forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington.
``The jobs data isn't having much impact on the market,'' said Theodore Ake, the head of Treasury trading in New York at Mizuho Securities USA inc., another primary dealer. ``The weakness in the economy is not a surprise. We know we are heading into a recession.''
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Sandra Hernandez in New York at shernandez4@bloomberg.net."
Fear Index VIX is staging reversal after Dow Low Retest.
Fear as a very strong Emotion and you can not be at Ultimate Panic Stage for a long time. Stupidity is another story, and you my dear friend are the best to know it...We have made Low High on Dow Low Retest and it is a very positive observation. After brutal Sell off with unprecedented speed of decline we are back into chartered waters: public knows now that we can anticipate powerful Rally and started position itself today selling treasuries all across the maturity. Fear will subside and Greed will be chasing performance again. Once Fear will stop spinning heads around double Top on US Dollar chart will be a very good reason to address fundamentals of the "safe heaven" currency, backed by One Trillion deficit.Dow has retested the Low, Bull will push the Fear, Greed and Inflation is back. DIA, SPY, QQQQ, FXI, EWZ, GDX
I hope I will not spoil it...In the beginning of the day Bottom seems to be falling off with the last Hope. News are all Negative and the last faith is lost. I guess it is how Mr Market is testing us. Another important observation: Who is leading Whom - China was up more then 4% after its more in Depth Stimulus Package appreciation and today we have experienced Powerful Retest of Low. All three major Charts has been alligned today: Dow restest of the Low, Fear VIX made lower high on this Retest and USD has made Second High forming Double Top. Everything is ready for transition: Fear for what has been left of your Capital to Greed and chasing perfomance. Dow is only the refference point for us - our heart belong to another tangible Things which are Nessesary as always. We were worring about mere existence of the Financial System, then Currencies and now Deflation. Time is to stop worry, let FED fight Deflation and position our pennies for Inflation Tide. Technical Analyses is never a pure scince and is only a way of Meditation on the Way of Things. It only works for those who are making money and it never works for those who are losing. I do not know what kind of fundamental shift it is Painting for us today: news are awful, "deflation is everywhere" and no Hope left for our Gold, Silver and Commodities Bull. But there is a Knowledge in the Market and those who know are leaving their footprints. We mere mortals can not call to Hank or Ben, but some others can...They are making money and we can see it on the picture. Trends are Bigger then Life and money involved are Big, so we can try to make our small stake on it: following the major Trend - Debasing of the former Empire currency. One of the "unknown" fundamentals TA is telling us now could be coordinated action after 15th of November with Rates Cut and weakening US Dollar policies - Quantitative Easing is all over mind those in power now. Trade will be made to prevent the collapse and allow orderly decline of the currency to stimulate Export and bring Inflation back.
Fingers Crossed: Retest in Dow - US Dollar: gravity is back.
Markets are bigger then we can appreciate it, with never ending bad news we have retested today the Low and formed a stronger reversal pattern. US Dollar has broke from triangle and killing all hopes for Gold and Commodities made a new High. Stronger Reversal pattern has been formed as a Double Top: aligned with retest in Dow, Falling Fear and its measure VIX, retest of 700 in Gold we have very good chances for US Dollar levitation coming to an END. Charts to follow. Never say never...but Sun is coming back to Rise from the East.
SSRI, SLW, GDX, AUY, TNR.v, CZX.v, SST.v, BVG.v, OK.v
Wednesday, November 12, 2008
China Retail Sales and Domestic Demand is Growing. SSRI, SLW, GDX, AUY
China Retail Sales Rise 22%, Help to Counter Slowdown (Update3)
"Nov. 12 (Bloomberg) -- China's retail sales rose 22 percent, close to the fastest pace in nine years, signaling that domestic demand may help the fourth-biggest economy withstand a looming global recession.
Sales climbed to 1.008 trillion yuan ($148 billion) in October, the statistics bureau said today, after gaining 23.2 percent in September from a year earlier. The increase matched the median estimate of 16 economists surveyed by Bloomberg News.
China's government pledged $586 billion of spending on low-cost housing and infrastructure on Nov. 9, seeking to boost confidence as the economy loses steam. Waning export demand and slumping real-estate sales threaten to undermine growth that has already slowed to the weakest pace in more than five years.
``The big package sent a signal for people to keep shopping,'' said Arthur Kroeber, head of research at Dragonomics Advisory Services Ltd. in Beijing. ``Rising domestic consumption will help to cushion economic growth in the coming months.''
