China is still growing, Export up 19% in October.

Rate of growth is lower then in September at 21.5%, but remembering the total Credit Crunch in Trade and general mood in the markets in October it is great news for that part of the world.

"China trade surplus rises but export growth weaker
1 hour ago
BEIJING (AP) — China's trade surplus swelled in October to a monthly record but export growth weakened amid a global economic slowdown that has battered Chinese exporters, according to data reported Tuesday.
China's global trade surplus rose 30 percent from the year-earlier period to $35.2 billion, the customs agency reported. The surplus with the United States rose 13.6 percent to $17.5 billion, while that with Europe rose 12.2 percent to $15.6 billion.
Exports surged 19.1 percent to $128.3 billion in October despite weaker global consumer demand. But that growth rate was down from September's 21.5 percent and sharply lower than the recent peak of 26.9 percent in July.
"The global financial crisis has had a considerable impact on Chinas export growth, which will continue to show weakness with recession in the U.S. and Europe," said a report by Jing Ulrich, JP Morgan & Co.'s chairwoman for China equities.
An unexpectedly sharp downturn in foreign demand for Chinese goods has led to a wave of factory closures and layoffs in the country's export-driven southeast.
The government has tried to help struggling exporters by boosting export-related tax rebates. Its massive stimulus package unveiled Sunday calls for efforts to compensate for weakening foreign demand by boosting domestic consumer spending.
China's import growth fell even more sharply in October, widening the trade surplus and reflecting weakness in domestic demand. Imports rose 12.4 percent to $93.1 billion, compared with September's 21.3 percent growth rate."

Gold, Silver and Miners are Up, when market is down. SSRI, SLW, GDX, AUY

Interesting US Dollar has manage to close Up today and formed "the hanging man", normally it will be a reversal pattern within our Triangle pointing to resolution downwards. Markets were under pressure in US even after Chinese stimulus package, very interesting divergence has formed when Gold and Silver manage to close positive after so custom selling pressure in New York session. Night and Morning Asia is Buying and during the day West is selling. Not today and Goldies have rallied closing strongly on positive side. Is it another sign that Us Dollar levitation magic is over? We will find it out very shortly.

Chinese Stimulus Package is a Poison Pill for US Dollar?

How Chinese are going to finance their Stimulus Package of equivalent 586 Billion US Dollar? Are they going to Sell part of the reserves which are mostly in Treasuries? Or they will at least buy less in the open market? Both ways it is not very positive news for a US Corp which needs to finance 1 trillion dollars deficit this year. On another hand it is great news for Gold, Silver and Commodities and all Asian markets rallied on this news. This is decoupling we have discussed over the weekend happening right now.

"China Stimulus Plan Will Boost Stocks Sentiment (Update2)
By Chua Kong Ho
Nov. 10 (Bloomberg) -- China's 4-trillion yuan ($586 billion) stimulus plan will boost stock-market sentiment, Morgan Stanley said, predicting short-term rallies for steelmakers, building materials producers and financial companies.
``Beijing has done the right thing to beat market expectations on stimulus package size,'' Morgan Stanley's analyst Jerry Lou wrote in a note to clients today. ``That is why we think market sentiment will improve.''
The stimulus package, of which 100 billion yuan is earmarked for this quarter, will be spent on low-rent housing, roads, railways and airports and infrastructure in rural areas. The funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site.
China's CSI 300 Index, a measure of local-currency stocks traded in Shanghai and Shenzhen, has declined 69 percent this year as the global economy slowed, cutting demand for the nation's exports. The stock measure, the worst performer in Asia, gained 6.3 percent to 1,783.19 at 10:11 a.m. today.
``Higher social welfare spending and rural reforms will help boost consumption,'' Jing Ulrich, chairwoman of China Equities at JPMorgan Chase & Co., said in an e-mail. While economic risks remain, ``the stock market will start to anticipate the positive impact,'' she wrote.
The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
To be sure, ``considerable uncertainties'' remain over the ultimate size of the plan, Goldman Sachs Group Inc. economist Song Yu said in an e-mailed report today.
``The amount of `extra' investments involved is still not clear at this point,'' wrote Song, adding that not all of the 4 trillion yuan will be spent by the government.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net "

