James V

53 Comments

    • China's Energy Strategy: Panda or Dragon? [view article]
      China is not a Dragon or a Panda.
      It is 100% a Tiger in every possible respect.

      In terms of energy security, China will go to any length even partnering up with their main competitor the USA.

      China had a special secret deal with USA to back their activites going into Iraq in return for oil. In return they proved very useful especially in using its influence with Pakistan.
      Aug 17 11:45 AM
    • The Consumer Driven Commodities Bull [view article]
      Per Capita income increases need to be put into prosepective of living cost increases and thus disposable income.

      Wages are not rising anywhere near to the rise in the cost of living.
      The factory workers have never been so poor. The cost of living in ruban/rural areas is up massively.

      Also lets not get confused about the reality of the development of factory workers consumer power. A lot of them in this lifetime will never buy cars/houses. As things stand most of them can not even afford to buy what they help make.

      Same with construction workers, if you are a builder in the UK. You make good money. Can buy a car, buy a nice house, have nice LCD TV. Construction workers in China can not afford any of the above. Sometimes they do even get paid.

      The wage differential is huge and until that reduces, we will not see the sort of consumer development everyone thinks will happen.

      However of course, due to the immense size of China's population, you only need a low percentage to develop into fully fledged consumers for increadible consumption trends to emerge. This is sure to happen as China develops its manufacturing base to a higher added value chain and the service industry develops further.

      In terms of the USA, effectively their entire economy is flawed.
      Wealth is created through financial manipulation and the printing of money. Which is then backed up by military strength. This financial manipulation and monetry creation is then sent down the chain to the consumer who has artificial wealth to spend which creates the consumer sector strength.

      Problem is this is unsustainable. Sept 11 we saw the military chain broken. The credit crisis/housing collaspe then broke yet another chain.
      The solution, print more money and send more printed money to consumers in the form of rebate cheques.
      Aug 14 12:50 AM
    • Six Reasons To Buy China Soon [view article]
      China is a Tiger - NOT a Dragon.

      In terms of Inflation India is probably nearer 15% - 16%
      It has to be said that 1000% increase in property price also reflects a very worrying statistic. China has seen 500% gains. Anything over that (regardless of fundamentals) really reflects enviroment of extreme inflation.

      I also believe that India and China are two completly different economies. And that analysing the future of one to predict the other is useless. I believe the single most important thing about where China is heading has to do with the huge reserves the government has and the pro-growth/pro-employm... government officials back-pockets policies.

      China just spent 80 billion USD on the Olympic Games to show the rest of ther World its power etc etc.

      They really would not think twice about spending 200-400 billion USD out of the 2+ trillion they have to stimulate demand during the next few years of hardship.

      China's cushion is huge.

      Aug 14 12:30 AM
    • Want to See a Bursting Bubble? [view article]
      rlirph, this chart in the article can be of very valuable quality.
      It does in effect show the most likely supoort level and possible capitulation point in the market.

      Also it puts the 'pyramid selling scam' we have seen over the last few years in China into prospective.

      Take a look at the chart, especially the breakout point high in 2001.



      Aug 13 07:53 AM
    • Olympic Excitement Doesn't Impress China's Market [view article]
      We are getting closer to a low. But because the market is effectively a closed market. There really is not enough liquidity, this can be seen by studying the volume. In volume terms we have not even had a extreme high volume selling day since this bear market begun. It takes very little selling volume to cause drastic price moves on the downside.

      To me the Chinese Market is fairly priced as we stand (not cheap/not expensive), but I feel we are going to move quite a bit lower because of the maturity of the market/participants/fi... industry as a whole and the liquidity problem. I also get the distinct feeling that not only have we got insiders dumping stock because of lock up expirations (Chinese Government + officials included as well as foreign investors, inside directors etc),but we also have a lot of companies raising funding by selling stock on the open market due to there not being a developed bond market.

      In terms of the Chinese Government stepping in and saving the day.
      Lets all be very clear that they and their associated links have been among the biggest sellers in the pyramid stock scheme we have seen unfold over the last 3 years. I think they will probably support the market by introducing a number of stimultitive policies shortly but will only start physical buying if we approach 2245 (shanghai market) which is the June 2001 peak that we broke out from in Dec 2006.

