Tuesday, August 31, 2010

The Daily Note - Your Tax Dollars at Work

Gone are the lazy, hazy, crazy days of Summer? Not so fast, we are still, in my opinion very much embroiled in them, which is surprising since usually the last week before Labor Day traders, if not on vacation are busy positioning for the Fall.

Not so this year. This economy and the seeming cross signals are keeping most guessing and many reacting rather than planning. It is the result of being led rather than leading, in case you are wondering what that leash is for. Yes, the government has put most businesses on a leash and they are waiting for the next reward for good behavior. Sadly, that is what comes from government handouts, be it named credits, loans, subsidies or bailouts.

Congress, busy sweeping things under the rug while on vacation, will be back with a new bag of tricks soon and they will be limping. You can bet dollars to doughnuts that they will not have your welfare in mind, but will only think on how to put things in good light before November elections.

Then, if you think it is over, think again, lame ducks can do an awful lot of damage before leaving for retirement.

But if you find yourself still puzzled, and still out of work, just put out a chair in your front yard, put out the sign: "Your Tax Dollars at Work" and enjoy the show.

Happy Trading, Living and Dancing

The Daily Pick - CMG

©DayTrading with Anni 2010 All Rights Reserved

Monday, August 30, 2010

The Daily Note - A Beautiful Life

We all get tangled in a web of charts looking for perfect setups, perfect trades, for another day in crazy markets. As I was finishing my daily routine, I realized I had not clicked on my music for accompaniment and perhaps that is why things were taking so long. We all need to take a break sometimes.

With only one thing left to do, the set up for my "Morning Note", I flipped on to listen to a list of tunes I haven't played for a while. What is nice about sharing music online is that friends share music back, and the list awaiting me was beautiful. With this crazy, chaotic, electronic fast paced world, it's nice to know we have friends because it takes friends and family for us to realize that we are living an awful beautiful life.

Happy Trading, Living and Dancing

The Morning Note

©DayTrading with Anni 2010 All Rights Reserved

Sunday, August 29, 2010

The Daily Note - Speaking of Taxes Part III

A revisit of a series that may be very timely for today, as Congress will reconvene considering taxation for the coming year of 2011. This 4 part series I wrote beginning of 2009 and I did not know then how bad it will get but, unfortunately, some lessons need to be learned again and again.

Please note my last sentence in reference to a "tea party" and that this article was written prior to the start of the current Tea Party Movement. If I had any help in it's conception, I am glad, but I cannot take credit.

Speaking of Taxes, Part III: It's Your Taxes, Updated

Since the seem to be magic number in this administration of who's rich is $250,000.00 and since this administration thinks those who earn that much and more should pay more, let's look the facts.

Using my previous 2006 model, because it has the latest and most updated data, in my previous article we saw that those having AGI earnings of $31,987.00 or more (top 50%) paid 97.1% of total individual income taxes collected.

So let's take it further; anyone who had AGI $108,904.00 or more income were in the top 10% of earners in 2006 and paid 70.79% of all individual income tax revenue.

Further we break it down to the top 5% of all taxpayers starts at above $153,542.00 paying 60.14% and the top 1% starting at $388,806.00 paying 39.89% of 100% of income taxes paid in 2006.

Which means that earners above that $31,987.00 mark and below $108,904.00 mark represented 40% of all individual tax payers and paid a total of 26.22% of individual tax revenue and coupled with the bottom 50% paying 2.99%, equals 29.21% of individual income taxes collected in 2006 were paid by the 90% of all taxpayers.

Now you may think that earning $108,904.00 is the definition of rich, and for most of the country that may be true.. but regardless of that, they certainly pay far more proportion of the income tax collected by our government than any other group.

Further, the top 1% pays even more disproportionally than any other group because consider that in 2006 the total number of returns in the top 1% group was 1,357,192 in number, paying 39.89% as opposed to the bottom 99% at 134,361,968 tax returns filed and paid 60.11%.

