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thanks for posting the link--
One of my favorite places for reviews is, oddly enough, at Amazon ... just google it.
that said, I tell you why I own the Edge 205 (minus the HRM and cadence options) ... way back when... as a younger man... when I raced... when I trained... I used to focus... a little too much. It's one thing to focus at full power doing intervals, it's another thing altogether, to not take a piss for fear of ruining my average speed count.
yup, I was that focused and being that focused, I never enjoyed training, hated it, until I started riding again without the computer. So I ended up using two bikes, one without a computer for training and another with a basic unit just to monitor where I was at in a long bike race, because I could never remember what lap I was on.
Now the reason for having a GPS unit has nothing to do with monitoring my fitness and everything to do with optimising my cycling routes-- it also has something to do with my lousy sense of direction. My favorite feature is that it displays my general direction.
Going South when I need to be going North is certainly a problem I was having until I introduced myself to the Garmin. <vbg>
-- it's a must own item just for that reason.
yeah, I have an interest in seeing some of the mountain stages. I also have an interest in finding some of the best riding routes in the world ... to simply state that I am a total map fanatic is an understatement, and riding on sacred ground and being able to map my journey at the same time is nirvana.
Anyway, awhile back I bought a Garmin Edge GPS system for my bike(s) and you can import your rides into these neat mapping programs.
Actually one of the best programs for this "Ascent" is available only for Mac
http://www.versiontracker.com/dyn/moreinfo/macosx/31886
-- be sure to check out the example files, you can even take the data and export it into Google Earth and do a "fly-by"
I've even posted some of my rides here:
http://trail.motionbased.com/trail/user/orange-kick
...on Floyd-- he's in a bad spot of bother, he gambled, and won the tour, yet in the end, he lost everything including the trust of his mother.
Isn't this what this is all about...?
To prove to his beloved parents that he did not become corrupted by leaving the farm, by leaving his faith...?
He's paying dearly for his mistakes.
...as for Basso, it's not so personal.
...as for me, I'm still a fan, it's the only sport I follow and I'll probably watch it faithfully for the rest of my life ... I think it has something to do with the sound of a Dura Ace grouppo being cranked at 400 watts through the Pyrenees.
------------------------------------
As for baseball, the only thing I know about it is through the writings of Michael Lewis' fabulous book "Moneyball," frankly I sit here in disbelief that such a beautifully intricate and technical sport like baseball would be affected by such barbarism.
Anyway, I've been following your posts on the baseball thread with interest-- thanks.
L... I think it is, what it is-- and why not? What difference does it make for those of us on the sidelines. He's not defending his Giro title with or without Bruyneel, with or without Riis, he's done. [period end of story]
-- if anything what if Basso is well aware of the politics involved in today's cycling and decided NOT to participate in the morass of legalities and NOT pay a team of lawyers in what's going to be a losing battle and NOT go into bankruptcy as a result.
...or, maybe he's anticipating a peloton wide amnesty since there are over one hundred riders being fingered.
Like... what's the big deal, here's a chunk of my DNA-- so f-off and let me race...???
IMHO, Basso quitting Discovery is about as close as we will get to an all out admission of guilt. The blood bags are his, and that's the only reason for his upcoming absence from the Giro.
Discovery is completely off the hook for this-- but CSC isn't, just google "Bjarne-Riis" for news and numerous stories of doping and cheating comes up, and this person runs a professionnal/corporate organisation...?
I figure the moment the DNA results are published on Ivan Basso is the moment Bjarne Riis is without a job.
delayed due to snow
http://www.velonews.com/race/dom/articles/12004.0.html
probably a coincidence, but I noticed Floyd has an orange theme in his infomercial.
He wouldn't be trying to organise something resembling an Orange Revolution like we seen back in 2004 in the Ukraine...!?
An Orange Coalition that's a true advocate for the cyclist...?
-- just a thought.
"commerce and tourism boards"
there seems to be two ways of covering a bike race:
-- from the wineries, the bakeries, the restaurants and historical landmarks.
or
-- from the bike, the cobbles, the dirt, the sweat and the tears.