      I also think that the ongoing disregard to obligations arising from contractual agreements between foreign banks/investors and Chinese Banks has left a very sour taste in the foreign banks mouths. Infact I would go as far to say that they no longer feel they can trust (and by definition control risk) when dealing with financial transactions with Chinese Counter-Parties. As well as this a number of foreign banks were blocked by the Chinese Government from selling stock in Chinese companies. The reason being the poor performance of certain investments made by the Chinese Sovereign Fund. In particular Citi Group wanted to sell stock in a Chinese Bank to raise funds due to its ongoing solvency issues. This does not bode well to encourage more foreign Investment by the QFII instituitions in the domestic market.

      I think the combination of the above bodes quite badly for the market in the short term. And makes the chances of getting close to 2245 very possible. If we overshoot to 2245, it presents us all some great opportunities.
      Aug 11 09:40 AM
    • Euro Slumps to Five Month Low Against the Dollar [view article]
      THANK-YOU - THANK-YOU - THANK-YOU

      The charts you have displayed are EXCATLY what the big financial institutions/central banks are looking at.

      Its a very clear picture, made even clearer by you article.
      Aug 09 12:03 AM
    • In China Money is Way to Loose, Not Tight [view article]
      standup trainer, get a life. Your hidden agenda undercuts the veracity of your comments. Jul 14 12:19 PM
    • China's Impending Financial Crisis [view article]
      The RMB NDF Implied Rates can be very volatile and has no real estimative value looking out longer than one year. There is no way that the RMB will be sitting at 6.0-6.3 in 3 years. The world will not Stand for it especially as in real terms the Yuan has not been revalued at all against the USD in real terms yet. The Euro has strengthend more against the USD than the Yuan. So far we have seen dollar weakness not Yuan strength. Indicative by looking at the other rates against the Yuan.

      The RMB forwward market, FX swap markets are essentially closed and controlled by SAFE. SAFE have been closing access to the FX swap markets recently citing 'national security'. In other words they dont want the market pricing these instruments, the Government wants to be able to keep on manipulating the currency and its associated instruments.


      Lots of very likely sceanrios could effect the RMB rate very strongly, the forward market does not price in these scenarios as it is lagging due to it essentially being a closed system.

      For example it is becoming ever likely that the USD is going to start its next leg of weakness after consolidating for the past few months. We could see a 10% decline very quickly across the board. Especially with the solvency crisis hitting the USA financial institutions and the fact US interest rates are going nowhere this year.

      This will have a direct effect on the RMB rate, especially with the Europeans demanding that China takes some of the FX pain that they are taking with the falling of the USD. This will not show up in the forward market until it hits the spot market. Really the spot market is the pricing mechanism for the forward market. Thats the reality.

      The Chinese Central Bank is already very worried about high inflation, however I predict shortly that we are going to see a huge uptick in broad based inflation because now all producers are starting to raise their prices in line with the increase of their spiralling costs. Everything is going to go up. EVERYTHING


      They will then be left witht he reality that RMB rate is the only way they are going to be able to get inflation under control. The second all the powers at be in China believe that they have an advantage in faster RMB revaluation, the rate will move very quickly in the spot market. This shift in desire can not be predicted far into the future in looking at RMB forward rate. In fact the totally opposite, SAFE will drive the RMB down to flush out speculatiors before any major revaluing upwards. If you watch the market like I do, you will know this happens a lot.

      In terms of depreciation caused through otuflows, if the Chinese believe that Money Outflows will put the system at risk when the RMB hits an equilibrium rate. They will simply put in place measures to stop money going out of China. The Chinese really would not think twice about doing this. And believe me it will be a lot harder to get money out of China if they do this than getting it in.

      I very strongly believe that if the USA does not have near term plans to convert the USD into the Amero. That they will be looking at a rate of 5rmb - 1 USD in the next two years. Threatening trade embargos if they dont get what they want. Their stance will become ever harder especially as they now realise China is not a friend at the UN table. As soon as Iran/Iraq situation is under control from the view of the US. And the fed have printed enough money to make the financial system solvent again, the USA approach towards China will change drastically. This is the risk I see in the Chinese system going forward.

      Jul 13 11:33 AM
    • Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
      Think-About-It - all the USD/foreign currency that is sent to private corporations can not be taken out of the bank by the private corporations. Instead the government the government puts it in its pocket and prints RMB to give to the corporations.

      To keep RMB low the Chinese Government holds the USD.