Break that down to each individual and you see that the top 1% paid on the average $300,893 per return as opposed to the bottom 99% paying an average of $4580 per return. So if you argue that the rich should pay more, I must argue back that they already are and that they have for far more years than visa-versa. If you doubt it, do the math.

Now, perhaps contrary to the popular belief, I happen to know that most people in the top brackets don't mind paying income taxes but they do resent the notion that they don't pay their fair share. They also have a very healthy philosophy on the subject that probably all should remember: being that you don't pay taxes on earnings you don't make, paying taxes means that you made money and not lost it. Of course if we keep rewarding those that don't work with "refundable credits" we will increase the population that takes rather than pays and shift further the burden of tax paying on those that do work, regardless of where they are on the ladder.

Keep shifting that burden to the top and you have individuals, as well as companies, tempted and able to leave the country, reducing the revenue to the country and creating a drop in the GDP as well, which may never be recovered. Of course there's another more dangerous possibility: That of creating another "tea party".

Thanks for Reading

The Daily Pick - ©DayTrading with Anni 2010 All Rights Reserved

Friday, August 27, 2010

The Daily Note - Speaking of Taxes Part II

A revisit of a series that may be very timely for today, as Congress will reconvene considering taxation for the coming year of 2011. This 4 part series I wrote beginning of 2009 and I did not know then how bad it will get but, unfortunately, some lessons need to be learned again and again.

Speaking of Taxes, Part II: It's Your Taxes

Did you know that in 2006 the IRS collected a RECORD (2nd year in a row) total tax revenue (individual and corporate) of $2,518,680,230,000? Did you really believe that we were in a recession when unemployement was at 4.4%? Can't collect record taxes unless there are record earnings.

Broken down that means that: Corporate revenues were $1,282,420,859,000 and Individual revenues were $1,236,259,371,000. Did you really believe that corporations don't pay any taxes?

Did you know that in 2006, 50% of all individual taxpayers paid 2.99% of total income tax revenue collected by IRS?

Which means, that 97.01% was paid by the other 50% or those earning AGI $31,987 or more;

And the top 10% earners, with minimum of AGI $108,904 earnings, paid 70.79% of the total collected individual income tax revenue.

Which means that those who paid 2.99% are totally beholden to those who paid the rest. So when those in the lower 50% who ask for more services, namely entitlements, handouts & credits, from the "the government" are really asking the other 50% to pay more taxes.

Which also means that your Representatives in Congress and your President who give and promise the entitlements, credits and services are demanding that the top 50% pay more.

Any questions?
Stand by for more ...

Thanks for Reading

sources: http://www.irs.gov/ http://www.taxfoundation.org

©DayTrading with Anni 2010 All Rights Reserved

Wednesday, August 25, 2010

The Daily Note - A Morning Note

No matter which day, there is always something to say about the markets in the morning. Predictions, views, hopes, dares all have a place from anyone with an opinion.

I'm no different, and since I've been posting many stories as the years pass by, I also like to be heard not just read. So my Morning Note is born and it may not be everyday, but I like to say what I mean and mean what I say: It's my view and my song.

Happy Trading Living and Dancing

The Daily Pick - The Morning Note

©DayTrading with Anni 2010 All Rights Reserved

Friday, August 20, 2010

The Daily Note - Speaking of Taxes Part I

A revisit of a series that may be very timely for today, as Congress will reconvene considering taxation for the coming year of 2011. This 4 part series I wrote beginning of 2009 and I did not know then how bad it will get but, unfortunately, some lessons need to be learned again and again.

Speaking of Taxes, Part I : Global Euphoria Is In!

The future is here! Global Euphoria is in! All other thoughts are anomalies. Fascinating isn't??