Floyd Landis takes case to YouTube
http://www.floydfairnessfund.org/
"-- the Tour figured it could market itself better using Tyler Hamilton as a feature draw."
I was buying into what you were saying until this sentence <posted above>.
Hamilton a draw...???
It's not like he's a rising young star with Boonan's ability to draw women to the side of the road.
If Tinkoff and the TOG were to market riders for their appeal, they do have a "stable" of young Russian riders and they could play on having a "cold war part-2" with the Disco boys.
-- as for the TOG, too bad they had to resort to these tactics to keep the race alive. Hopefully, they'll be better organised for next year, but with the Ullrich taint on the sport I'd be surprised to see this race next year.
Unless we all support it, warts and all.
I can think of better ways to avoid exercise. <vbg>
the big problem with collecting all this DNA is that it only complicates the Anna-Nicole paternity battle
hmm...
A fools edition of Cycling News
http://www.cyclingnews.com/news.php?id=news/2007/apr07/apr01newsspecial
I have a GPS unit on my bike:
http://trail.motionbased.com/trail/user/orange-kick
The Growth Hormone Myth
http://www.slate.com/default.aspx?id=2162473&nav/tap1
"An investor is better off doing nothing until he sees money in the corner just waiting to be picked up." - Jim Rogers
Andrew B. Busch
Global FX Strategist
Owning a home will give me a sense of belonging." This simple statement of community gets at the heart of what is desired universally by most human beings: a home to call one's own.
This is why property and real estate markets are intrinsic to every country. These markets are also intrinsic to capitalist economies. Real estate is a driver of wealth creation and financial innovation.
As I wrote last week, the United States is at the forefront of this innovation. At times, this innovation goes too far and creates problems. As I was participating in the Wharton China Business Forum this past weekend, I could not help but think of that country as a place where we can see the benefits from property ownership potentially change the nature of its society.
China has recently taken the next major step toward freeing the reins on capitalism and unleashing Adam Smith's "invisible hand." A new law on property is going to be passed this fall at the Chinese Communist Party congress. While there have been delays on the language of the law and unprecedented public criticism, this will be a seminal event for the country.
This law addresses the concerns of the new 200 million middle-class Chinese who are property owners and want to know if their assets are secure. This is a core tenet of capitalism: private ownership of the means of production. In this case, the means is real estate.
For some time, the Chinese have been protected against seizure of goods that they own such as clothes, cars and iPods. This has not been the case in real estate. The most protests in China have occurred over the seizure of land by the government. The enormous appropriation of land from farmers with little or no compensation has fuelled anger in rural areas and angst in urban regions.
However, the law will do much more than address these issues. It should unlock tremendous asset wealth and increase the efficiency of its distribution in China. Should farmers be given the right to own the land they farm, this will allow combining of property. This means more efficient scales of production and increased output.
For individuals, this means they will be allowed to more freely invest in real estate without worry over losing the property. This should eliminate some of the inefficient methods of acquiring real estate and should mean for more accurate valuations of the properties themselves. It's supply and demand 101.
Moreover, the change in the property laws should bring big changes in financial products as well. It's estimated that home ownership in China is 80 per cent compared with 69 per cent in the United States. Think about what can happen should these owners be allowed to borrow against the value of these properties.
A massive change in personal consumption could evolve the country from an economy based on exports to an economy based on domestic spending.
Also, think about this money being allowed to flow to more productive and varied uses in China. Instead of the state being concerned about providing the capital for nascent businesses, the private sector can not only generate the money, but also absorb the risk of doing it. And the profits. This environment is dynamic, yet stable and efficient.
To me, this is the true promise of China as it continues to inch further from centralized economic decision making to the decentralized capitalist "invisible hand."
Did China Cause The Recent Plunge In Stocks?
