Search results matching tag 'The Coming China Wars'

Ho Hum, Another Bear Market Summer Day

RichardSchwartz — Fri, 20 Jun 2008 14:08:00 GMT

UPDATE ON THE STOCK MARKET. Witten Friday, June 20th, 2008: 6:30 a.m.

Looked to me like yesterday’s stock market rally was a knee-jerk reaction to China announcing it was going to raise oil prices by 17%. Crude dove on the news while stocks jumped. But if one thinks it through, is China raising oil prices really such good news? The bullish knee-jerk was that higher prices for gasoline in China will mean lower overall oil demand from China and that will reduce oil prices globally. As we’ve been hearing a lot lately that it’s government subsidized gas prices in China, India and many other developing countries that isn’t allowing crude demand destruction to occur and thus lower global crude prices. I mean Americans drove 30 billion fewer miles from November through April and that hasn’t lowered prices. The bullish train of thought continues that if the world gets lower oil prices, everything will improve. But, with further thought, if gasoline prices go up in China, won’t that cause demands from Chinese workers for higher wages? I mean the very last thing that the current communist Chinese leadership wants is any revolution from the Chinese people. Already, super big picture investor and Chinese advocate Jim Rogers says its inevitable that China’s government will go capitalistic over time, what with the Chinese people getting a taste of free markets for the last decade or so and realizing that free markets are the pathway to future wealth. Remember: “To be rich is glorious,” is the Chinese people’s new mantra. Hm? … and won’t higher Chinese wages mean higher Chinese export prices, thus higher import prices for us here in the US since we import tons and tons of stuff from China? And thus higher consumer goods prices intensifying the already ongoing and tightening squeeze on US consumers? We’ve had stagnant wages for many, many years with no light at the end of that tunnel and now we’re seeing higher prices for just about everything; food, fuel, health care, taxes, etc. Guess the still entrenched bulls figure lower crude will lead to lower gasoline, diesel, heating oil, and food too, eventually. And since the trend is the thing in the stock market, meaning the markets start discounting immediately upon seeing a new trend emerge, stocks rose yesterday. Still, is a gas hike in China really going to bring down global energy prices? I mean China already raised gas prices late last year and that didn’t bring prices lower. And we now live in a very globally competitive world as all countries and regions want to secure their energy and other needed mineral futures. And food futures too now after the recent global rice shortage has exposed the fallacy that it’s ok to depend on other countries for food staples. Anyway, the first thought was that lower oil is good for stocks and thus the stock market got stronger as the afternoon proceeded, led by lower energy beneficiaries such as the Dow Transports. But while I turned bullish on the Transports back in late March, after technically it broke three fan lines and formed a Head & Shoulders Bottom, I’m now bearish on the group after the two-month dead cat rally ended and the transports formed a bearish, rarely seen Broadening Top, an indication of loss of intelligent sponsorship and leadership. Thus I would certainly use yesterday’s nice bounce back in the trannies to get out if you haven’t already. And, for aggressive traders, if you can find a way to short the transports, I’d do so in a small way now. Schwartz View: Again, yesterday seems like just another bounce in a larger bear market environment, caused by entrenched bulls who refuse to admit the primary trend has now changed and is now pointed downward. The problem with this bullishness -- investors refusing to admit they are wrong, a terrible habit in the stock market! -- is that it indicates we’re still in the early stages of this bear market. Again, safely position yourselves and, unless you’re a trader, take the summer off. Of course, keep reading my letters. Why? Well, let’s see, to improve your knowledge base of how the stock market works and to make sure you don’t miss the opportunity to get back in. Bear markets do have endings. The last Mama Bear market, 2000-2002, ran for slightly less than two years with the most damage coming in the 2^nd year. The last Papa Bear market, in 1973-1974 ran for two years. And that very famous big bad Papa Bear market, which this one is looking more & more like, ran from 1929-1932, or just under three years. So all bad times do pass.