Some 3 years ago, unemployment was at a low, incomes were at the highest, even higher than 1999/2000 during the dot com tax revenue collection, and yet the economy according to the news broadcasts was BAD. Everyone was using the "R" word (for recession) and Congress was trying to have the Administration admit it. Listening to the TV reports then was like being in a different country than I was reading about. In those days I was deep into news headlines and reports reading roughly 2000+ headlines daily and many of which I read in depth as to the story. I was also deep into keeping people out of tax hell, something I continue do.

The reality was that tax revenues were at an all time high from all sources, which continued to tax year 2007. Three years of record high tax revenues collected from individuals and from corporations that was hardly noticed if reported at all by the media. How can it be so if we were in such bad economy? You don't pay taxes on borrowed money, you don't get to deduct interests on loans other than your mortgage and yet.. record tax revenues went not only to the federal government but to states as well. So how come they're broke? It's simple, because they spent it like drunken sailors who think the next paycheck is only 2 weeks away and they have no care in the world. That's the group you've entrusted with your hard earned dollars to be responsible about your well being and assure your future.

That is precisely how most of the Congress talks and walks. Correction: they talk as if they're kids in their first year away at college and they act as if there's more where that came from so what the hey.. let's whoop it up! Well, no more I hope. They won't notice that they're slowly strangling the golden goose, selling the cow and forgetting what came from both. Of course now that the revenue is reduced, they can think of only one way to solve this catastrophe and that is to raise taxes! The rich should pay! You can tell by what they do that they hold themselves guiltless for what has emerged as the greatest economic catastrophe since the 1970's. NOT DEPRESSION as so many would like to scare you with.

Yet scared you should be because the 1970's and early 1980's were no pretty years: 9.9% unemployment, 18-20% mortgage interest rates, not to mention record property taxes in California, plus high inflation. Ohhhh goodies.. just what we want again.. right? But hey remember: 4% unemployment was bad, inflation below 3% was bad, mortgage interest rates were bad at below 6% according to your media. It's what they were selling as a bad economy. We were all living in the streets homeless the way the media painted it.

My point is that if you don't think things through for yourself, you can be made to believe anything. So next time you're told to feel euphoric about an event or to feel morose about another, please take the time to check it out. Most likely than not, as with the markets, it's just an opinion based in fact .. or not.

What's been created is a government that on every level will reach into your pocket at every opportunity for your "greater good" to which you said: "Yes we can!"!!

Thanks for Reading

The Daily Pick - ©DayTrading with Anni 2010 All Rights Reserved

Thursday, August 19, 2010

The Daily Note - "Bad" Old Days

Frankly it's wearing on me. I yearn for the days when I was arguing for the "good" side. It was when the Feds, Congress, Media were all publicly pounding the economy and how BAD it was and how many people were out of work, and how everyone was suffering. Does it ring a bell? It should, because you were on the most part witness to it, if you were trading then.

The years were 2004-2007, yep they were; and I recall how the markets tanked on any bit of bad news on the hype. So pardon my disbelief that the markets no longer care now that the unemployment is truly at a high,9.5% conservatively, with record number of new claims filed in todays report,(500K) and the people who have given up or have surpassed the unemployment compensation limit are erased from the books, still existing claims hardly budged lower.

Take a look at the historical data exactly 5 years ago as reported on Briefing.com: Aug 18,2005 Initial Unemployment Claims were: 314K compared to today, Aug 19, 2010: 500K
Unemployment rate was 5% compared to today 9.5%
July Leading indicators were .1% compared to today: .1%
August Philadelphia Fed was +17.7% compared to today : -7.7%

Yet the media barely bats an eyelash, and traders go on as if all is just an anomaly and will soon blow over. Take a look at the Dow from 2005-2007. We are currently trading at Dec 05-Dec 06 levels yet collecting less revenue: (2005 - $2153.9B vs 2009 - $2105B ) It was lower or the same as the levels we are currently trading, yet we had what amounted to an almost 100% employment, record revenues collected and far less debt:
2005 - $7932.7 vs 2009 - $11,875.9.

