Food Prices Rise 11% in China, Overall Prices Rises 4.9%; Central Planning Idiocy; China’s Impossible Dream
by ilene - March 11th, 2011 7:37 pm
Courtesy of Mish
Food prices continue to soar in China and the overall prices are up 4.9% officially. Nonetheless, the Chinese central bank has ruled out currency appreciation and has also ruled up curtailment of credit.
The New York Times has additional details in China’s February Inflation Held at 4.9 Percent
China’s February inflation stayed elevated on a double-digit rise in food prices, adding to pressure for communist leaders to cool surging living costs they worry could fuel unrest.
February consumer prices rose 4.9 percent while food price inflation accelerated to 11 percent from January’s 10.3 percent increase. That exceeded Beijing’s 4 percent target for the year and defied forecasts by analysts who expected the rate to ease.
Inflation, especially in food prices, is dangerous for China’s leaders because it erodes economic gains that underpin the Communist Party’s claim to power. Poor Chinese families spend up to half their incomes on food.
Speaking at a news conference held in connection with the annual meeting of China’s legislature, central bank governor Zhou Xiaochuan said inflation is stable, though at a "relatively high level."
Zhou ruled out major changes in credit or exchange rate policy. Analysts say Beijing has fueled inflation by keeping interest rates too low to ward off the global crisis and could cut import costs by letting its tightly controlled currency rise faster against the dollar.
"The main instrument for managing inflation is not the exchange rate regime," Zhou told reporters. He added later: "When we make adjustments to interest rates we cannot think about the consumer price index only. We have other objectives, such as the impact on liquidity in the market."
Beijing has tried to mollify the public by paying food subsidies to poor families and ordering local leaders to see vegetable markets have adequate supplies.
China’s Impossible Dream
- China does not want to hike rates
- China does not want to curtail bank lending
- China does not want the Yuan to rise
- China does not want inflation to exceed 4%
- China does want 7-10% growth
China is going to overheat to the point of implosion unless it does something it does not want to do. Sustained 10% growth, or even 7% growth is no longer possible.
China refuses to come to grips with that reality. Instead, Chinese banks keep making real estate loans for properties no one can afford and no one even…
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Cornfields vs. Oilfields (Infographic)
by ilene - March 11th, 2011 6:20 pm
Heres’s an interesting infographic by Online Schools, via Timothy B. Hurst and h/t Jr. Deputy Accountant.
Via: Online Schools
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Chart Porn: Here’s the Real Reason Gas is So Expensive
by ilene - March 11th, 2011 6:13 pm
Courtesy of Jr. Deputy Accountant
…besides the fact that oil is denominated in dollars and our dollars are being diluted on a daily basis by the money-printing maniacs at the Federal Reserve.
I present to you, my second favorite food-based commodity (after bacon pork bellies, of course), corn:
Corn was trading at $3.50 over the summer and is now just under $7. The U.S. government predicts corn reserves this year will be at their lowest level in 15 years due to high demand from China and, presumably, our gas tanks (who came up with that idea?! The cornfield mafia, of course.).
Just wait until these price spikes really hit the grocery store, we haven’t even had time to digest this yet. Must be that global savings glut at work or something, couldn’t possibly have anything to do with all the dollars we pulled out of our as*es.
Worse, look for an ethanol farmer bailout, coming soon to a cornfield near you.
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How Punk Rock and Pop Music Relate to Social Mood and the Markets
by ilene - March 11th, 2011 5:36 pm
Elliott Wave Internation explains How Punk Rock and Pop Music Relate to Social Mood and the Markets.
We can now add the recent uprisings in North Africa and the Middle East to the category of life imitating art — specifically, music lyrics. Those who lived through the 1980s might be forgiven for hearing an unbidden snatch of music run through their heads as they watched first Hosni Mubarak and now Moammar Gadhafi try to hold onto power — "Should I Stay or Should I Go" by The Clash. In Libya, where Gadhafi has used air strikes and ground forces against the rebels, The Clash’s other huge hit from 1981, "Rock the Casbah," describes the current situation so well it’s almost eerie:
The king called up his jet fighters
He said you better earn your pay
Drop your bombs between the minarets
Down the Casbah way
Punk rock played by bands like The Clash, X, The Ramones, and the Sex Pistols had that in-your-face, defy-authority attitude that crashed onto the scene in Great Britain and the United States in the ’70s and ’80s. It’s interesting that the lyrics can still ring true 30 years later, but even more trenchant is how the prevailing mood is reflected by the music of the times, as seen in this chart that Robert Prechter included in a talk he gave last year.