The benchmark CSI 300 Index of shares closed 1.2 percent higher. The yuan rose to 6.8285 against the dollar as of 3:58 p.m. in Shanghai from 6.8305 before the announcement.
Automobile sales climbed 19.6 percent in October from a year earlier, boosting the Chinese ventures of Volkswagen AG and General Motors Corp. Jewelry rose 30.6 percent.
Andrew Wu, the group director in China of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA, said Nov. 11 that he was ``cautiously optimistic'' about the economy after the stimulus announcement. ``China is in a strong position.''
Signs of Weakness
Signs of weakness included slower sales growth across sporting goods, cosmetics, jewelry, furniture, garments and food. Spending on telecommunications equipment and construction and decorating materials fell.
Household electronics rose only 0.8 percent after a 30.3 percent gain in September.
``Stiff headwinds are ahead and we expect a slowdown in retail sales growth in coming months,'' said Merrill Lynch & Co.'s Hong Kong-based economists Ting Lu and T.J. Bond.
Ha Jiming, chief economist at China International Capital Corp. in Beijing, said the retail figures were inconsistent with evidence that growth in household spending had already weakened.
Rural sales helped to underpin today's figure, accelerating to growth of 21.9 percent from 21.8 percent in September. For urban spending, the gain was 22.1 percent, down from 23.9 percent.
Investment, Construction
China's economy expanded 9 percent in the third quarter from a year earlier, the slowest pace since 2003.
Falling demand for real estate is undermining investment and construction. In Shenzhen, a manufacturing and exporting hub on the nation's east coast, house prices declined 12.6 percent last month from a year earlier.
Inflation has halved from a 12-year high of 8.7 percent in February. Exports grew by the least in four months in October and manufacturing contracted by a record. The benchmark CSI 300 Index of shares has dropped 67 percent this year.
Wage gains may sustain spending. Urban disposable incomes climbed 7.5 percent in the first nine months of 2008 from a year earlier, after adjusting for inflation. Rural incomes climbed 11 percent.
PepsiCo Inc., the world's largest snack maker, said this month that it plans to invest $1 billion in China in the next four years to increase production and sales.
Railways, Roads
The stimulus package, running through 2010, includes housing, rural infrastructure, railways, roads, airports, tax cuts for business investment and subsidies for farmers.
The central bank has already lowered interest rates three times in two months and reduced restrictions on lending to stimulate growth. The key one-year lending rate is 6.66 percent.
For the first 10 months, retail sales climbed 22 percent from a year earlier to 8.8 trillion yuan, the statistics bureau said. That was up from 16.8 percent for all of 2007.
In the first half, consumption contributed 50.2 percent of the nation's economic growth, investment 44.9 percent and net exports 4.9 percent. Last year, net exports accounted for 21.5 percent.
The biggest gain in China's retail sales since Bloomberg data began in 1999 was a jump of 23.3 percent in July this year.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net "
Sales climbed to 1.008 trillion yuan ($148 billion) in October, the statistics bureau said today, after gaining 23.2 percent in September from a year earlier. The increase matched the median estimate of 16 economists surveyed by Bloomberg News.
China's government pledged $586 billion of spending on low-cost housing and infrastructure on Nov. 9, seeking to boost confidence as the economy loses steam. Waning export demand and slumping real-estate sales threaten to undermine growth that has already slowed to the weakest pace in more than five years.
``The big package sent a signal for people to keep shopping,'' said Arthur Kroeber, head of research at Dragonomics Advisory Services Ltd. in Beijing. ``Rising domestic consumption will help to cushion economic growth in the coming months.''
The benchmark CSI 300 Index of shares closed 1.2 percent higher. The yuan rose to 6.8285 against the dollar as of 3:58 p.m. in Shanghai from 6.8305 before the announcement.
Automobile sales climbed 19.6 percent in October from a year earlier, boosting the Chinese ventures of Volkswagen AG and General Motors Corp. Jewelry rose 30.6 percent.
Andrew Wu, the group director in China of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA, said Nov. 11 that he was ``cautiously optimistic'' about the economy after the stimulus announcement. ``China is in a strong position.''
Signs of Weakness
Signs of weakness included slower sales growth across sporting goods, cosmetics, jewelry, furniture, garments and food. Spending on telecommunications equipment and construction and decorating materials fell.
Household electronics rose only 0.8 percent after a 30.3 percent gain in September.