So where do you think the markets are in comparison? Take a look.
Dow Jones Industrials: August,2005 high: 10719.41 compared to: August 2010 high: 10719.94. Nope, you can't make this up.

For 2010 we have a lower revenue outlook and with current unemployment and unknown taxation looming, how do we solve the growing revenue-debt gap to justify a higher market? One thing is for certain: it will not be done with the current policy. So are you yearning for the "bad" old days yet?

Happy Trading, Living and Dancing

The Daily Pick - $DJI

©DayTrading with Anni 2010 All Rights Reserved

Wednesday, August 18, 2010

The Daily Note - Just Another Day

I seem to question Wednesdays after Mondays the most. Mondays I look at as after weekend, Friday memories may fade so the questions arise about direction. Wednesdays because of the previous two days history, seem also to be in a see-saw mode, therefore difficult to gauge too far ahead. Will the momentum of the day before carry through or will there be a retrace? I only know that the day will tell going forward, and this day in pre-market hours seems so far to be going higher.

The best way to tell, is to watch and follow the trend. Sometimes easier, sometimes more difficult, but if we look at it as "just another day", instead of Wednesday or hump day, we will probably get over the reservation or expectation of a difficult day.

Happy Trading, Living and Dancing

The Daily Pick - Mid-Day Tune

©DayTrading with Anni 2010 All Rights Reserved

Tuesday, August 17, 2010

The Daily Note - Market Update

It seems no amount of bad news will hold the market down, which only proves that when a crowd want to go one way, it's better to go with the flow or get trampled by the throng. Going with the flow does not mean you have to be the leader only means let the momentum carry you.

What momentum you ask? Well I ask the same myself right now, as the momentum does seem to be lacking at times, yet invisible at times it may be, it's carrying stocks upward.

What I see is purely news driven, upgrade/target driven and perhaps driven by lack of anything else to do in these summer doldrum days.

When playing the markets daily, it matters not. When playing the markets for the longer term, it may matter a lot. The valuations matter. Not just the valuations by analysts, but real valuations of companies, which I tend to check here and there, I am beginning to wonder. Imagine when the DOW hits 13-14K do you really see the prices rise, which they must if we are headed back up to those levels, to keep with the valuations to the levels 25-50% higher? It may, due to inflation, but that is not valuation; it's merely imagination.

Happy Trading, Living and Dancing

The Daily Pick - Morning Note

©DayTrading with Anni 2010 All Rights Reserved

Monday, August 16, 2010

The Daily Note - Promises Promises

Not many things disappoint as much as a broken promise. We all make them, and we all received them although not everyone really believes in them. In fact many consider a promise, if believed, as a childish fantasy; after all, "Promises are made to be broken".

Still and yet, I think we all believe them, even if, only a little and we also all get disappointed even if, just a little. No matter how little or how much, a broken promise is a trust betrayed.

Think about the worst broken promise you experienced from someone close: your girlfriend, boyfriend, spouse, your parents, siblings, or even perhaps a salesman or business. Think about how the disappointment felt and how you may have sworn never to fall for another promise from that person, again.

Now, think about your own trading plan and think about the number or times you have broken the promise to yourself to stick to it. Each time you broke a promise to yourself, it disappoints as much as any promise from others. The only difference is that, you cover the feeling with excuses you may not have permitted with others. Each cover buries the feeling of pain a little more, but it teaches the lesson not, otherwise you would not make yourself yet another promise to: put in that stop, take that gain, stick to the plan or the all encompassing "This time it will be different".

The only promises that are made to be broken are the ones that will hurt your self-esteem. Each promise you make and break erodes your belief in yourself, and ultimately your trust in your trading plan resulting in an inability to trade.

The commonality of trading and a promise is trust; trust is the anchor, without which trading is like being adrift in the dark, which is the result of promises you can't keep.