Gary Halbert's Weekly E-Letter
http://www.investorsinsight.com/forecasts_va_print.aspx?EditionID=494
TECHNICALS - COMEX/NYMEX metals technical indicators
GOLD SILVER PLATINUM PALLADIUM COPPER
APR MAY APR JUN MAY
<GCJ7> <SIH7> <PLJ7> <PAM7> <HGK7>
Close March 23 657.30 13.227 1233.40 359.50 306.90
High 665.30 13.470 1242.00 359.00 312.50
Low 655.50 13.150 1230.20 357.00 306.50
5-DAY M.A. 659.00 13.327 1234.20 355.63 304.45
20-DAY M.A. 657.10 13.355 1222.30 354.36 287.07
50-DAY M.A. 656.80 13.523 1201.80 351.07 269.81
9-DAY R.S.I. 51.45 46.96 53.36 69.57 83.62
14-DAY R.S.I. 50.96 46.78 54.23 64.16 78.66
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-
-
Note: Data calculated from previous close. Previous high and
low include ACCESS trading from previous session. Indicators
are based on the time periods recommended by their developers
or commonly used by technical analysts. Moving averages are
simple moving averages. RSI formulas include a smoothing factor
utilizing an exponential moving average (EMA), determined to be
the industry standard. All calculations can be made using
Reuter Graphics or Reuter Technical Analysis products.
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-
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Contract High 765.00 14.800 1274.50 402.75 364.00
Contract Low 490.00 8.540 1080.00 293.00 118.65
First Notice Day Mar 30 Apr 30 Mar 30 May 31 Apr 30
Expiry Date Apr 26 Mar 29 Apr 26 Jun 27 May 29
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BULLISH CONSENSUS ON March 20: 24 Month Range
Low Hi
Gold 70 from 69 on March 13 53 - 92
Silver 67 from 64 on March 13 40 - 98
Platinum 70 from 69 on March 13 50 - 95
Copper 54 from 49 on March 13 39 - 96
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* Bullish Consensus, Copyrighted, Market Vane Corporation
BTV-Business Television Talks Uranium With Jim Dines and Features Khan Resources, Anglo Canadian Uranium and Crosshair Exploration
http://www.stockhouse.ca/pfolio_V2.asp?page=displaynews&symbol=V.CXX&newsid=4320474&from...
...on Kloden, yes I've always seen him as a GC rider-- in fact, I thought I picked him for last years TdF (after the ejections) but obviously didn't.
from 06/2006 -- #msg-11834534
On Ullrich, I'm under the impression that he fell in love with the bike after they told him he couldn't ride it anymore. I think there's a strong contrarian streak in him-- so your dream is entirely plausible.
he'll probably be racing classics in his 40s :)
...as for Millar, he has no choice but to be clean, if anything for the sake of the sport.
fwiw, I don't think VS network nor Discovery team will have any leverage whatsoever on the european scene when countries like Germany drop television coverage because of the perceived cheating-- in consideration of their beloved T-Mobile and their inability to be competitive.
-- yup, T-Mobile sucking wind at the back. I'm not surprised, as I said earlier this winter with the dope testing done by T-Mobile (and Vaughter's team here in America), we'll be able to guess the level of deceit in the peloton.
That said, presently T-Mobile has the flu running rampant within the team, but if they aren't competitive by the TdF, it'll really look bad, bad enough to rekindle the doping controversy of last year.
Bad enough, I wouldn't be surprised if Basso doesn't get the invite to ride the tour.
Bad enough, that people will question the legitimacy of David Millar's success.
Bad enough, that the best financed team in the peloton (T-Mobile) needs to have some success, or else.
Market Mania In China
Stocks remain a wild gamble, but millions of unsophisticated investors are rushing in
http://www.businessweek.com/globalbiz/content/mar2007/gb20070308_895782.htm?chan=top+news_top+news+i...