``Stiff headwinds are ahead and we expect a slowdown in retail sales growth in coming months,'' said Merrill Lynch & Co.'s Hong Kong-based economists Ting Lu and T.J. Bond.
Ha Jiming, chief economist at China International Capital Corp. in Beijing, said the retail figures were inconsistent with evidence that growth in household spending had already weakened.
Rural sales helped to underpin today's figure, accelerating to growth of 21.9 percent from 21.8 percent in September. For urban spending, the gain was 22.1 percent, down from 23.9 percent.
Investment, Construction
China's economy expanded 9 percent in the third quarter from a year earlier, the slowest pace since 2003.
Falling demand for real estate is undermining investment and construction. In Shenzhen, a manufacturing and exporting hub on the nation's east coast, house prices declined 12.6 percent last month from a year earlier.
Inflation has halved from a 12-year high of 8.7 percent in February. Exports grew by the least in four months in October and manufacturing contracted by a record. The benchmark CSI 300 Index of shares has dropped 67 percent this year.
Wage gains may sustain spending. Urban disposable incomes climbed 7.5 percent in the first nine months of 2008 from a year earlier, after adjusting for inflation. Rural incomes climbed 11 percent.
PepsiCo Inc., the world's largest snack maker, said this month that it plans to invest $1 billion in China in the next four years to increase production and sales.
Railways, Roads
The stimulus package, running through 2010, includes housing, rural infrastructure, railways, roads, airports, tax cuts for business investment and subsidies for farmers.
The central bank has already lowered interest rates three times in two months and reduced restrictions on lending to stimulate growth. The key one-year lending rate is 6.66 percent.
For the first 10 months, retail sales climbed 22 percent from a year earlier to 8.8 trillion yuan, the statistics bureau said. That was up from 16.8 percent for all of 2007.
In the first half, consumption contributed 50.2 percent of the nation's economic growth, investment 44.9 percent and net exports 4.9 percent. Last year, net exports accounted for 21.5 percent.
The biggest gain in China's retail sales since Bloomberg data began in 1999 was a jump of 23.3 percent in July this year.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net "
Tuesday, November 11, 2008
China is still growing, Export up 19% in October.
Rate of growth is lower then in September at 21.5%, but remembering the total Credit Crunch in Trade and general mood in the markets in October it is great news for that part of the world.
"China trade surplus rises but export growth weaker
1 hour ago
BEIJING (AP) — China's trade surplus swelled in October to a monthly record but export growth weakened amid a global economic slowdown that has battered Chinese exporters, according to data reported Tuesday.
China's global trade surplus rose 30 percent from the year-earlier period to $35.2 billion, the customs agency reported. The surplus with the United States rose 13.6 percent to $17.5 billion, while that with Europe rose 12.2 percent to $15.6 billion.
Exports surged 19.1 percent to $128.3 billion in October despite weaker global consumer demand. But that growth rate was down from September's 21.5 percent and sharply lower than the recent peak of 26.9 percent in July.
"The global financial crisis has had a considerable impact on Chinas export growth, which will continue to show weakness with recession in the U.S. and Europe," said a report by Jing Ulrich, JP Morgan & Co.'s chairwoman for China equities.
An unexpectedly sharp downturn in foreign demand for Chinese goods has led to a wave of factory closures and layoffs in the country's export-driven southeast.
The government has tried to help struggling exporters by boosting export-related tax rebates. Its massive stimulus package unveiled Sunday calls for efforts to compensate for weakening foreign demand by boosting domestic consumer spending.
China's import growth fell even more sharply in October, widening the trade surplus and reflecting weakness in domestic demand. Imports rose 12.4 percent to $93.1 billion, compared with September's 21.3 percent growth rate."
1 hour ago
BEIJING (AP) — China's trade surplus swelled in October to a monthly record but export growth weakened amid a global economic slowdown that has battered Chinese exporters, according to data reported Tuesday.
China's global trade surplus rose 30 percent from the year-earlier period to $35.2 billion, the customs agency reported. The surplus with the United States rose 13.6 percent to $17.5 billion, while that with Europe rose 12.2 percent to $15.6 billion.
Exports surged 19.1 percent to $128.3 billion in October despite weaker global consumer demand. But that growth rate was down from September's 21.5 percent and sharply lower than the recent peak of 26.9 percent in July.