Happy Trading, Living and Dancing

The Daily Pick - GOOG

©DayTrading with Anni 2010 All Rights Reserved

Thursday, August 12, 2010

The Daily Note - Equipment Frenzy

Much like photographers, traders know that there's nothing more important to maintain than their equipment. Without the equipment, there is no product, period. Having relied on computers and photo equipment a lot of my career days, I've been probably more mindful of it than most about upkeep, but despite of it all, there things beyond our control. Yesterday was such a day for me. I got frozen, dropped, stuck!!!

I will say that most of the time I've been extremely fortunate for having reliable bandwidth, isp service and computer hardware for most of my trading days, but it's the software that sometimes gets us totally flustered when the unknown creeps in; and in creeped an unknown with the latest Microsoft update, which wreaked havoc with some of my software.

I will not go into the frustrating details, let's just say that it took me out for the day; down and out which has not happened to me since, I honestly cannot remember. Thank goodness for that, and hope it will not happen again for another "I can't remember when" time frame.

I was sorry to miss a great downturn trading day, but I can honestly say today made up for it. I hope your day went equally well and I hope you will continue to follow and read my posts. If you wonder about what I do, I am posting a MidDay Tune for you to see, and I'll be back with some other tidbit tomorrow for you to follow. Meantime...

Happy Trading, Living and Dancing

The Daily Pick - MidDay Tune Pt.II a bit muffled.

©DayTrading with Anni 2010 All Rights Reserved

Tuesday, August 10, 2010

The Daily Note - Don't Ignore Reality

Wishful thinking and ignoring reality may take us for a nice ride, but eventually we all have to wake up and face reality. This economy is stuttering and has been trying to tell us that the solutions we have employed, supported and some embraced are at best driving it further into a difficult situation.

While many have been happy to bash the CEO of BP for failing to act soon enough about the oil leak, most do not realize that it takes time to solve a catastrophe never before encountered.

It seems that those very same people however, despite evidence to the contrary, insist on using measures that have been tried and found wanting in order to solve a catastrophe which has happened before.

With endless patience the relentless critiques of one, refuse to truly critique the other, even though the bigger damage is done by those not being held up to be accountable.

Interesting part of human nature regarding finances is that most just do not wish to admit lack of knowledge, failure and defeat about the method they have been using to create wealth. Many traders suffer the same and perhaps what they do is reflected in how others act. After all we need to change ourselves before we can expect others to change.

It may be finally time to wake up, if truly we do not wish to dream ourselves into deadly stupor.

Happy Trading, Living and Dancing

The Daily Pick -

©DayTrading with Anni 2010 All Rights Reserved

Sunday, August 8, 2010

The Daily Note - Capitalism as Virtue

Wall Street has been a long time target for those who wish the world to think that they are full of the rich who only want to get richer at the cost of the poor. Since Enron however, it has escalated new heights with call to oust the "greedy" & the "rich"; and there has been a "witch" hunt akin to a Stalinist purge led by Eliot Spitzer as New York State's Attorney General,  in his early years, but who listened to me?

Certainly Madoff did not help in the matter, but truth be known and really examined in any business, the good  outnumber the bad.  Truth also be known, all businesses are capitalist; in other words, they are doing it to make money for themselves. The other truth is, that so are the workers and it is the truth that many wish not to admit, but the recognition of this is very important if we are to survive the biggest onslaught of anti-capitalism since Marxism first raised it's ugly head.

The fact that all humans are capitalists at the core, and the recognition of it by the forefathers of this nation,  is the reason this country became the fastest growing and the strongest one since the Republic was established.  The opportunity to make the best and be the best at anything one chooses is the motivator and it is also the multiplier of more opportunity. There is no denying that out of innovation, inspiration grows and opportunity becomes evident, leaving only one missing ingredient: daring.  Daring to succeed.  In sum you have the recipe that makes the dough rise, pun intended.

This recipe is the truth for worker or business owner alike, and at once the best rose to the top regardless of stature. Workers became recognized for their mastery of a craft just as much as business owners flourished when they produced the best.  No better place than to look to Hollywood or sport teams for this example, but also look to Wall Street.

