After three decades of spectacular growth, China passed Japan in the second quarter to become the world’s second-largest economy behind the United States, according to government figures released early Monday.
The milestone, though anticipated for some time, is the most striking evidence yet that China’s ascendance is for real and that the rest of the world will have to reckon with a new economic superpower.
The recognition came early Monday, when Tokyo said that Japan’s economy was valued at about $1.28 trillion in the second quarter, slightly below China’s $1.33 trillion. Japan’s economy grew 0.4 percent in the quarter, Tokyo said, substantially less than forecast. That weakness suggests that China’s economy will race past Japan’s for the full year.
Former chief economist for the International Monetary Fund and filthy Group of 30 operative Kenneth Rogoff is convinced there’s a bubble: “You’re starting to see that collapse in property and it’s going to hit the banking system,” said Rogoff, 57, who also serves on the Group of 30, a panel of central bankers, finance officials and academics led by former Federal Reserve Chairman Paul Volcker. “They have a lot of tools and some very competent management, but it’s not easy.”
As opposed to #1 with no tools and completely incompetent management, right? I’m not naming names, I need not.
“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”
I doubt Tim Geithner actually feels China’s hot breath on his neck because last time I checked, our Zimbabwe Ben printing press was still in full working order and recognized by the global economy as all-powerful mover of the cheap money-hungry monster.
China’s Shanghai Composite Index may drop as much as 6 percent after breaching the 250-day moving average for the first time in a year, Shenyin & Wanguo Securities Co. said.
The benchmark gauge plunged 4.8 percent to 2,980.3 yesterday, the most in eight months, on concern government measures to curb real estate speculation will slow economic growth. The index may extend losses until reaching the next support level of 2,803…
Yesterday, Calculated Risk noted that the Shanghai composite is continuing down:
Keep an eye on the Shanghai index (in red). It appears China’s economy is slowing.
This graph shows the Shanghai SSE Composite Index and the S&P 500 (in blue).
The SSE Composite Index is at 2,622.67 mid-day – down about 300 points from 2 weeks ago.
China’s economy is teetering on the edge of a major slowdown … according to a noted China strategist.
David Roche, an economic and political analyst who manages the Hong Kong-based hedge fund Independent Strategy, says the world’s third-largest economy is now on the brink, faced with the inevitable reckoning that follows an extended bank-lending binge.
"We’ve got the beginnings of a credit-bubble collapse in China," said Roche, predicting the economy will likely cool from its stellar double-digit growth rate to a 6% annual expansion as a result.
While that may not sound bad, Roche believes the collateral damage from the cooling will be anything but mild, as the banking sector comes under pressure from cumulative
In a teleconference with investors, Nouriel Roubini, professor at the University of New York, says he sees a new wave of losses. He was adamant: "The problems of Greece and the euro area are a sign of things to come." This was reported today by Brazilian newspaper O Estado de Sao Paulo.
Perhaps on a media offensive lately, Roubini adds:
"There was a socialization of the losses of the financial system and housing market, and now there are huge budget deficits and public debt almost doubled, so we see sovereign risk serious not only in Greece but also in Portugal and Spain, and spreading in the future to the United States, Britain and Japan."
The article mentions that, as we know, Roubini is not alone. Kenneth Rogoff, Harvard professor and former chief economist of the International Monetary Fund (IMF) issued a warning as well stating that Greece is just the beginning of a second wave of bankruptcies. After the financial turmoil of 2008, now it is the excessive indebtedness of the governments of advanced countries that will undermine the economy. Rogoff examined 800 years of financial crisis to write his book, This Time is Different: Eight Centuries of Financial Folly, with Carmen Reinhart. "There are several other countries on the radar: Ireland, Portugal, Spain." Outside the euro zone, Romania, Hungary and the Baltic countries would be other nations that are quite fragile.
He concludes that the pattern is repeated throughout history: after banking crises like the one in the world in 2008, after Lehman Brothers, there is always a wave of sovereign debt crises. To save the financial systems, governments enter into debt. A few years later, there is a wave of crises and sovereign debt defaults. That is, after a crisis in the financial system, there comes a crisis of sovereign debt.
Niall Ferguson, writing in the Financial Times last week, swelled the chorus of pessimists. "It started in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
One of the most dangerous philosophical contentions even amongst liberty movement activists is the conundrum of government force and prevention during times of imminent pandemic. All of us at one time or another have had this debate. If a legitimate viral threat existed and threatened to infect and kill millions of Americans, is it then acceptable for the government to step in, remove civil liberties, enforce quarantines, and stop people from spreading the disease? After all, during a viral event, the decisions of each in...
My title above is only half-kidding. Because everytime Wall Street pronounces “The Death Of” anything, that’s pretty much when it starts working again. But there is an important point being made in a new article at the Wall Street Journal about the current state of some of our biggest stalwart stocks and their underlying businesses, a point I made two days ago here…
Here’s the Journal:
A third of the companies in the Dow Jones Industrial Average have posted shrinking or flat revenue over the past 12 m...
After a one-day pause, the S&P 500 returned to rally mode. The index opened at its 0.20% intraday low, vaulted upward and then drifted to its 1.81% mid-afternoon high. It closed ninety minutes later with a trimmed gain of 1.23%. The popular financial press touted strong pre-market earnings (most notably from Caterpillar and 3M) as the rally trigger and blamed the afternoon fade on renewed Ebola worries (a doctor being tested in NY).
Looking ahead ... will Amazon's post-close earnings disappointment trigger a market struggle at tomorrow's open? Stay tuned!
The yield on the 10-year Note closed at 2.29%, up 4 bps from yesterday's close. The weekly average for the 30-year fixed mortgage was announced today at 3.92%, the lowest rate since early June of last year.
Here is a 15-minute chart of the past five sessions.
There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...
Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?
With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...
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What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices? In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...
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Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
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