Silverstone Resources SST.v - landing spot for Ben's Choppers

All those charts meditations on the way of things will stay without any positive implication if we will not be able, my dear Diary, to make some money from all what is left from our devotion and common sense practise after mind disturbing dollar levitation. So where are those waters to fish for what will be left of all those trillions coming on after paying bonuses to bail out bankers? We are pleased to help Mr Obama, because we all need weaker dollar and some positive inflation signs. As always we like crazy way of things: like to deploy your ten percent of the capital for one hundred percent return. Gold is a Call on USD going down, Silver is a Call on Gold and Silverstone Resources SST.v is a Call on Silver without any Time decay. Latest deal will double silver revenue in OZ next year and is a necessary step to bring confidence back into the company. You must do your own DD as always and can find some initial information on this blog.

US Dollar Risk Averse Trade is close to an End?

US Dollar Risk Averse Trade is close to an End? Very nice article in explanation for all my charts.

"Well, the one thing the US government might have had going forward was the strength of the dollar, which, despite America’s economic weakness, low rates and some evidence of Japan-style quantitative easing, was still going strong in recent weeks.
But there are now signs of slackening demand for the US currency, according to Bank of America’s Robert Sinche.
Specifically, one source of the the dollar’s recent rally has been the scarcity of USDs among G7 nations and emerging market countries. That’s now easing, according to BoA, with the provision of currency swaps, such as the $30bn for South Korea, Brazil, Mexico and Singapore announced last week. Intuitively, a mass of dollars coming into the system would ease upward pressure on the USD and that easing can be seen through recent declines in the Libor-OIS spread, BoA says:
While there are many factors that influence the LIBOR-OIS spread, particularly the stability of prime money market fund balances, the spread does provide some measure of the offshore demand for USDs, as does the pricing behavior action in the NDF markets. There are signs that these pressures are beginning to moderate in recent weeks as USD funding liquidity has become available on a widespread basis, suggesting that the scarcity demand for USDs is lessening significantly.
The second factor affecting the USD in recent weeks, according to BoA, has been the repatriation by Americans of foreign assets. Data from the Treasury TIC report indicates that US residents had sold foreign equities for each of the three months ended August, with total net sales of $21.6bn. That, however, may be slowing:
It appears that repatriation accelerated in September/early October, with weekly data (from AMG) showing the sharpest redemptions in international mutual funds during the first half of October. However, those redemptions slowed sharply during 2H October, falling to only an estimated -$0.2bn (2 weeks ended October 29) from -$6.4bn in the 2 weeks ended October 15. With global equity prices stabilizing in recent days, the pace of USD-supportive redemption/repatriation is likely to slow further in the weeks ahead.
The final factor, according to BoA, has been the recent appetite for risk aversion, which drove investors to the safe-haven status of USDs, as well as the Japanese yen. Using the VIX as a measure of risk appetite, BoA thinks the VIX’s recent fall means a “significant correction” in USD gains is likely. As goes the VIX, goes the dollar.
Finally:
A strict reading of interest rate differentials would imply the potential for a further 10% fall in the USD Index during the weeks ahead, about three times the 3.5% correction in place from the October 28 recovery high. While that magnitude of correction appears unlikely in the immediate future, we do note the seasonal forces that often weaken the USD into yearend. Moreover, in a global financial system characterized by a scarcity of capital, it is rather ironic that the currency of the largest capital importer (largest current account deficit) has been so strong in recent months. In this context, the strength in the USD in recent weeks also appears unsustainable, with broad-based gains in both developed (ex-Japan) and select developing-country currencies expected during the final two months of the year.
While predicting a weaker dollar pits BoA against Deutsche Bank and a number of other investment houses (see for instance, this recent Bloomberg article on the dollar’s strength), the final nail in the USD coffin (at least in terms of short- to medium-future gains), may ironically be the election of Barack Obama as president on Tuesday night. From Forecast’s Ray Atrill, via Bloomberg:
The more people feel positive about the election outcome, ironically, the worse it may be for the dollar. An improvement in the stock market, for example, as a barometer of improved sentiment and perhaps improved risk appetite, given what we’ve been through in the last year, typically is associated with a weaker dollar.
During the heights of uncertainty, fear and risk aversion, the dollar has been the beneficiary. At the moment, I’d probably see a dollar sell-off as a positive sign in terms of the international financial community’s judgment on the election outcome.
Probably the next shoe to drop is how quickly Obama makes announcements