Unlike in Hollywood or on the sports field, more workers are able to partake in capitalism on Wall Street than anywhere else. They can benefit in the riches of many businesses through investments just as much as business owners can. They are the most basic capitalist system by being mutually invested in the success of a company. It is this truth however, which is hated the most by Marxists who have been  vigorously publicizing the opposite with much success.

Pitting one against the other by making one good the other evil in definition has divided many societies in history resulting in unfortunate and deadly consequences. The rich vs. poor, fortunate vs. unfortunate, farmer vs.worker, manager vs labor, CEO vs investor, where it succeeded, has been the main ingredient for taking control and suppressing  freedom. Unfortunately it has also succeeded here in the USA with the greatest speed during the past decade, culminating in the fastest, most powerful changes to freedoms enacted by the politicians currently ruling this country.

You see, while you were busy hating your partner in success, they grabbed your freedom and started controlling your life.  Proving yet again that there are no bigger greedy capitalists than the likes of those who wish to suppress your freedoms and control your choices: Communists, Socialists, Progressives, Marxists, Dictators all fit this definition, although they may masquerade as Democrats and Republicans. The battle that you may have had to fight for better wages under a capitalist free market system in this Republic, are nowhere near as difficult, hard or deadly, as the battle you will have to fight for the freedoms, choices or your life; but to recognize that, you will first have to admit that you, like all humans, are capitalists at heart.

Then, and only then, will you be able to defeat the social capitalists in the Capital and purge their power grabbing, entitlement rich arrogance out of the system and hold the Constitution as the law of the land once again.

When you become willing to fight for the best you can be, and be willing to defend your right to fight, will you be able to receive the best fortune. With capitalism there are no guarantees that you will succeed, there is only the guarantee that you may try.

Happy Trading, Living and Dancing

The Daily Pick - MDR

©DayTrading with Anni 2010 All Rights Reserved

Wednesday, August 4, 2010

The Daily Note - A Delicate Dance

Over the years, both subscribers and visitors of my blog have been amazed by some of my posts about the trades I provide.  Even though I emphasize that it is potential of the tape, I must also assert  that it is the the preparation of the trader which allows for the maximum gain.

Some days the tape allows for more than others, it is the preparation what helps us see what the potential may be, or if the tape will unfold as expected. Targets are not pulled out on the fly, targets are calculated some would say, but targets are often the feel of what is to come regardless of the news or mathematical probabilities.  As in life, it is the history of the tape that most reveals the likely future. Often this supposed "eyeballing" still worries me at times, but time and again, when I try other methods, I return to what continues to work for me.

I can blog, twit, and post the targets hit as I go along but  what people do not see and is impossible to twit, is the preparation it takes to hit those targets and for which there is no substitute. My prep work takes time. It doesn't take calculation, but it takes quiet, retrospect, introspect and trust.  Trust is the most precious part of my system: to trust what I see, to execute it when I see it,  is still at times the most stomach churning, especially when it comes to trades like PCLN and GOOG today.

Trust is my dance partner, my leader in the dance and hope is the temptress that will steal him away should I let go, making hope my biggest enemy in this delicate dance called trading.  Without trust, I 'm left alone on the dance floor to be jostled about by other partnered dancers, losing direction and watching as the temptress is laughing at me from the other side of my trade as I slink off the dance floor in shame.

But hope is not alone, hope has a partner, whose name is fear, working it's evil magic just as successfully should I let go of trust. Where hope is the temptress that prevents me from letting go of a trade,  fear is the doom-sayer which prevents me to enter one.  No matter how well planned, if I glance away from my partner's trusted eye, and continue the dance surefooted,  doom-sayer is ready to trip me. Should I second guess, or, for too long a moment pause about trade, I lose my posture,  opportunity is lost and I have to endure doom-sayer willingly mock my mis-step.