"The global financial crisis has had a considerable impact on Chinas export growth, which will continue to show weakness with recession in the U.S. and Europe," said a report by Jing Ulrich, JP Morgan & Co.'s chairwoman for China equities.
An unexpectedly sharp downturn in foreign demand for Chinese goods has led to a wave of factory closures and layoffs in the country's export-driven southeast.
The government has tried to help struggling exporters by boosting export-related tax rebates. Its massive stimulus package unveiled Sunday calls for efforts to compensate for weakening foreign demand by boosting domestic consumer spending.
China's import growth fell even more sharply in October, widening the trade surplus and reflecting weakness in domestic demand. Imports rose 12.4 percent to $93.1 billion, compared with September's 21.3 percent growth rate."
Monday, November 10, 2008
Gold, Silver and Miners are Up, when market is down. SSRI, SLW, GDX, AUY
Interesting US Dollar has manage to close Up today and formed "the hanging man", normally it will be a reversal pattern within our Triangle pointing to resolution downwards. Markets were under pressure in US even after Chinese stimulus package, very interesting divergence has formed when Gold and Silver manage to close positive after so custom selling pressure in New York session. Night and Morning Asia is Buying and during the day West is selling. Not today and Goldies have rallied closing strongly on positive side. Is it another sign that Us Dollar levitation magic is over? We will find it out very shortly.
Chinese Stimulus Package is a Poison Pill for US Dollar?
How Chinese are going to finance their Stimulus Package of equivalent 586 Billion US Dollar? Are they going to Sell part of the reserves which are mostly in Treasuries? Or they will at least buy less in the open market? Both ways it is not very positive news for a US Corp which needs to finance 1 trillion dollars deficit this year. On another hand it is great news for Gold, Silver and Commodities and all Asian markets rallied on this news. This is decoupling we have discussed over the weekend happening right now.
"China Stimulus Plan Will Boost Stocks Sentiment (Update2)
By Chua Kong Ho
Nov. 10 (Bloomberg) -- China's 4-trillion yuan ($586 billion) stimulus plan will boost stock-market sentiment, Morgan Stanley said, predicting short-term rallies for steelmakers, building materials producers and financial companies.
``Beijing has done the right thing to beat market expectations on stimulus package size,'' Morgan Stanley's analyst Jerry Lou wrote in a note to clients today. ``That is why we think market sentiment will improve.''
The stimulus package, of which 100 billion yuan is earmarked for this quarter, will be spent on low-rent housing, roads, railways and airports and infrastructure in rural areas. The funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site.
China's CSI 300 Index, a measure of local-currency stocks traded in Shanghai and Shenzhen, has declined 69 percent this year as the global economy slowed, cutting demand for the nation's exports. The stock measure, the worst performer in Asia, gained 6.3 percent to 1,783.19 at 10:11 a.m. today.
``Higher social welfare spending and rural reforms will help boost consumption,'' Jing Ulrich, chairwoman of China Equities at JPMorgan Chase & Co., said in an e-mail. While economic risks remain, ``the stock market will start to anticipate the positive impact,'' she wrote.
The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
To be sure, ``considerable uncertainties'' remain over the ultimate size of the plan, Goldman Sachs Group Inc. economist Song Yu said in an e-mailed report today.
``The amount of `extra' investments involved is still not clear at this point,'' wrote Song, adding that not all of the 4 trillion yuan will be spent by the government.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net "
By Chua Kong Ho
Nov. 10 (Bloomberg) -- China's 4-trillion yuan ($586 billion) stimulus plan will boost stock-market sentiment, Morgan Stanley said, predicting short-term rallies for steelmakers, building materials producers and financial companies.
``Beijing has done the right thing to beat market expectations on stimulus package size,'' Morgan Stanley's analyst Jerry Lou wrote in a note to clients today. ``That is why we think market sentiment will improve.''
The stimulus package, of which 100 billion yuan is earmarked for this quarter, will be spent on low-rent housing, roads, railways and airports and infrastructure in rural areas. The funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site.
China's CSI 300 Index, a measure of local-currency stocks traded in Shanghai and Shenzhen, has declined 69 percent this year as the global economy slowed, cutting demand for the nation's exports. The stock measure, the worst performer in Asia, gained 6.3 percent to 1,783.19 at 10:11 a.m. today.
``Higher social welfare spending and rural reforms will help boost consumption,'' Jing Ulrich, chairwoman of China Equities at JPMorgan Chase & Co., said in an e-mail. While economic risks remain, ``the stock market will start to anticipate the positive impact,'' she wrote.