http://ftalphaville.ft.com/blog/2008/11/05/17851/dollar-danger-ahead/

5 year Treasuries are rolling over into Inflation mode.

This area is crowded by everyone now: Hedge funds, Mutual funds and Banks. Supply is coming but appetite is diminishing, values are rolling over into Inflation zone with Yield over 3%. When you have Blue Chips in Dow paying dividend Yield higher then 5 year Treasuries it is time to allocate at least some of your cash to equities to boost returns. Everyone is watching everybody, you can not afford to lose in returns and miss the turn around in the market being over defencive in that world.

10 year Treasuries TNX - commercials are buying equities.

Here we have much more conclusive picture: Yield is rising, commercials are moving out of treasuries and into equities. Mutual funds have to match their assets allocations and have to sell Fixed Income and Buy Equities. This is the place were Curve is getting steeper - first hope for the banks to start lending. No deflation signs here as well. It is the place where the Treasury will try to lock in low rates in coming auctions for financing its 1 trillion dollar deficit. More staff to come - more discount: higher Yield to be offered.

30 year Treasuries TYX: Pension funds and Insurance are moving into equities?

These guys has helped us to call bottom on 10th of October. Difficult to consider the clear picture, but the divergence is apparent and killing Deflation argument already: yield is slowly moving up - treasuries trade has became too crowded. Only professionals are investing in 30 years to match their maturities on liabilities side, move here Up in Yield and Low in Price will create the last Bubble to burst - Treasuries. Last two days were very important: market was under selling pressure on Thursday, but treasuries were selling as well. Once only smell of inflation will come into Play music will stop here. Recent move up here is supporting our hope for USD breaking down from Triangle pattern with all positives we have discussed these two days.

Brazil EWZ Engine of Growth in Soutn Americas is coming back.

As brutal as it was flight to "quality" of US Treasuries with 1 trillion deficit as a collateral is ending. All emerging market is different from 1998, some of its parts are particular strong now. My love is in Argentina with risky TNR Gold TNR.v play, but Brazil is the place to move continent forward. Once fear of Default in places like Argentina will come down and stability will returns to commodities play this Farm of the world will get its share of excitement again.

China FXI - it is still there and growing.

Do not confuse market and economy in places like China. My call on Parabolic rise and coming down last year was right on the money, like it was excessive then so it is unsustainable on the downside now. China do not have to do all those bailouts USA did, but they can chose to do all those stimulus like in USA using their Reserves of 1.9 trillion. It is happening already: Agri reform - slaves will be able to sell their land for the first time, Infrastructure - railroads spending in trillions of local currency. Housing and debt problem are disconnected in China: level of borrowing still at its infancy compare to developed world. Nothing will be perfect, but markets have discounted China rising below 5% already. Oil below 100 and recent commodities prices are big presents to the hard working people there, they will scoop the world resources exchanging worthless US Dollars from the reserves for securing Supply of precious commodities.

