Sunday, October 26, 2008

When China starts to flood the rich lists

The milkpowder contamination case, SanLu brand is the instigator to tighther regulations in the food processing industry, they say that a crisis is onli the way to correct things and to make any deviation back to the original course, and i believe china food processing industry have always lack the standard required to make food edible, consumers buy for the mere fact, either it is cheaper, or it is a brand that has been build since earlier generations, like the white rabbit sweet, the can of mackarel with black beans, the tauchu, etc.If the downline can have more tighter regulatory boards then the factory standards will uphold and china production quality standard would be recognized .

In fact , this has what they have been striving for these years, to balance between cost structure and creating quality products, but somehow somewhere the items got a bit tainted with chemicals, first lead now melamine, but it will be a pragmatic leap to the regulatory boards of China and this new chapter will be a new one where quality must be assured and this one off set back is countered with the acienct Shih Huang Ti style, burnt all the books and we shall be in control, the chinese burnt all the goods and now they hope to turn a new leaf. Chinese have great adaptability one thing for sure, as long as there is a patent by hook or by crook they will be able to take that patent and make the product china made, u can throw a chinamen into a den with the lions and he may still either wrestle his way out like Wu SOng, or he may just talk his way out by trading with the lion.

Chinese must learn to innovate and create, strive for inventions, not trailing the back of technology, when the strong hold can learn to create and i believe with such a huge population, intellectual property is not a problem, they will create a whole new technological industrialization era in the china industries, maintaining a low domestic cost structure and high efficiency with tightly regulated standards of qualities.

Expect the unemployment in the US to show and unwind in countries outside america, they either sack u or they send u to another branch outside asia to replace the management for a lower wage, those previously reporting to u might be still employed as they did not misjudged and made wrong bets, they guy u were screwing for the blend coffee and slow report handin would be the guy taking your position, imagine your entire department being closed down and company cutting production at all cost due to the global slowdown.

Psychologically this is devastating to watch, emotionally it will impact any citizen that is alive and watching, if u think isolation is ur game, think again, all who lived thru the depression, understands the depression, even the rich fear it as it clamped on their tails so close they almost got dragged in to the pits together with the rest. One thing i believe could help the people is thier prudent and healthy financial practices, savings and cash holdings, proper allocation of capital is the right way to live. Social problems are going to rise, crime rates are going to balloon, like it or not if u have a license for any armory possession i suggest u take up some artillery and stack up for safety. The us is already bancrupt i fear it can hold for only that much, the only possible help the citizens can do is being euphoric about the amount of cash poured in to the system, and hope that it would play it way down to homeowners and depositors.

Saturday, October 25, 2008

All eyes to the GDP report

The mark to start the recession period is here, most of the wall street traders think its too late to even consider the start of a recession, the path has long begun before the first stimulus plan to initiate a tax rebate, all the money they put in temporary can boots the gdp figures and earnings but the effects are weary when the banks hoard and flee to the feds for even more money as they cannot even supply the withdrawal from depositors.

There are many news report predicting what the feds will cut, but in my book it is never significant as first the figures are mostly just a mere forecast and bench mark, it is not the actual lending rate, if one would keep a close eye, they would have to see the LIBOR and the loan term, the longer term sold the more chances that bankers are loosening a bit. The feds rates onli mark the movements in the financial floors and does not have a mind of its own, the onli difference it makes now is that it does not affect LIBOR, Libor is in frenzy mode so is the Index.

What we going to look at is how the dollar rally can sustain, if things are going to continue to unwind, dollar rally is going to be stronger but it is going to loose the steam once, things start to look a bit better and when the housing price has a bottom

Wednesday, October 22, 2008

Commodities, inflation, and rate cuts

Who dare to bet that interest rates are going up, nobody as the feds wont have the balls to raise them, it is either maintained or lower down, the bet now is to lower another 50 basis point, then it would be a carry trade instrument, many have shown exposure to currency positions that are not known to the public and with such sudden spike in borrowing banks mights start to have carry trade using the dollar in the next 5 years, The japanese delayed and protected their banks and today we see that the peak was never revisited, when the printing continues inflation will roam the US and prices of commodities have no where but up !

I believe that there is no way the bancrupt US government can continue to support their acts of proping the dollar and pushing it out to the consumers, if slowdown happens in a more severe manner, consumption appetite will fall, and we have slimmer us citizens in terms of size and wallet. Long term rates have no where to go but up if we take a look at the printing engines production, and i would urge commodity holders to not forget the fact that commodities have strong fundamentals and they are scarce, and expensive to produce, new oil are going to cost around 65-70 per barrel, u tell me who would sell ?