A Modern History of Investment Booms
Posted by Marc Faber on Mar 8th, 2007
http://www.dailyreckoning.com.au/investment-booms/2007/03/08/
David Pescod's Late Edition -- Canaccord Capital Corporation
CRUDE OIL (April Contract) $58.91 -1.14
NATURAL GAS (April Contract) $6.912 -0.171
There are two little tidbits of the last week or two that should certainly makes those who are in the bullish camp for the price of oil feel a little bit more comfortable. One of them was an article found in the New York Times but also in other publications where they took a hard look at Pemex the national oil company in Mex- ico and the reasons to be concerned for that company.
Mexico and Pemex is the fifth largest oil producer in the world in 2005, and is sitting on tens of billions of barrels of untapped oil reserves according to the New York Times piece. But they con- tinue that much of that is in deep waters in the Gulf not far from where American companies have announced discoveries.
The question is does Pemex have either the money or exper- tise to get at that oil. They point to Cantrell in the shallow waters of the Gulf and it is the world’s second largest oil field. That one field used to account for about 60% of Mexico’s oil production that has gone into a sharp decline. Production at Cantrel fell 13.5% last year and is estimated to fall another 15% this year from 3.4 million barrels a day in 2004.
Meanwhile Pemex’s proven reserves of crude oil had fallen to 11.8 billion barrels at the end of 2005 from 15.1 billion barrels at the end of 2002. The big problem for Pemex of course is that the government owns it and we all know that anytime a national gov- ernment owns a utility like this, you can count on it being poorly run and if run at all its run for the purposes of the politicians.
In this case the Mexican government depends on Pemex to finance its budget and last year sales of Pemex reached $97 bil- lion, but $79 billion of that went to the government. That ac- counted for almost 40% of the entire federal budget. Needless to say, there is not a lot of that money left for exploration or building needed facilities and the like. And one wonders how much longer Mexico will even be able to be an exporter of oil.
The other tidbit came from China, where its booming passen- ger car sales have soared by 33% in just the first two months of this year compared to the same period of 2006. The sales in January and February totaled 712,000 units. Their total sales in- cluding trucks, and other vehicles topping 1.3 million units.
While total vehicle sales in China hit 7.2 million units last year are far lower than American sales, the world’s biggest at around 16 million one has to remember that it was only roughly 25 years ago that there was only a handful of privately own cars in the en- tirety of China. And we all know every one of those vehicles needs the oil to move.
I've been buying AXL, AEN and GO.A -- all on the TSX.
I was visiting the doctor the other day to discuss some blood tests that I like having done twice a year.
-- apparently, I have low (lower end of the normal range) testosterone, but wouldn't give me a prescription.
-- apparently, I have high (higher end of the normal range) cholesterol levels and he quickly wrote me a prescription for a statin drug ... and yet I'm perfectly fit.
...just my observation of the medical profession.
Anyway, I concur this doping problem is huge-- whenever I see a news summary come across my screen odds are there's at least 1 or 2 stories that link sports with doping.
China ::: Paul van Eeden
On Tuesday for the first time in modern history China became a world financial trendsetter. The Chinese stock markets declined (the Shanghai Composite Index fell 8.84% and the Shenzhen Composite Index fell 8.54%) and stock markets around the world fell like dominos.
That China is important to the world's economies and financial well-being should not have caught anyone by surprise. China has been credited, or accused, depending on your point of view, with the increase in commodity prices for several years now and the ascent of its vast population to middle class is supposedly going to convert hundreds of millions of investors all over the world into millionaires. So when China's stock markets fell, the world took notice.
The reason for the markets' fall was China's government's announcement the previous day of a top-level task force to clamp down on illegal activities in the securities markets. Chinese investors have been flocking to stocks hoping to get rich, just as North American and European investors have been snapping up anything to do with China hoping not to get left behind. Chinese capitalism is today's Wild Wild West where just about anything can and will happen, where for every greedy investor there is an appropriately constructed plan to part him from his money and now the government wants to put an end to it.
The Chinese banking system is rife with bad loans made to well-connected people who set up unprofitable businesses. Corporations borrowed money to build factories, offices and apartments, many of which are empty or operating at a loss. The boom in China's stock markets was, to some extent, also driven by debt, although I suspect it would be near impossible to figure out just how much of the speculation had been undertaken with borrowed money. When markets are debt-driven they are massively volatile both during the upswing, as an inordinate amount of money chases limited stocks, and during the down-cycle, as investors panic and fret about losing all they have and more, so it is not really surprising that China's stock markets took a plunge.