Trust is tested every day and is never well enough learned.  Trust in a system that works is where  success begins and is able to flourish.  Mastering this delicate dance, sometimes slow and sometimes fast, takes place daily on my dance floor and I hope never to end the music that accompanies it's delicate steps.

Happy Trading, Living and Dancing

The Daily Pick - Evening PlayList Review

 ©DayTrading with Anni 2010 All Rights Reserved

Tuesday, August 3, 2010

The Daily Note - Good Question, No Answer

In searching for the meaning behind current events, I was led to wonder.  What is the meaning behind every thing anyway?  Why is it that after all the hard work, hard won liberties, riches, learnings are eventually lost? Where does it go? It seems sometimes that no matter what we do, we just tend to lose it all.  It seems that the understanding of the first intent is lost in translation is lost in time and is lost in importance. It seems that like everything else, we live in cycles and the cycle includes dark ages which descend in order to appreciate the liberties that have to be won all over again.

When this country was started it was important to realize freedom from removed or remote government, freedom from taxation without representation, and freedom of government imposed religion. Over the years, however, these three important purposes have been altered with meanings far less important. At one time self- reliance was more important than dependence. At one time, doing for oneself developed more self-esteem than the recognition from others. At one time,  belief in a power unseen was more important than the belief in a power centralized in one man. Yet today, many, hold the latter three to be above anything else. Many considered those with star quality to have more import than those who have reasoning quality. Many consider  a degree more important than learning.

I was reminded of the above article I started about a month back, when I received an email; actually two. One from an  friend in Duesseldorf embarking yet on another teaching assignement on the philosophy of Kant's "Critique of Pure Reason" and one from a reader and as yet a stranger in the USA who seems also to be in education, but tells me he "agrees to disagree".  Interesting to me that these two letters arrived on the same day, and seems to have sparked in me a real examination of the latter especially.

Happy Trading, Living and Dancing

Yesterday, on the Dance Floor : + 13.62 points. Join us for the next dance: "MEMBERSHIP"

©Day Trading with Anni 2010  All Rights Reserved

Monday, August 2, 2010

the Daily Note - The Bull in China (Shop)

Is the current market headed for a breakout high? If so, it will, in my opinion be only on more hot air. Unlike the bull in current China where it has to wear a compression suit to prevent explosion, USA needs to worry about pumping enough hot air to keep the bull from crashing. Put simply, USA prints money, China suppresses money.

China is experiencing what we in the USA experienced in the 1950's  It makes no difference that their "oil" is coal and their "plastic" is housing. It's still a fast steep growth despite all the measures taken to slow it. The USA's growth during the 1950's, although equally spectacular,  was less steep probably because of less intervention and dollar availability. China has no such luxury, since they became dollar fat over the years thanks to the USA, so when building took off, it really took off; so steep that China had to restrict housing price growth, lending and ownership. Since the measures took effect the housing bubble cooled but we will have to keep wondering how long can the restrictions keep a lid on what is desired by the masses: wealth building.

China in order to keep increasing the GDP kept building which allowed people to earn incomes most likely never seen before saw homes to be the safest investment and most desired. So, housing investment speculation took off.   As long as China keeps building and also as long as China keeps restricting the housing bubble the bull is  relatively safe. China  has been around a long time, so I suspect they can keep the game going for a long time too, yet it needs to be remembered that now they are also tied to the USA, and I'm not sure how long the USA can keep up the charade.

On the other hand, despite the fast growth, China is not on board with consumer spending as some around the world wish, therefore imports are lagging. As China is lagging in meeting expectations of imports, and as the USA slows in being top consumers, the entire world economy may need to take pause. In which case we have to wonder about those lofty and heady bulls yet again.

Question is which one will inflate, deflate, burst or crash first; or will this delicate bull in China (shop) dance actually succeed?

Happy Trading, Living and Dancing

The Daily Pick -  BIDU

 ©DayTrading with Anni 2010 All Rights Reserved