      This is basic crude example. But it effects the closed currency system and gives an idea how they keep the yuan under control.
      Jul 11 08:54 AM
    • China's Market is Happy Again [view article]
      The olympic rally is here...

      Shanghai developers are cetainly in the spirit, I have never seen so many ex-council (government owned) local housing being knocked down to make way for new projects.

      After seeing the building booms in 2003+2004 and then again in 2007, I can say that what I am seeing now takes the prize.

      Office Buildings
      Luxury Appartments
      Retail buildings
      Shopping Centres
      Subways

      Where ever you go, all you can here is demolition, drilling and building. It truly is amazing. It seems that the policy makers only concern and foucs is food prices, property prices and making sure hotmoney does not increase the speed of revalaution of the RMB beyond their control. The second they see these things stabilising for a month (even if through manipulation) they become pro-growth again.

      Anyone that studies the price of goods in China knows that Inflation is not decreasing accross the board. We have some decreases in food prices. And cab fares are still stupidly cheap. But everything else is going up. If its not going up in price the quality is going down.

      Inflation is getting so bad, that Japanese goods are starting to look fairly priced now!!

      A lot of the domestic factories are raising the prices of their goods right now that are sold through their agent networks. Especially furniture, air conditioning and other home goods. This is at the current time of deminishing demand due to seasonal factors. When aggregate demand booms even higher during the Olympic period prices are going to skyrocket across the board. I see this period starting in a matter of days not weeks.

      I can not see how prices have any chance of stabilising going forward until at least march 2009. Between the Olympics, Hot Money Inflows, Shanghai Expo construction spending, peak manufacturing demand from international customers stocking up for Christmas. We have huge demand to the end of 2008.

      Bringing us around to Spring Festival which starts slightly earlier this year.

      Unless the Chinese government speed up revaluation of the Yuan post olympics. Then it seems to me it is a one way bet. Who knows it may be cheaper to live in the Uk soon.

      Jul 09 01:16 PM
    • Time to Hop Back Onboard the Asia Express? [view article]
      As the market stands there are a lof of fundamental bargains that value investors would feel comfortable buying. There are also a lot of overvalued stocks with fake accounting skeletons in their closet. Its a stock pickers market. Margins are being squeezed by in inflation in a lot of market sectors but there are also a number of companies that will benefit from RMB revalution.

      I also believe that prices will go up in China in every sector, this will increase margins. If demand does not wane as prices move up. I think that a lot of chinese companies will have a good year. Especially with the olympics around the corner.

      The Olympic may have started today...
      Lets see if we can get higher than 3000 in the next few weeks.
      Jul 07 09:58 AM
    • Path Dependency in the EU and U.S. Economies [view article]
      Oil can not be priced in Euros because the European Bond Market is too small to cater for the volumes. It is also does not make sense for the Arab oil producing nations to unpeg the dollar because there economies are based primarily on selling oil (which is priced in USD). They can and are making adjustments for the USD debasement by pushing up the price of oil.

      There are s few factors behind the surging oil price (apart from s+d):

      China is trying to buy as much oil as possible as a means of flight to quality out of the USD. China is not stupid, they can see that the US is effectively devaluing their dollar and pumping up inflation to export their monetary problems. China is also aware that a contingency for a dollar crash is already in place which involves the a financial Treaty between Mexico/Canada/USA and involved the creation of a new currency to replace USD - the Amero. All debt owed to China will be devalued and priced in Ameros at whatever price Canada/Mexico/USA decide. If the Amero is put into circulation.
      This incidently is how USA is going to write off it debt if the worse comes to the worse.

      The speculators everyone is blaming for pushing up the price is actually an agency arm of the Chinese government. They are buying paper oil with their useless USD. The other speculators are the oil producing nations buying paper oil, restricting supply to drive the price ever higher. It could be argued that the Oil producing nations have waged an economic war with the USA covertly. Or it could be argued that they dont want to be holding devalued USD monopoly money and so are manipulating the price of oil to reflect loss of USD purchasing power. **REAL INFLATION**

      For those who want to look at the real numbers go to:
      shadowstats.com





      Jul 06 04:06 AM
    • Hot Money in China [view article]
      Almost all the Hot Money I see personally entering into Shanghai at present is oversees Chinese Money. They have the best access to vehicles to get Hot Money in. Recently I have seen huge groups of affluent oversee Chinese business men flocking into Shanghai. I spend a lot of time at luxury developments in Shanghai and can confirm that now the oversee Chinese/HK/Taiwanese are the main buyers of luxury properties. Happy to take a 3% yield.