The only explanation for the contagion caused by China this week is that investors across the globe have entrusted their money to mutual fund and hedge fund managers that are gambling on the greater fool theory with their clients' capital. When the markets around the world fell in sympathy with China it illustrated loud and clear that many investors have no interest or faith in the companies they own; they are merely holding them in the hope of trading the stocks to another fool in the future.
According to the World Bank approximately one third of all of China's production is exported, and if you consider the flow through effect then perhaps more than half of China's economy is export dependent. As a bellwether, the USA being the world's largest economy and largest consumer is therefore far more indicative.
Unfortunately the United States is not in good shape. The latest from the Commerce Department is that durable goods orders fell 7.8% in January; the National Association of Realtors reported that January new home sales were down 4.3% from last year and the median sales price was down 3.1%; the Commerce Department revised gross domestic production for the last quarter of 2006 down to 2.2% from an earlier estimate of 3.5%; business spending fell 2.4% in the last quarter although consumers did their part by increasing their spending by 4.2% yet residential fixed investment fell 19.1%.
Consumer spending accounts for more than 75% of US economic activity and the US accounts for more than a third of all the economic activity in the world. The US consumer accounts for about 25% to 30% of global economic activity, meaning that if US consumer spending fell by only 5% there would be a 1.25% to 1.5% reduction in world-wide economic activity. There is no other single more important economic factor than the US consumer. Because the US consumer has been financing his spending with borrowed money generated mostly due to rising real estate values, we should look at the US real estate market for future guidance - not to the Chinese stock market.
Existing home sales fell 8.4% in 2006, the sharpest decline in home sales in 24 years. 30-year mortgage rates are still only at 6.14%, and so homes should be very affordable, but because of rising real estate values home buyers are battling to meet mortgage payments. Falling real estate prices have reduced some home values below their outstanding mortgages, making the homeowners prone to default on their mortgage payments. Nearly 6% of all sub-prime home loans were more than two months in arrears by the end of last year and first-year delinquency rates are up about 200% in little over two years.
Approximately 16% of all mortgages issued last year were to sub-prime borrowers and with falling real estate prices the money available to these borrowers is drying up. That will reduce demand for homes.
There is an index (part of the ABX family of indices) that tracks how much it costs to insure BBB-minus rated bonds backed by mortgages to sub-prime borrowers. When the index falls it means such mortgages cost more to insure, which in turn is a proxy for the risk and value of these mortgages (as risk increases, insurance increases and value decreases). The index is down almost 30% since the beginning of the year. More than 20 sub-prime lenders have closed shop after having to repurchase bad loans they originated.
Mortgage defaults are now the highest in five years and rising with many of the problems tracing back to adjustable rate mortgages - what a surprise! Mortgage lenders such as Bank of America and Citigroup are now trying to get borrowers with adjustable rate mortgage to switch to fixed rate mortgages. That's a smart move for both parties: the US budget deficit will eventually cause interest rates to rise to much higher levels. Some banks are now also allowing borrowers to sell their homes for less than the outstanding mortgage and then forgive the shortfall since it is often less costly and time consuming than foreclosing on the homes. The catch is that borrowers may find they have to pay income tax on the forgiven debt. Sales of homes for less than their outstanding mortgage debt increased by 25% during 2006 according to Bank of America.
Keep in mind that the increase in bad loans is broad based and is occurring during exceptionally strong economic conditions, at least if you believe the authorities and talking heads. US consumer confidence is still at a five year high indicating that the collapse of the US real estate market has not had a major effect on consumer spending yet. What is going to happen when consumer confidence finally does fade and economic growth does stall?