Dr. Zinc and Dr. Copper thoughts on Global Economy. CZX.v, TNR.v

Why commodities? In the inflationary environment price of commodities could never fall to zero. It is determent by Supply and Demand. Demand is going down first hurting Price, Supply is determent by Price and Price is determent by cost of production. Until world is going into Depression with Deflation (credit contraction as a reason and price falling as a symptom) Demand is there at a particular price. Price will be adjusted by marginal project going out of production reducing Supply further. Fear here made this Bear masquerade possible: all commodities Trade is based on Credit. When you can not produce reliable Letter of Credit you simply can not Trade. Watch out what metals are telling us: Inflation is coming and Infrastructure will be the name of the game. Move above 25o will confirm these affirmations.

Another less reliable thought: now everybody is telling we are in recession: we were talking about it last year. With all those money coming into play and Unemployment of 6.5% we are not so far from Recovery even in US with new debased Dollar value.

Juniors - Life after Death experience. TNR.v, CZX.v, SST.v, BVG.v, OK.v, MGN

Couple of weeks ago when Juniors were down their Cash Value world seams to be Ending in that part of the world. Next step would be to pay you as a Buyer just to hold some Junior Mining shares. Why is it so? Do they have any excessive Debt? Do they in production with a Negative Cash Flow? Some of them are. So look now for the strongest: this is a life time opportunity to Buy into 2003 all over again: FED is on your side ReInflating economy again. Buyers are almost Non Existing, but Sellers could be gone any time with USD going down and China and Commodities firming up. Move up will be explosive once reversal H&S confirmed. Chinese are all over the world scooping what has left. M&A will be the name of the game.

Canada - is the Party time here again? CZX.v, SST.v. TNR.v

Very nice reversal H&S in the making as well, rising China and Oil stable above 60 will bring more fuel for the rally. More fiscally prudent and solid on commodities, recent sell off in Canadian Dollar was just as a honey for the bees. Positive total recovery from Fear will be the most benefit for Canadian market.

Gold and Silver Index XAU is more decisive about its intentions.

On this chart we have more clear positive signal with H&S reversal. right shoulder is already forming with Buy at PPO. Move above 100 will be important for this new born Bull.

Gold Bugs Index HUI - No bugs left? Watch the butterflies! SSRI, SLW, AUY, GDX

Picture is muted here. Two Left shoulders are much higher of the potential Head at 150.27. Danger here if the Gold will slip from Bearish Flag with US Dollar breaking up we can retest 150 area. I will not count on this: if the pattern will go as we have discussed in USD, VIX, DOW we will have fast shoot up above 250. Friday close above 200 is important, PPO is at Buy cross. With two Right Shoulders to be formed at above 227 and 250 we will have very strong reversal.

Gold - Inflation expectations are rising. GDX, AUY, ABX, NEM, RGLD.

Gold Inflation indicator is still to be confirmed by decisive move up from recent Low. On a positive we have Buy cross on PPO and very strong candles. Danger here is a break down from Bearish flag. We need US Dollar to come down and implosive move in Gold up with Short squeeze, like in the beginning of September. First step will be to close above 750 weekly and then above 800.

Gold Miners GDX H&S Bullish reversal.

After three legs down from July's high GDX is turning up in reversal H&S, it is important that RS will be formed above 20 for powerful come back. Watch the US Dollar as we have pointed before. With strength in Gold this sector will fly back to normal valuations very fast. We need just 1% of all money allocated to equities to change this game forever.

Basic Materials is coming back.

Basic materials are showing the same reversal pattern: economy will recover much later, but demand will come before it at some level and at some price. Here is the key: level of price is killing the Supply side more then Demand is diminishing. Decision to close the mine will come quick without the credit available, but to build a new one you need 5-7 years with all favorables in place. Study Zinc as one of the examples.

Dow Jones World Stock Index - Following Bullish Reversal

I am not sure whether there is any life on Mars, but Earth is still spinning around. We must overtake 188.36 for definite move and Decoupling to be recognised. It has already happen: US Corp will have 1 trillion Deficit after all these bailouts, China has 1.9 trillion Reserves.

Dow Jones Transportation is staging a Bullish Reversal.

Reversal in Dow DIA must be confirmed by Bullish Reversal in Dow Transportation: 107.76 must be taken out above 110. Oil below 100 will help here.