Wow

China to invest $3 billion with Blackstone Group

China to invest $3 billion with Blackstone Group

US Bonds will fell the pressure...

Edited by redfoliage2, 20 May 2007 - 05:56 PM.

But characterized by the media in the same, tired ways. They actually agree to invest 4 billion, and economists immediately speculate that the number could rise to 200 to 400 billion-quite a leap of faith. Also mentioned in the same article was the "multi billion dollar" buyout of Chrysler, which, with investment in the company not considered was really a 650 MILLION dollar buyout of 80% of Chysler. That actual pricetag paints a bit different picture of the true value of some US equities.

The 3 billion is more symbolic than anything and hopefully indicative of much more to come. That's because 3 billion isn't much of anything in this market where 5 billion and 10 billion deals and more are the norm. In fact, of the 95 days trading this year, on 26 of them there has been an announcement of a 5 billion or more acquistion.

But characterized by the media in the same, tired ways. They actually agree to invest 4 billion, and economists immediately speculate that the number could rise to 200 to 400 billion-quite a leap of faith. Also mentioned in the same article was the "multi billion dollar" buyout of Chrysler, which, with investment in the company not considered was really a 650 MILLION dollar buyout of 80% of Chysler. That actual pricetag paints a bit different picture of the true value of some US equities.

The Chinese need to recycle dollars to prevent the RMB from excess appreciation. Today they do not "float" their currency, but will be under pressure to do so by Congress. So they are creating these avenues. In addition this gives them the ability NOT to buy as many treasuries. Then the US will have higher interest rates and a stronger dollar versus RMB. Inflation will show in the US as the RMB revalues. China will get political clout of holding the purchase of treasuries over our head. They will no longer just come over and offer to buy a few airplanes & grain.
The next couple of weeks will be interesting...

FEARLESS FORECAST
I am still long the market in my 401K and will let my trailing stop/chart take me out. However, personally I believe this will be the trigger to change the market direction down. Wall Street will figure out lower interest rates are not in the cards even though the economy will need lower interest rates to recover.
Then the reversal will be strong with China flow of funds, treasury purchases, & lower interest rates.

To quote Jim Kingsland "Interesting to note that President Bush and Blackstone founder Steve Schwarzman spent some quality time together back in April. "