      Also a huge amount of hot money is flowing into Service industries in Shanghai. I can not believe the amount of new resturants etc that are opening. Its totally out of control, especially so late in the business cycle.

      I also believe that a number of International Blue Chip companies have incorporated the RMB revaluation in their business models.
      Especially clothes stores who are not being hit by inflation so much.
      The Blue Chips objectives seem to me to be shifting to creating increased revenue through expansion even at the expense of profit margins. Calculating that they will benefit from revalution when repatriating their funds at a later date. For USA coprorations this also presents a very good hedge against 'the falling purchasing power of the USD'

      In terms of the deal values in Shanghai falling, this is not very indicative of Shanghai market because we have been experiencing a very severe 'mold season'. The rain, dampness and weather for the last month has been so bad, people have not had the ability to go out and buy property. I myself have been restricted on looking at some developments.

      I can confirm that the market prices I am seeing are still strong. Which is quite positive considering the events that have occured in China recently.
      The property developers in Shanghai are very very well capitalised so are not at risk of cashflow issues 99% of the time. However it is only a matter of time before some serious cracks develop. My belief has been that hot money flows, the EXPO and domestic inflation would take the Shanghai market another 20-30% higher. But I am getting very concerned of the immense problems in the system here.

      The government has enforced very very strong policies. But the fact remains they have printed too much money and its still in the system. The SME can not access it but the Bigger companies can. Therefore their policies are stimulating to the larger companies because they can build bigger monopolistic share. But it is killing the SME who need to borrow in other ways.

      Their tightening policies are in effect inflationary.
      The bigger companies are expanding at stupid speeds because of their 'guanxi'. The SME are raising their prices because of higher interest/borrowing costs.

      This presents an interesting picture: -
      The low value of the Yuan is causing monetray inflation.
      Which is causing excessive investment from Hot Money flows.

      To compensate rather than revalue the Yuan the government's draconian tightening measures are causing cost-push inflation because of the increased cost to do business of the SME.

      The government is then subsidising certain products which is causing demand-pull inflation on world oil prices for example. In order to compensate from cost-push inflation domestically.


      I also dont think that the only Hot Money issue is only international money moving into China either. Domestically speculation on businesses is rampant. Anyone who borrws at 50+% is at best speculating in their business on the premise of making quick money.
      To me this money is also Hot Money. It certainly is very pro-cyclical and very very volatile.

      It seems now days everything in China is very volatile.
      Jul 05 02:12 AM
    • Dow in Secular Bear Market When Priced in Ounces of Gold [view article]
      shadowstats.com

      This gives you idea of true inflation in USA. The gold price is very indicative of monetary value but is subject to manipulation,speculati... etc which alters its indicative value.

      However the bottom line is the same. Taking inflation into consideration. The USA markets have been smashed. Corporate profits are not rosy. People's wages have dropped in real terms.
      The USA has lost its buying power.

      The truth is the USA economy has been very bad for at least 10 years. To compensate the USA government has printed more money which most of it has been wasted. The Government created the Technology Bubble to increase tax receipts and create an investment orgy to develop technologies so the USA would have some competitive value in at least one industry (as well as develop technology in the weapons industry). The Government is stimulating inflation to devalue its debt holdings.

      The Iraq war, which was hoped to make Energy Security more secure and add to the Economic Wealth and Power of the USA has to date backfired.

      Things have been very bad for a very long time.
      What we are seeing now is the compensatory effect from all the bad policy decisions over the last 10 years.

      It baffles me, why the USA government does not re-build a decent manufacturing base in the USA and increase import/duty taxes to stimulate domestic manufacturing demand. What the USA needs the most is to add value and produce. Not to artifically drive up asset prices using clever money printing techniques and derivatives. Then send all the money that has been artifically created to other countries like China/Middle East.

      Some tough decisions need to be made.
      But no one is making them.

      This is because of the hold big business has on the countries powers.
      Jul 03 09:25 PM
    • China's Negative Economic Outlook [view article]
      But the chinese government has 1.6 trillion usd in reserves.
      There is no risk at all of soverign default ont heri part, unless the reserves fall under a trillion.
      Even then they still have a lot saved up for a 'rainy day'


      Jul 02 11:43 PM
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