China's Bear Market Bottoms Out On ...

RichardSchwartz — Mon, 31 Mar 2008 13:38:00 GMT

CHINA again and again. I write about China so much that I get bored with it. But China is the new global power and thus very important. Plus commodity advocate and long term perspective guru, who I haven’t seen call much wrong, Jim Rogers believes so strongly in China that he sold his NYC townhouse and moved to Singapore. And got his daughter a Mandarin-speaking nanny, all to live closer to where he figures the forthcoming action and big profits are going to come from next. Plus he predicted a big sell off in China, which by the by, fell another big -5% today, and that’s coming true. A sell off he figures will be a great buying opportunity. Plus, Jim not Jimmy, he hates that moniker although I’ve heard three people on CNBC including popular Dennis Gartman call him Jimmy recently. Obviously they don’t know him well if at all if they call him Jimmy. Sort of reveals some of the hot air on the Street. Anyway, I want to keep a close eye on China now. Because I have to agree with Rogers that China is riding a major wave and I want to get on that wave at some point although I wish one of these financial media types would ask Rogers some insightful questions about China instead of the usual mundane questions like what he thinks about the Fed’s latest moves. We all know by now that Rogers believes debasing one’s currency as our government and Fed is doing has never proved a good move in the past and won’t be this time either. I just wish someone would ask Rogers about China’s amoral behavior to start. Moving on, here’s what’s been going on in the Chinese indices: Date of Top % Move DownShanghai Stock Exchange Composite 10/16/07 -44%USX China Index (symbol HXC) 10/31/07 -36%Hong Kong 10/30/07 -28%Taiwan TAIEX Index 10/30/07 -24% (low on Jan. 23, 2008) * Rogers just mentioned that he’s buying Taiwan now because, even before the recent Taiwanese elections which the more pro-Chinese mainland candidate won, he sees more China/Taiwan economic ties going forward. This should greatly increase Taiwan’s prosperity piggybacking on China’s wealth. This is probably why Taiwan set a near term low back a couple months ago. Taiwan has an ETF (symbol EWT) which I’m looking to get into at some point, both trading wise and investment wise, waiting at least for the celebration on Monday, after the election, to subside. Schwartz View: My best guesstimate is that China’s stock markets bottom out during or around the August Olympics. From now until then, worldwide attention is going to be drawn towards China and all the bad, illegal, unethical, polluting and amoral activities and policies its currently following. Protestors will show up all along the Olympic Torch’s 100 plus day path and journey from Greece to China with reports in that London and Paris are scheduled protest points along the way. All the while Chinese inflation is out of control, food prices are way up and internal protests are going to add to China’s woes. And millions of new Chinese investors who opened their first stock brokerage accounts last year are now seeing their portfolios shrink which feeds on itself. The government itself has its hands full trying to reduce the smog that’s lies heavy over Beijing and is also in the process of tightening, not lowering interest rates, to do something about inflation caused by massive foreign money coming into China. Manipulating the stock market upward is the least important item on China’s agenda, at least for now and until the Olympics wind up. But when a bottom does come, we certainly ant to identify it as quickly as possible. Rogers, with his in depth studies of past bull and bear markets in any and all investments including directing his college students to help, and his world travels by car and motorcycle, has a long term global view I trust explicitly. And I can’t say that about many if any other pundits.

China's Shame Highlighted

RichardSchwartz — Mon, 31 Mar 2008 13:29:00 GMT

GLOBAL VIEW. China & the Summer Olympics. I watched the always depressing BBC (British Broadcasting Corp.) news last night at 6 pm. (Right after Inside Racing which this time of year showcases the 3-year old horses getting ready for the Kentucky Derby, coming up the first Saturday in May, shortly after the Masters. Add in the return of golf and the opening of trout fishing and this is a good time of year for me.) Getting back to business, the Olympic Torch just started on its footpath from Greece to Beijing for the summer Olympics. And immediately Tibet protestors began laying down in the way. Awful to watch them wrestled out of the way screaming, waving Tibet flags (I assume) and with red paint splattered on, and such bad publicity for China. When the torch reaches London, talk is there will be protestors there as well. And with China’s amoral relations with any and all rogue countries, etc. like Sudan, as long as China can get natural resources from these countries, we have to expect further protestation. Schwartz View: It’s going to be very hard for China to revive its stock market with China being cast in such a negative light for the next six months of lead up to the August Summer Olympics.