As more and more home owners get into financial trouble and more and more homes go on sale it puts downward pressure on house prices. Home prices fell in about half of all metropolitan areas during the fourth quarter of 2006. For the first time since the National Association of Realtors started recording home prices in 1979 home prices fell in the majority of the cities surveyed.
Home construction has fallen to its lowest level in ten years. Housing starts in January fell 14.3% and building permits fell 2.8%. Luxury home builder, Toll Brothers, reported a 67% decline in its last quarter's profit as it wrote down inventory. The company also lowered its earnings outlook for 2007 based on fewer orders and rising cancellations. The company's net orders are down 33% from a year earlier as it struggles with a 30% cancellation rate.
It's not just real estate loans that are going sour. Wells Fargo, the 4th largest bank in the US by market value, reported $726 million in net credit losses for the fourth quarter and most of these were concentrated in its auto-lending portfolio. Consumers are increasingly unable to pay for all those new cars they bought when the car companies were running specials to get rid of inventory. US Bancorp, the 6th largest bank, saw a 25% increase in charge-offs and predicted that writing off retail loans will continue to increase during 2007. These are by no means the only banks seeing an increase in loan defaults, merely an example of what is happening.
The problems don't end with autos and homes either - the economy is integrated. Home Depot expects earnings during 2007 to fall between 4% and 9% as it doesn't expect the residential and housing markets to improve during the year. Manufacturing output fell 0.7% in January with manufacturing capacity utilization at only 79.6%. Manufacturing of automobiles fell 6% in January and excluding autos, industrial production was still down 0.2% for the month.
Is this all not more worrisome than the pullback of an over-bought Chinese stock market?
The dollar lost about 2.5% against the yen during the week. I wrote about the yen carry trade and how, when it unwinds, it will cause the dollar to fall. Last month Japan raised its overnight interest rate from 0.25% to 0.5% and this is potentially far more significant than what happened in China this week. Higher Japanese interest rates will cause the yen to appreciate on foreign exchange markets and will put pressure on the yen carry trade. On Tuesday of this week the dollar recorded its largest decline versus the yen in over a year as investors sold dollars to buy yen.
It is somewhat incorrect to say that the dollar is falling since it is actually the yen that is rising. The dollar has been reasonably steady against most major currencies this week but the yen rose against almost all of them. I suspect that over time the yen will rise against most currencies and the dollar will fall against most currencies because much of the yen carry trade involves being long dollars and the US still has an enormous trade deficit that has to be addressed.
From my perspective as an investor primarily interested in gold, the events of the week were very interesting because the gold price in US dollars fell even though the dollar was down sharply against the yen.
Unlike the investors who panicked and sold this week, I was happy to see falling gold stocks. Share certificates are certificates of fractional ownership in a business and I only buy stocks of companies that I really want to own, so I don't mind if the share prices fall because it means that I can increase my ownership at a lower cost than before the decline. When I look at my portfolio and see a stock that I would not like to see fall in price I sell it immediately, before it has a chance to decline.
With gold and gold shares falling I am quite content to wait and see what happens. Nobody can predict the future so to sit and debate whether this is going to be a big decline, a long decline, a short decline, a non-event, is pointless. The markets are so emotionally driven and far removed from any sense of value that there is no telling what will happen or how long it will take. Fortunately, if the carnage is short lived then stock prices will soon recover and everyone will be happy. If the declines continue then we will find much better buying opportunities going forward and I'll be very happy.
At some point I think the US dollar is going to come under serious pressure and when that happens the dollar and the gold price will decouple, with the gold price rising and the dollar falling. I am actually hoping that the gold price continues to fall in the interim as it only means there will be more money to be made in the longer term.
STRATFOR ::: Global Market Brief: China's Engineered Drop
By George Friedman
China's Shanghai Composite Index tumbled 8.84 percent Feb. 27, its largest fall in a decade. Its sister index, the Shenzhen Composite Index, fell 8.54 percent. The size of the drop in China is not significant in and of itself. On a number of occasions during the past year, the Shanghai Stock Exchange has experienced 5 percent plus daily reductions, and it has already boomed and busted once this decade.
