Posts by "boli mekura"

@DaveO

ES volume profile:http://www.charthub.com/images/2011/01/30/ESRiskcap_multipledays

Haha :) Everyone is CIA, right? World conspiracy 101. Rothschilds and Bilderbergs, who else? :)

@Qingyu

You're right. Too risky to short oil given the geo-political backdrop. It could go vertical if chaos in Egypt and most importantly in Suez disrupts oil deliveries. Besides the problem in Egypt is not just Suez. The more deeper problem is that Egypt is a key US ally in the region and is one of only two countries in the region which has signed peace treaty with Israel (the other being Jordan). So if a new regime in Egypt is not so friendly to US and Israel, then the fragile balance in the region could be disrupted.
Moreover, have in mind that the Saudi king's health problems has escalated and as some analysts mentioned, this time the transition of power in Saudi Arabia may not be smooth. So this is another oil positive.
So I will also be very very careful if I decide to open short positions in oil.
GL.

China's currency
The rise of the redback
China will have to open its financial market if it wants the yuan to rival the dollar

The Economist

In 1965 Valry Giscard dEstaing, then Frances finance minister, complained that America, as the issuer of the worlds reserve currency, enjoyed an exorbitant privilege. Chinas president, Hu Jintao, does not have quite the same way with words. But on the eve of his visit to America this week he told two of the countrys newspapers that the international currency system was a product of the past. Something can be a product of the past without being a thing of the past. But his implication was clear: the dollars role reflects Americas historical clout, not its present stature.

Mr Hu is right that Americas currency punches above its economys diminished weight in the world. Americas share of global output (20%), trade (only 11%) and even financial assets (about 30%) is shrinking, as emerging economies flourish. But many of those economies, such as South Korea, still sell their exports for dollars; many, including China, still peg their currencies to the greenback, however loosely; and about 60% of the worlds foreign-exchange reserves remain in dollars.

This allows America to borrow cheaply from the rest of the world. Its government has been able to overspend, secure in the knowledge that its IOUs will be bought by foreign central banks, which are not too fussy about price. America would show more self-discipline, many Chinese believe, if the dollar had a little bit more competition.

Related itemsChina's currency: Stranger than fictionJan 20th 2011The rise and fall of the dollar: Go with the flowsJan 20th 2011
Could the yuan become a rival? Chinas economy will probably surpass Americas in outright size within 20 years. It is already a bigger exporter. It is prodding firms to settle trade and even acquire foreign companies in its own currency. That is adding to a pool of redbacks outside its borders. These offshore yuan are, in turn, being tapped by borrowers, issuing dim sum bonds in Hong Kong (see article).

But as the dollars history shows, economic clout is not enough without financial sophistication (see article). If foreigners are to store their wealth in yuan, they will need financial instruments that are safe, stable and easily sold. Dim sum makes for a tasty appetiser. But the main feast of Chinas financial assets is onshore and off-limits, thanks to its strict capital controls. The government remains deeply reluctant to let foreigners hold, buy and sell these assets, except under tight limits. Indeed, it is barely ready to give its own people financial freedom: interest on bank deposits is capped; shares are largely owned by state entities; and bonds are chiefly held by the bankswhich are, in turn, mostly owned by the state.

Over time China will relax its financial grip. But even if it could usurp the dollars role as the worlds currency, it will not replicate the American set-up. The United States takes advantage of the dollars position to borrow cheaply from the rest of the world, selling its assets in return for goods. China is a mirror image of this. It runs a trade surplus, selling goods in return for financial claims on foreigners. Its firms, households and government save more than they can invest at home.

A different kind of perk

Rather than seeking to borrow in its own currency, China may harbour the opposite ambition: to lend in its own currency. The exorbitant privilege it may covet is a lower foreign-exchange risk on its savings. On top of the trillions China has lent to Americas treasury, it also holds stakes in Australian mines, African farms and Swedish car companies. But because none of these assets is in yuan, China suffers a capital loss whenever its currency strengthens. It would no doubt like to share some of this risk with the rest of the world. The model is not America, but Germany, an international creditor which holds 70% of its foreign assets in euros.

There is a catch, though. No one will want to borrow in a currency that is only ever going to strengthen, increasing the value of their debts. So if China wants to yuanify some of its claims on the rest of the world, it will need a currency that can go down as well as up. To make people believe the yuan can fall tomorrow, China will have to loosen its currencys peg and let it rise faster today. China is different from America: it is a rising economic power and a thrifty one. But one rule still holds: China will have to open its financial system to the world if the yuan is to be the dominant currency.

@TG
This is not negative comment. This is called constructive critics. Constructive critics stimulutes people do better.

No one has 100% correct calls. But also no one is always right. So there is nothing wrong for a person to admit his mistake. In this way the others see that he is doing the necessary corrections. Otherwise there is even less guarantee that his current call could be right and not turn out to be like the previous SP500 call.

I also mentioned that now I expect the SP500 to start a correction. However at 1200 I did not expect a correction, which turned out correct.

And lastly, speaking of negativity, you are the one that is writing insults ("but knowing a person of your nature... you will be selfish"), so first lookk at yourself before name calling others.

Good luck.