The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
To be sure, ``considerable uncertainties'' remain over the ultimate size of the plan, Goldman Sachs Group Inc. economist Song Yu said in an e-mailed report today.
``The amount of `extra' investments involved is still not clear at this point,'' wrote Song, adding that not all of the 4 trillion yuan will be spent by the government.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net "
Sunday, November 09, 2008
Silverstone Resources SST.v - landing spot for Ben's Choppers
All those charts meditations on the way of things will stay without any positive implication if we will not be able, my dear Diary, to make some money from all what is left from our devotion and common sense practise after mind disturbing dollar levitation. So where are those waters to fish for what will be left of all those trillions coming on after paying bonuses to bail out bankers? We are pleased to help Mr Obama, because we all need weaker dollar and some positive inflation signs. As always we like crazy way of things: like to deploy your ten percent of the capital for one hundred percent return. Gold is a Call on USD going down, Silver is a Call on Gold and Silverstone Resources SST.v is a Call on Silver without any Time decay. Latest deal will double silver revenue in OZ next year and is a necessary step to bring confidence back into the company. You must do your own DD as always and can find some initial information on this blog.
US Dollar Risk Averse Trade is close to an End?
US Dollar Risk Averse Trade is close to an End? Very nice article in explanation for all my charts.
"Well, the one thing the US government might have had going forward was the strength of the dollar, which, despite America’s economic weakness, low rates and some evidence of Japan-style quantitative easing, was still going strong in recent weeks.
But there are now signs of slackening demand for the US currency, according to Bank of America’s Robert Sinche.
Specifically, one source of the the dollar’s recent rally has been the scarcity of USDs among G7 nations and emerging market countries. That’s now easing, according to BoA, with the provision of currency swaps, such as the $30bn for South Korea, Brazil, Mexico and Singapore announced last week. Intuitively, a mass of dollars coming into the system would ease upward pressure on the USD and that easing can be seen through recent declines in the Libor-OIS spread, BoA says:
While there are many factors that influence the LIBOR-OIS spread, particularly the stability of prime money market fund balances, the spread does provide some measure of the offshore demand for USDs, as does the pricing behavior action in the NDF markets. There are signs that these pressures are beginning to moderate in recent weeks as USD funding liquidity has become available on a widespread basis, suggesting that the scarcity demand for USDs is lessening significantly.
The second factor affecting the USD in recent weeks, according to BoA, has been the repatriation by Americans of foreign assets. Data from the Treasury TIC report indicates that US residents had sold foreign equities for each of the three months ended August, with total net sales of $21.6bn. That, however, may be slowing:
It appears that repatriation accelerated in September/early October, with weekly data (from AMG) showing the sharpest redemptions in international mutual funds during the first half of October. However, those redemptions slowed sharply during 2H October, falling to only an estimated -$0.2bn (2 weeks ended October 29) from -$6.4bn in the 2 weeks ended October 15. With global equity prices stabilizing in recent days, the pace of USD-supportive redemption/repatriation is likely to slow further in the weeks ahead.
The final factor, according to BoA, has been the recent appetite for risk aversion, which drove investors to the safe-haven status of USDs, as well as the Japanese yen. Using the VIX as a measure of risk appetite, BoA thinks the VIX’s recent fall means a “significant correction” in USD gains is likely. As goes the VIX, goes the dollar.
Finally:
A strict reading of interest rate differentials would imply the potential for a further 10% fall in the USD Index during the weeks ahead, about three times the 3.5% correction in place from the October 28 recovery high. While that magnitude of correction appears unlikely in the immediate future, we do note the seasonal forces that often weaken the USD into yearend. Moreover, in a global financial system characterized by a scarcity of capital, it is rather ironic that the currency of the largest capital importer (largest current account deficit) has been so strong in recent months. In this context, the strength in the USD in recent weeks also appears unsustainable, with broad-based gains in both developed (ex-Japan) and select developing-country currencies expected during the final two months of the year.
While predicting a weaker dollar pits BoA against Deutsche Bank and a number of other investment houses (see for instance, this recent Bloomberg article on the dollar’s strength), the final nail in the USD coffin (at least in terms of short- to medium-future gains), may ironically be the election of Barack Obama as president on Tuesday night. From Forecast’s Ray Atrill, via Bloomberg:
The more people feel positive about the election outcome, ironically, the worse it may be for the dollar. An improvement in the stock market, for example, as a barometer of improved sentiment and perhaps improved risk appetite, given what we’ve been through in the last year, typically is associated with a weaker dollar.