Saturday, October 18, 2008

read up

Read and Relax , dont panic dont go against the feds

I can tell u the financial market deteoriation is going to eat up even more market capitalization and leave you wondering where has all the money suddenly vanished to ? You might probably stand back and ask where can i put the cash that is safe and not going to lose value, then u start to think hell i have diversified my asset and practiced the asset allocation of 10,20,20,30,10.. 10% fixed rate bonds/ deposits,20% cash, 20%gold,30% stocks,10% in risky security.

Then u start to form a thought, i dun think all will go bust at once, so diversified is going to keep me safe, I think one way u are right and the other way u are wrong! If the dollar really go bust, only gold is going to safe u! But if central bankers cartel is going to manipulate gold prices again, how would u guarantee it is going to bail your portfolio from total destruction, as u all know average cost of producing oil stands at65-72 level, deflation of assets has started to infect commodities but below cost would send the sellers to hoard oil and push it up again.

I mean if u feel the dollar will be the one going up and interest rates are coming down, hell ur bonds are going to take a hit, shares are going to plummet, as exports drop affect gdp, inflation will kick in food prices, ur cash holding has not the same purchasing power and suddenly all looks so much more expensive like when gasoline was 4 bucks.

Then i recalled an article titles SPEND spend SPend, that emphasize on spending smart as the prudent investor, spending at the current value not onli ensures that ur purchasing power is maintained and chances of losing purchasing power decrease in a volatile economic period, and in addition to spend wise may also mean to restock for ur biz when time is rite, to replenish staples before pricing sparks, but if purchasing power is par by earning power, if income is consistent but spending keeps increase it will affect our balance sheet/portfolio.... Are there nothing that is sure and concrete in the world ? i am asking the same question, so a trading plan, is inevitable

Thursday, October 16, 2008

8,500 succumb or Stand out

If the saying Americans are always first to lead, it would be my say that they are leading the bear rally, with 1000 point swings, now u start seeings a approximately 700 swing from the bottom daily, but really where does it brings us, weekly we are still a bit lag from the top, there are no higher high call, to confirm an entry.

Technology are really leading and it is their earning that are least affected and not to mention inflation data that were stable, who could blame inflation of scared of creeping out the door when it has been strained by banks around the world, reverting back to the dollar, boosting its value for a short term grace. I scold myself for not calling a temporary top in gold since they are going to do some prime pumping for the dollar and the entire mortgage market.

End of the day, when the real situation arises and liquidity is not available , we are going to see our legs get dipped in paint and soil again, tainted in red, but as that day comes i suggest enjoy the current rally, Dow vs usd correlations remains utmost strong and i believe that it is the way it is being played now, what say u give a comment. I have called for a technology rally from my first post now it has given me one, i wanna know till when it can last? Ambac wants to be saved, are they significant enough?

euros ..near 1.35
oil near their average producing price
Yen still far from target since crisis did not unveil that badly
Gold, sold as they rush with the rally
Commodities might spark a rally from this point onwards as long as inflation remains low concern, it will give an indirect approval to print more trust me if u can skin this cat!!!

--~~ trade according to plan; discipline will ensure safety and perseverance~~--

Tuesday, October 14, 2008

The plasticity of the DOW and Human Nature

1000 points up to make it look good
-suddenly all cries that subprime is over, dont forget that the crisis has just begun to unfold
-not that i want to stop u big guys from skinning a fat cat, u only find lipid accumulated beneath a thin layer of dermis.
-but the central bankers are buying equity stakes of banks, financial will lead but again how long before another lehman strikes, 
-bonds and treasuries risk are higher than before, even the ever safe municiple bonds are now deemed as Financial WMD
-dollar have weakened and the pound & euro is strenghthening,
-if one had collected gold as i instructed with a sound mind and doing some home work, one would be a bit well off
-mortgages are still around to be foreclosed and defaulted.
-By next year march, the bankers have to repay the loans
-Central bankers are tapping ever tap and pipe they have until the drought starts,
-Euro cannot buy treasury papers, so it is good and bad if liquidity is  a problem
-the japanese wishes to start their domination plan again like WW II, they used the bicycles now they are riding the bicycle notes to the top rank IMF bankers
-Oil has rise in tandem with the yen and euro.
Take a birds view before jumping into the market, there will be more calls in the market but i'll be the maverick to pUt them .