38 replies to this topic

[milbank]

As far as today goes. My short covered while I was typing this. I'm done for the day.

Wellll.... maybe one more.

Edited by milbank, 19 February 2008 - 01:29 PM.

[arbman]

You are welcome, actually the steepest downtrend among all of the ETFs is in FXI, which is not US-based, but China-25 is really deteriorating the fastest at the moment. In 2003-2004, China was the biggest buyer of the US Treasuries, I am not sure they are still willing to do so. If their growth is slowing so significantly as evidenced by their dismal stock indices, then this country must either start buying the US Treasuries or there will be a larger wave of inflation in US since the US manufacturing is behind its consumption. The fierce competition within China and overcapacity was probably keeping the price of the manufactured goods low. This is a very complex economical balance and I will not dare to go there to comment about it, but I am watching the 10 and 30 yr yields very carefully now. You would expect the yields to stay steady even if the market rallies since the market needs significant liquidity to sustain the upward path and this will not happen with the broken long bonds (the march to lower yields must continue). An increase in the long term yields will be more inflationary and I doubt that it means much for the real earnings such that the rallies should not go far. We'll see...

Edited by arbman, 19 February 2008 - 01:33 PM.

[milbank]

The long bond's rising yield isn't going to be helping the housing situation either.

[ogm]

You are welcome, actually the steepest downtrend among all of the ETFs is in FXI, which is not US-based, but China-25 is really deteriorating the fastest at the moment. In 2003-2004, China was the biggest buyer of the US Treasuries, I am not sure they are still willing to do so. If their growth is slowing so significantly as evidenced by their dismal stock indices, then this country must either start buying the US Treasuries or there will be a larger wave of inflation in US since the US manufacturing is behind its consumption. The fierce competition within China and overcapacity was probably keeping the price of the manufactured goods low. This is a very complex economical balance and I will not dare to go there to comment about it, but I am watching the 10 and 30 yr yields very carefully now. You would expect the yields to stay steady even if the market rallies since the market needs significant liquidity to sustain the upward path and this will not happen with the broken long bonds (the march to lower yields must continue). An increase in the long term yields will be more inflationary and I doubt that it means much for the real earnings such that the rallies should not go far. We'll see...

I think FXI has bottomed for the time being. And will breakout to the upside within a couple weeks.

[arbman]

SPX must break above 1400 in the next few tdays ahead of the 5wk low to prove that this latest 2.5 wk cycle is right translated (bullish structure) and then it must also make one more high later in Feb that the 5 wk cycles are also turning bullish, this would turn the 10 wk cycle quite bullish and any decline into the tax season would be extected to be mild (higher low). Then we could expect a higher high during the remaining of the 20 wk cycle, my most sophisticated market indicators (credit growth, implied volatilities etc) kind of support these, but the basic momentum and cyclical indicators do not...

[iloli way]

You are welcome, actually the steepest downtrend among all of the ETFs is in FXI, which is not US-based, but China-25 is really deteriorating the fastest at the moment. In 2003-2004, China was the biggest buyer of the US Treasuries, I am not sure they are still willing to do so. If their growth is slowing so significantly as evidenced by their dismal stock indices, then this country must either start buying the US Treasuries or there will be a larger wave of inflation in US since the US manufacturing is behind its consumption. The fierce competition within China and overcapacity was probably keeping the price of the manufactured goods low. This is a very complex economical balance and I will not dare to go there to comment about it, but I am watching the 10 and 30 yr yields very carefully now. You would expect the yields to stay steady even if the market rallies since the market needs significant liquidity to sustain the upward path and this will not happen with the broken long bonds (the march to lower yields must continue). An increase in the long term yields will be more inflationary and I doubt that it means much for the real earnings such that the rallies should not go far. We'll see...

I think FXI has bottomed for the time being. And will breakout to the upside within a couple weeks.

The greatest cold in 50 years turned Year of the Rat into a Snow Rat in China. Already, as in Katrina's case here, Chinese government and business, including foreign investment alike predicting a massive reconstruction boom that will turn Snow Rat into Golden Rat again. Look at US stock market's performance since 2005 Q4 Katrina hit, a breakout to the upside is not far fetched for China.