China's Amoral Stance Hurts

RichardSchwartz — Thu, 14 Feb 2008 16:19:00 GMT

GLOBAL VIEW. CHINA, THE OLYMPICS & STEVEN SPIELBERG. Trouble Begins! Looks like exactly what China’s government has to fear is starting to unfold. You see, famous American film-maker Steven Spielberg had signed up to add some glitz to the upcoming August Beijing Summer Olympics ceremonies. But yesterday he pulled out because he couldn’t reconcile his own conscience with China’s support of the Sudanese government. Because Sudan is committing genocide in the Darfur region of Sudan. Spielberg’s pullout came on the heels of a critical letter addressed to China’s president signed by Nobel Prize winners, Olympic athletes, writes, actors and political figures from around the world. The problem as I’ve written about before is that China is amoral, doesn’t care who it deals with -- dictators, rouge governments, anyone -- as long as they can get oil, gas, minerals, commodities in general to fuel its “factory floor.” China divorces politics from business but sometimes there’s ramifications. Schwartz View: China has already fallen some -27% of its October bull market highs and this news promises to reinforce this decline. Plus the horrific, 50-year snowstorms China just experienced which killed 69 million farm animals, collapsed 354,000 homes, etc, promises to cause food prices to jump even faster (China has put price controls on some foodstuff but controls eventually cause prices to rise). So China has big inflation problems which may cause it to keep tightening rates. Investors, beware China!

China in Bear Market

RichardSchwartz — Thu, 07 Feb 2008 15:13:00 GMT

Boy, during China’s recent sharp pullback of -29% off its October 16^th, 2007 top, investors have been anxiously waiting to jump back on board. Even well known, long term investor Jim Rogers, who’s very bearish on America now, has started saying he’s looking to buy more shares in China after this dip. He owns some Chinese shares but hasn’t bought more for some time. Well, investors bought China heavily on Monday fueling a +8% surge. Quite a “flashy-splashy” rally, so typical here in the US during bear markets. Why not the same technical and psychological phenomenon happening in China? Where the motto today is: “To be rich is glorious.” One has to figure greed reigns supreme in Chinese investor psychology today and investors will pile in as soon as someone says “bottom.” Schwartz View: I would think Monday’s big rally is more evidence that China’s stock market has entered a bear market.

China's Problems

RichardSchwartz — Tue, 15 Jan 2008 19:16:00 GMT

CHINA. The Big Dog. I couldn’t help but notice that: (1) China’s trade surplus actually shrank in December and (2) import prices from China rose again. In explanation, China’s trade surplus hit a record high of $27.0 billion in October, backed off to $26.2 billion in November and then fell to $22.7 billion in December. So someone, probably everyone in the US and Europe anyway are (likely) buying less after the Made in China tainted manufacturing scandal hit. At the same time China’s import prices into the US continue to rise. Which is going to translate into higher inflation after many years of the US importing deflation from China. Americans are now going to squeezed by higher prices by whatever China produces and ships here (which is just about everything). This trend was first reported by former Fed chief Alan Greenspan in his book released mid last year where he observed “… that import prices from China rose markedly in spring 2007 for the first time in years.” Schwartz View: So now China has its hands full, having to worry about the world buying less of the products while its manufacturing capacity is overbuilt. Plus China now has to worry about keeping its citizens happy. The burgeoning middle class has something to call their own, something to want to protect. Their new middle class lifestyles! And because of the Internet they have a way to gather together and protest. Consider the fascinating bullet points from a recent article in the Washington Post titled: Farmers Rise In Challenge To Chinese Land Policy.