Popular culture reflects social mood, and the stock market reflects that same social mood. That’s why we get loud, angry music when people are unhappy with their situation; they want to sell stocks. We get light, poppy, bubblegum music when they feel happy and content; they want to buy stocks. In a USA Today article about music and social moods in November 2009, reporter Matt Frantz made clear the connection that Elliott Wave International has been writing about for years:
The idea linking culture to stock prices is surprisingly simple: The population essentially goes through mass mood swings that determine not only the types of music we listen to and movies we watch, but also if we want to buy or sell stocks. These emotional booms and busts are followed by corresponding swings on Wall Street.
"The same social elements driving the stock market are driving the gyrations on the dance floor," says Matt Lampert, research fellow at the Socionomics Institute, a think tank associated with well-known market researcher Robert
…
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Should We Be Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?
by ilene - March 11th, 2011 3:01 pm
Michael Snyder talks about the world’s addiction to debt and where that is leading us. He asks: "Should We Be Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?"
Another excellent financial writer, Mish, thinks fading Bill Gross’s move makes some sense, though he also stated "The alleged ‘relative value’ of emerging markets may turn out to be nothing but an ‘absolute value"’ trap. Admittedly there is not much to like on a long-term basis about US treasuries either.
"Should treasuries continue to sell off, it may very well be the case there are no hiding places at all, except for the universally despised US dollar." (Pimco Dumps All Remaining Treasuries in Total Return Fund; Six Reasons to Fade Bill Gross)
What do you think? - Ilene
Should We Be Alarmed That The Biggest Bond Fund In The World Has Dumped All Of Their U.S. Treasury Bonds?
Courtesy of Michael Snyder of Economic Collapse
Bill Gross, the manager of the biggest bond fund in the world, has forgotten more about bonds than most of us will ever learn. That is why the big move that PIMCO has just made is so unsettling. At one time PIMCO held more U.S. government debt than any other bond fund on the globe, but now news has come out that they have gotten rid of all their U.S. government-related securities.
So should we be alarmed? For months, Gross has been warning that the bull market in bonds is coming to an end, and now it looks like he is putting his words into action. Gross has often publicly decried the rampant government spending that has been going on over the last several years, and apparently he has seen enough. He is taking his ball and he is going home. This really is a stunning move by PIMCO. Gross must really believe that something fundamental has shifted. Gross didn’t get to where he is today by being stupid. But so far world financial markets are taking this news in stride. Nobody seems all that alarmed that the largest bond fund in the world has dumped all of their U.S. Treasuries. But with world financial markets in such a state of chaos right now, shouldn’t we all take note when one of the biggest players in the…
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Hot Math Chart Porn: Bill Gross Isn’t the Only One Dumping Treasurys
by ilene - March 11th, 2011 2:50 pm
Courtesy of Jr. Deputy Accountant
Bill Gross is either trying to call the government’s bluff or is serious about keeping his money safe. Either way, this might be the chance the Caribbean Banking Centers have been waiting for to finally surpass China as our second biggest creditor. First, as we all know, is the Federal Reserve. Oh sorry, that’s not really common knowledge but I’m sure that’s not on purpose or anything.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits.
Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website. The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.
Yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing, Gross wrote in a monthly investment outlook posted on Pimco’s website on March 2. Gross mentioned that Pimco may be a buyer of Treasuries if yields rise to attractive levels.
WC Varones asks the important question:
If the world’s biggest bond fund manager won’t touch the $1 trillion-plus in new issuance every year, to say nothing of rolling maturing debt, who’s going to buy Timmy’s junk when the Dirty Fed stops its QE2 monetization? That debt ain’t gonna monetize itself, you know.
It gets better. Whereas previously we had a good reference point to see how much debt China has been dumping, we’re now stuck from July 2010 on, when the Treasury changed the math. When I last checked major holders of U.S. debt in November of 2010, the chart looked like this:
But looking at it last night, it now looks like this:
If you didn’t know any better, you might think China gobbled up a whole bunch of new debt, but obviously the larger number is not reflected in the earlier chart, which clearly shows China adding only $3 billion in Treasury debt.
The explanation as to the huge disparity in numbers is a footnote buried on…
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For Fed’s Dudley, iPad comment falls flat in Queens
by ilene - March 11th, 2011 2:26 pm
That’s right, we can’t eat iPads, and the prices of houses affect sellers too, so the relentless decline in housing is not helping people who live paycheck-to-paycheck fill up their cars with gas and buy food. – Ilene
(Reuters) – The president of the New York Federal Reserve Bank doesn’t normally face a raucous crowd.
But in Queens, New York, on Friday, William Dudley was bombarded with questions about food inflation, and his attempt to put rising commodity prices into a broader economic context only made things worse.
"When was the last time, sir, that you went grocery shopping?" one audience member asked.