During the heights of uncertainty, fear and risk aversion, the dollar has been the beneficiary. At the moment, I’d probably see a dollar sell-off as a positive sign in terms of the international financial community’s judgment on the election outcome.
Probably the next shoe to drop is how quickly Obama makes announcements
But there are now signs of slackening demand for the US currency, according to Bank of America’s Robert Sinche.
Specifically, one source of the the dollar’s recent rally has been the scarcity of USDs among G7 nations and emerging market countries. That’s now easing, according to BoA, with the provision of currency swaps, such as the $30bn for South Korea, Brazil, Mexico and Singapore announced last week. Intuitively, a mass of dollars coming into the system would ease upward pressure on the USD and that easing can be seen through recent declines in the Libor-OIS spread, BoA says:
While there are many factors that influence the LIBOR-OIS spread, particularly the stability of prime money market fund balances, the spread does provide some measure of the offshore demand for USDs, as does the pricing behavior action in the NDF markets. There are signs that these pressures are beginning to moderate in recent weeks as USD funding liquidity has become available on a widespread basis, suggesting that the scarcity demand for USDs is lessening significantly.
The second factor affecting the USD in recent weeks, according to BoA, has been the repatriation by Americans of foreign assets. Data from the Treasury TIC report indicates that US residents had sold foreign equities for each of the three months ended August, with total net sales of $21.6bn. That, however, may be slowing:
It appears that repatriation accelerated in September/early October, with weekly data (from AMG) showing the sharpest redemptions in international mutual funds during the first half of October. However, those redemptions slowed sharply during 2H October, falling to only an estimated -$0.2bn (2 weeks ended October 29) from -$6.4bn in the 2 weeks ended October 15. With global equity prices stabilizing in recent days, the pace of USD-supportive redemption/repatriation is likely to slow further in the weeks ahead.
The final factor, according to BoA, has been the recent appetite for risk aversion, which drove investors to the safe-haven status of USDs, as well as the Japanese yen. Using the VIX as a measure of risk appetite, BoA thinks the VIX’s recent fall means a “significant correction” in USD gains is likely. As goes the VIX, goes the dollar.
Finally:
A strict reading of interest rate differentials would imply the potential for a further 10% fall in the USD Index during the weeks ahead, about three times the 3.5% correction in place from the October 28 recovery high. While that magnitude of correction appears unlikely in the immediate future, we do note the seasonal forces that often weaken the USD into yearend. Moreover, in a global financial system characterized by a scarcity of capital, it is rather ironic that the currency of the largest capital importer (largest current account deficit) has been so strong in recent months. In this context, the strength in the USD in recent weeks also appears unsustainable, with broad-based gains in both developed (ex-Japan) and select developing-country currencies expected during the final two months of the year.
While predicting a weaker dollar pits BoA against Deutsche Bank and a number of other investment houses (see for instance, this recent Bloomberg article on the dollar’s strength), the final nail in the USD coffin (at least in terms of short- to medium-future gains), may ironically be the election of Barack Obama as president on Tuesday night. From Forecast’s Ray Atrill, via Bloomberg:
The more people feel positive about the election outcome, ironically, the worse it may be for the dollar. An improvement in the stock market, for example, as a barometer of improved sentiment and perhaps improved risk appetite, given what we’ve been through in the last year, typically is associated with a weaker dollar.
During the heights of uncertainty, fear and risk aversion, the dollar has been the beneficiary. At the moment, I’d probably see a dollar sell-off as a positive sign in terms of the international financial community’s judgment on the election outcome.
Probably the next shoe to drop is how quickly Obama makes announcements
http://ftalphaville.ft.com/blog/2008/11/05/17851/dollar-danger-ahead/
5 year Treasuries are rolling over into Inflation mode.
This area is crowded by everyone now: Hedge funds, Mutual funds and Banks. Supply is coming but appetite is diminishing, values are rolling over into Inflation zone with Yield over 3%. When you have Blue Chips in Dow paying dividend Yield higher then 5 year Treasuries it is time to allocate at least some of your cash to equities to boost returns. Everyone is watching everybody, you can not afford to lose in returns and miss the turn around in the market being over defencive in that world.10 year Treasuries TNX - commercials are buying equities.