· “About 1000 farmers gathered in the village meeting hall here at 8 am on December 19 and proclaimed what amounted to a revolt against China’s communist land-ownership system.”

· The goal was to make each family the owner of a private plot of land.

· This gathering wasn’t an isolated incident.

· In a few weeks, it spread to half a dozen other towns around the country.

· All of China’s rural land is owned by the state in spite of China now allowing some forms of private ownership in industry in its cities. This after the move to privatizing state-owned industry has been so supremely successful.

· The word of this movement spread over the Internet.

· China sent in the police to break these gatherings up and dismisses the whole idea saying peasants were exploited by private landlords before the communist takeover in 1949.

· But times are a changing in China.

Schwartz Summary: Jim Rogers, he of hedge fund and now commodity fame, predicted this movement in China, saying its only when people have something to protect that they will protest. Saying China’s government is going to have a hard time keeping what’s happening in China and the rest of the world from its people in the new world of the Internet. He predicts somewhere along the way, the communist regime will have to go away. And Peter Navarro, in his COMING CHINA WARS book says protests are happening every day all over China. The rest of the world just don’t hear about them. Bottom line, with the Olympics coming this summer, with the Made in China negative label to overcome, with inflation raging and with more and more Chinese wanting a piece of the rapidly expanding prosperity pie, China’s government has its hands full. In most all ways. Including keeping the political system communist.

China View: 12/14/2008

RichardSchwartz — Fri, 14 Dec 2007 14:28:00 GMT

CHINA VIEW. I just finished up Peter Navarro’s (who is on CNBC as I type this morning) most depressing THE COMING CHINA WARS (2007) and it’s description of China as a self-professed amoral country. Mr. Navarro’s expose threw me for a loop in my concurrence with long range forecasters that China is going to lead Asia and Asia is going to lead the world in the 21^st century. Happily, finishing Mr. Navarro’s book, I’ll review it this week, allows me to jump right into The Age of Turbulence which I can see right away is going to be extremely helpful to me in understanding what has transpired in the US economy by the #1 authority himself, the just retired Federal Reserve chairman. Schwartz View: Maybe there is going to be a different ending to the big picture story, a better story for the US than I’ve previously thunk [sic]. Even though Dr. Greenspan’s book is a 500 page, heavy hardcover, it may have to go to the beach with me.

China View: 12/04/2008

RichardSchwartz — Tue, 04 Dec 2007 23:32:00 GMT

CHINA VIEW. No one is talking about or highlighting any data about how America’s nervousness about buying anything Made in China is affecting China’s exports this holiday season. I did hear one report awhile back that those larger seaboard shipping containers, containers carry imports, coming in to the US west coast have been slowing. Seems to me this ugly feeling of having to "wash one’s hands" after touching any products Made In China has to be having a major impact. And when this news comes out – although I’m sure China will fudge it as much as possible and there are no controls on anything China does or says – some investors will wake up and start selling China. Actually China’s Shanghai Stock Index fell another -2.63% today and is now down -20% off the October 16^th top, so maybe Chinese investors themselves are worrying. I have to think the global supply pipeline from China is backing up big time in spite of Wal-Mart saying their sales are good. Because it’s extremely difficult to buy anything not made in China and we all HAVE to give presents for the holidays. But afterwards, who’s going to buy anything made in China? I’m really going to boycott China seriously. Schwartz View: I just started reading Peter Navarro’s new 2007 book: THE COMING CHINA WARS. Just to understand both sides of the story that China is the next great country. The first thing I noted was the book was taken out of the library eight times since July before me. More about the meat of the book later but for now those who read it before me have be concerned about buying Chinese. My growing fear is its going to be a boycott by America against anything Made in China which is going to cause a global stock market crash.