Dudley tried to explain how the Fed sees things: Yes, food prices may be rising, but at the same time, other prices are declining. The Fed looks at core inflation, which strips out volatile food and energy costs, to get a better sense of where inflation may actually be heading.
A better sense or an academic, sort of distorted sense? Maybe we need to change the operative definition of inflation that the Fed uses.
Full article here: For Fed’s Dudley, iPad comment falls flat in Queens | Reuters.
Pic credit: Jr. Deputy Accountant
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Japan struggling to ‘cool down’ nuclear plant, minister says
by ilene - March 11th, 2011 1:23 pm
There’s a slide show at CNN with more amazing pictures. – Ilene
Tokyo (CNN) — Officials ordered an evacuation Friday of residents living near a Japanese nuclear power plant, saying there has been no sign yet of leaks but indicating a struggle to "cool down" one of the atomic facilities.
A 8.9-magnitude earthquake led to cooling problems and a fire at two of Japan’s nuclear plants closest to its epicenter, said government officials.
Late Friday, Chief Cabinet Secretary Yukio Edano told reporters that people within 2 to 3 kilometers (1.2 to 1.8 miles) of the Fukushima Daiichi power plant have been told to leave the area. Those closer by — within 3 to 10 kilometers — were asked to stay home. Japan’s Kyodo News Agency estimated that the evacuation order directly affected about 3,000 people.
"This is a precautionary instruction for people to evacuate," Edano said. "There is no radioactive leakage at this moment outside of the facility."
Full article here: Japan struggling to ‘cool down’ nuclear plant, minister says – CNN.com.
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The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance
by ilene - March 11th, 2011 1:16 pm
Courtesy of Reggie Middleton
As I sit back and contemplate the content and delivery style that would be best suited for my upcoming keynote speech at the ING Real Estate Valuation Conference in Amsterdam (this is my first presentation to a large group where English is not the primary language), I am bombarded with news bits and bytes that confirm what I’ve been modeling, warning, fearing and preparing for – for nearly 2 years. That is almost 23 months to the date. What is it, you ask? It is the market’s return to the adherence of fundamentals and global macro forces versus following the whims of the concerted efforts of central banks around the world to openly manipulate real asset, equity and bond markets on a global basis.
Really, sit back and think about it. Put some thought into figuring out how difficult it is to successfully manipulate real estate (commercial and residential), stock and bond markets in just one major country. Then give the same thought to how difficult it would be to do the same in nearly all of the developed nations who participated in this crisis. The mere attempt to do so has loaded them up with debt at a time of marginal if not negative GDP and economic upside, a disgruntled populace ripe to ripple from the causes of social unrest rising from the rife economic conditions that the aftermath of incessant bubble blowing has wrought, and last but not least – fundamentally overvalued investment markets.
Was it really worth it? Is it going to last? I believe, and am rather confident in this belief, that we will be FORCED to finish what was started in 2008 – and that is the (re)commencement of the down leg of a major asset cycle. We had several concurrent booms (real estate – both residential and commercial, credit, fixed income, and equity) and an incomplete bust that failed to totally let the air out of the bubble. To make matters substantially worse, governments (on a global basis, mind you) wasted the resources of their countries and taxpayers in an attempt to fight the markets and the normal economic cycle by both re-inflating said bubbles (all of them to some extent) while simultaneously indemnifying and pumping full of undeserved capital, the massive agents of leverage which initially were the conduits of the bubble blowing pressure. As a…
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Tsunami Damage from 8.9 Earthquake in Japan
by ilene - March 11th, 2011 3:42 am
Earthquake Strikes North Japan; Tsunami Destroys Buildings
Bloomberg: An 8.9-magnitude earthquake, the world’s strongest in more than six years, struck the coast of Japan, causing a tsunami as high as 10 meters that inundated towns north of Tokyo.
One person was killed and many people are missing or injured across northern Japan, national broadcaster NHK Television said. Airports were closed down and bullet train services suspended. More than 4 million homes are without power, Tokyo Electric Power Co. said.
The quake struck at 2:46 p.m. local time 130 kilometers (81 miles) off the coast of Sendai, north of Tokyo, at a depth of 24 kilometers, the U.S. Geological Service said. It was followed by a 7.1-magnitude aftershock at 4:25 p.m., the service said.
NHK showed images of people getting medical treatment in northern Japan and footage of a tsunami sweeping buildings across farmland as far as 1.5 kilometers inland. Ships were smashed into harbor walls and cars were washed away. More here >
Photos of Tsunami Damage from 8.9 Earthquake in Japan
Courtesy of George Washington, writing at Zero Hedge
Big waves coming in:
Flooding:
Damage:
The long rectangular object in the bottom to the right of center is a big rig truck.
Yes, that’s a boat washing far inland onto farm land.Photos courtesy of Japan’s NHK television.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(