Here we have much more conclusive picture: Yield is rising, commercials are moving out of treasuries and into equities. Mutual funds have to match their assets allocations and have to sell Fixed Income and Buy Equities. This is the place were Curve is getting steeper - first hope for the banks to start lending. No deflation signs here as well. It is the place where the Treasury will try to lock in low rates in coming auctions for financing its 1 trillion dollar deficit. More staff to come - more discount: higher Yield to be offered.
30 year Treasuries TYX: Pension funds and Insurance are moving into equities?
These guys has helped us to call bottom on 10th of October. Difficult to consider the clear picture, but the divergence is apparent and killing Deflation argument already: yield is slowly moving up - treasuries trade has became too crowded. Only professionals are investing in 30 years to match their maturities on liabilities side, move here Up in Yield and Low in Price will create the last Bubble to burst - Treasuries. Last two days were very important: market was under selling pressure on Thursday, but treasuries were selling as well. Once only smell of inflation will come into Play music will stop here. Recent move up here is supporting our hope for USD breaking down from Triangle pattern with all positives we have discussed these two days.
Brazil EWZ Engine of Growth in Soutn Americas is coming back.
As brutal as it was flight to "quality" of US Treasuries with 1 trillion deficit as a collateral is ending. All emerging market is different from 1998, some of its parts are particular strong now. My love is in Argentina with risky TNR Gold TNR.v play, but Brazil is the place to move continent forward. Once fear of Default in places like Argentina will come down and stability will returns to commodities play this Farm of the world will get its share of excitement again.China FXI - it is still there and growing.
Do not confuse market and economy in places like China. My call on Parabolic rise and coming down last year was right on the money, like it was excessive then so it is unsustainable on the downside now. China do not have to do all those bailouts USA did, but they can chose to do all those stimulus like in USA using their Reserves of 1.9 trillion. It is happening already: Agri reform - slaves will be able to sell their land for the first time, Infrastructure - railroads spending in trillions of local currency. Housing and debt problem are disconnected in China: level of borrowing still at its infancy compare to developed world. Nothing will be perfect, but markets have discounted China rising below 5% already. Oil below 100 and recent commodities prices are big presents to the hard working people there, they will scoop the world resources exchanging worthless US Dollars from the reserves for securing Supply of precious commodities.
Dr. Zinc and Dr. Copper thoughts on Global Economy. CZX.v, TNR.v
Why commodities? In the inflationary environment price of commodities could never fall to zero. It is determent by Supply and Demand. Demand is going down first hurting Price, Supply is determent by Price and Price is determent by cost of production. Until world is going into Depression with Deflation (credit contraction as a reason and price falling as a symptom) Demand is there at a particular price. Price will be adjusted by marginal project going out of production reducing Supply further. Fear here made this Bear masquerade possible: all commodities Trade is based on Credit. When you can not produce reliable Letter of Credit you simply can not Trade. Watch out what metals are telling us: Inflation is coming and Infrastructure will be the name of the game. Move above 25o will confirm these affirmations.
Another less reliable thought: now everybody is telling we are in recession: we were talking about it last year. With all those money coming into play and Unemployment of 6.5% we are not so far from Recovery even in US with new debased Dollar value.
Juniors - Life after Death experience. TNR.v, CZX.v, SST.v, BVG.v, OK.v, MGN
Couple of weeks ago when Juniors were down their Cash Value world seams to be Ending in that part of the world. Next step would be to pay you as a Buyer just to hold some Junior Mining shares. Why is it so? Do they have any excessive Debt? Do they in production with a Negative Cash Flow? Some of them are. So look now for the strongest: this is a life time opportunity to Buy into 2003 all over again: FED is on your side ReInflating economy again. Buyers are almost Non Existing, but Sellers could be gone any time with USD going down and China and Commodities firming up. Move up will be explosive once reversal H&S confirmed. Chinese are all over the world scooping what has left. M&A will be the name of the game.
Canada - is the Party time here again? CZX.v, SST.v. TNR.v
Very nice reversal H&S in the making as well, rising China and Oil stable above 60 will bring more fuel for the rally. More fiscally prudent and solid on commodities, recent sell off in Canadian Dollar was just as a honey for the bees. Positive total recovery from Fear will be the most benefit for Canadian market.
Gold and Silver Index XAU is more decisive about its intentions.
On this chart we have more clear positive signal with H&S reversal. right shoulder is already forming with Buy at PPO. Move above 100 will be important for this new born Bull.