[arbman]

Who cares whether they build their worthless shacks back up, their economy has never been about housing like US... I am telling you what the chart is telling me. The disasters in an upcycle would be buying opportunities and breaking points during the downcycles, for example 9/11 in US during the down cycle vs the Katrina during the up cycle. Do you know where China is today? My guess is they are at the end of an overcapacity and peak of their booming cycle. Are there more and more demand or consumption and in fact liquidity worldwide to support China's evergrowing manufacturing capacity (where the real earnings are)?!? Not unless China buys the Treasuries around the world to support the liquidity, watch the long term rates...

[denleo]

Guys, all I said in this post is that this morning was a shorting opportunity. I didn't expect 1,000+ views and 26 replies to something that was so obvious. Denleo

[iloli way]

Who cares whether they build their worthless shacks back up, their economy has never been about housing like US... I am telling you what the chart is telling me. The disasters in an upcycle would be buying opportunities and breaking points during the downcycles, for example 9/11 in US during the down cycle vs the Katrina during the up cycle. Do you know where China is today? My guess is they are at the end of an overcapacity and peak of their booming cycle. Are there more and more demand or consumption and in fact liquidity worldwide to support China's evergrowing manufacturing capacity (where the real earnings are)?!? Not unless China buys the Treasuries around the world to support the liquidity, watch the long term rates...

Well, "Do you know where China is today?",your guess is as good as anyone's, I give you at least that.

Who says anything about their 'worthless shack'? That is some prejudice ignorant comment, taken from its face value. You do realize that from those 'worthless shack' housing the greatest manufactures of the greatest consumer boom in the human history? I am talking about massive infrastructure rebuild after the ice disaster. And money from around that 'wothless shack', like Singapore, Taiwan, Japan, Korea...already salivating over this oppertunity. They do not care what you care or not, believe me.

You do know that they buy US treasury with their funny money, as in trade surplus vs our trade deficit? The majority real wealth was kept inside that country. Eventually, not too far away future, they do not need to rely on heavy export but to utilize their broad production base to produce for domestic consumption. Yes I would worry they stop buying as much treasuries around the world, but I am less worried they can't support their own booming cycle.

That brings back to the possibility of their equity market advance to come.

[arbman]

Well, "Do you know where China is today?",your guess is as good as anyone's, I give you at least that.

Who says anything about their 'worthless shack'? That is some prejudice ignorant comment, taken from its face value. You do realize that from those 'worthless shack' housing the greatest manufactures of the greatest consumer boom in the human history? I am talking about massive infrastructure rebuild after the ice disaster. And money from around that 'wothless shack', like Singapore, Taiwan, Japan, Korea...already salivating over this oppertunity. They do not care what you care or not, believe me.

First of, I am sorry for what happened and lost lives, I just do not want to sound like an arrogant jerk here.

Very short: only in US that people are given plastic credit cards to spend after a disaster like Katrina.

I bet most of the damage in the housing is in the rural areas, I don't know and those are probably meaningful to the agriculture than manufacturing. I am sure they will rebuild their damaged plants, restore the power and clear any blocked roads etc, if there is any, but how is that adding to their bottom line unless they build them bigger and if they build them bigger, will there be more demand out there unless they sell their products perhaps cheaper? ... and then what happens if they already have an overcapacity or oversupply of goods?

I hope the best for them, but this doesn't sound like a new wave or boom of growth to me since it doesn't seem to be adding to the future net worth... BTW, it didn't add in US either, it only grew the money supply or inflation. But the inflation in China is different than the inflation in US...

You do know that they buy US treasury with their funny money, as in trade surplus vs our trade deficit? The majority real wealth was kept inside that country. Eventually, not too far away future, they do not need to rely on heavy export but to utilize their broad production base to produce for domestic consumption. Yes I would worry they stop buying as much treasuries around the world, but I am less worried they can't support their own booming cycle.

That brings back to the possibility of their equity market advance to come.

...China supporting its own economy with its own domestic consumption... and isn't this a communist country?

Just watch the treasuries...