But that hardly means the development is insignificant. The fall is important both for how it happened and what it triggered.
How it Happened
This was an engineered drop.
The Chinese government has become increasingly concerned about levels of investment in its economy or, more accurately, the sheer amount of money that is chasing projects. State firms with limitless access to subsidized capital from state banks have used that access to launch thousands of nonprofitable firms. This glut in "investment" money drives up the cost of commodities and adds industrial capacity without actually producing anything of much use, making life more difficult for the average Chinese and unduly harming relations with foreign powers that face a glut of otherwise noncompetitive Chinese goods.
This penchant for overinvestment has now spread to the stock market in two ways. First, the same politically connected government officials who started dud companies are taking out loans to buy shares, or are using shares they already hold as collateral for new loans. Second, ordinary Chinese citizens have started borrowing -- sometimes against their homes -- in order to play the market. In January, the number of total traders on the Chinese exchanges grew by 1.38 million, an increase of 134 percent from a month earlier, while stock turnover was up 700 percent from a year earlier.
The net result is an absurd stock surge with no basis in fundamentals. At present, some Chinese banks now have price-to-earnings ratios higher than financial behemoths such as Deutsche Bank and Chase, despite deplorable management and a history of highly questionable lending policies.
For the past few months, the government has been working to drive down this speculative investing. On Feb. 26, China's State Council launched a new "special task force" that accurately could be referred to as the "get-those-idiots-to-stop-borrowing-to-gamble-on-the-stock-exchanges" team. Its express goal is to get the Chinese domestic security brokers to lay off such speculative decision-making, while also putting a crimp in the source of the subsidized capital.
Day one started by the script, and Beijing is likely quite pleased with the way things are going (or at least it was until its actions unintentionally triggered a global meltdown). Also, since the Shanghai exchange is actually still up 3 percent for the past week despite suffering its largest drop in a decade, the State Council probably hopes for more drops in the days ahead.
What it Triggered
But the rest of the world took a different lesson. Why the Chinese stock crash occurred was unimportant to the outside world, only that it did -- and that it affected everyone else.
For the first time, China has become the trendsetter in the global stock community. Normally, the U.S. exchanges -- especially the S&P 500 index and the Dow Jones Industrial Average -- set the tone for global trading patterns. Not on Feb. 27. This time, China led Asia to a wretched day. The wider the contagion spread, the more margin calls were forced to be called in. (If an account's value falls below a minimum required level, the broker will issue a margin call for the account holder to either deposit more cash or sell securities to fix the problem.)
As the drops snowballed, Europe filed in dutifully behind, mixing the China malaise with its own nervousness about overextended markets in Central Europe and the former Soviet Union. By the time markets opened in the United States -- where investors already were fretting about the subprime mortgage markets -- the only question remaining was how far U.S. markets would descend. In the end, the Dow dropped by the most since the fall triggered by the 9/11 attacks.
So why has this not happened before now? As China's market capitalization has increased, its links to the global system have increased apace. These links have developed very quickly, and with few controls. The Shanghai exchange, for example, more than tripled in total value in 2006 to more than $900 billion -- and much of the rapid-fire initial public offerings (IPOs) of Chinese banks on the Hong Kong and other international exchanges are not included in that little factoid. Indeed, China's mainland exchanges are only the tip of the iceberg -- and they certainly do not include foreign firms that are heavily invested in the mainland.
Two years ago, China's market capitalization was too small for its problems to impact the global system. Now, between ridiculous foreign subscriptions to IPOs, irresponsible corporate policies and irrational valuations all around, that capitalization is to a level -- around $1.3 trillion -- where its integration with the global system via funds and margins makes China a sizable chunk of the international financial landscape. The insulation that once protected international exchanges from Chinese policies is gone, which makes the international system more vulnerable to Chinese crashes.
Feb. 28 and Beyond
Follow-on crashes can come from one of three places.
First, the Chinese believe their exchanges are massively overvalued (hence the engineered crash). They will do this again, and are not (yet) particularly concerned with the international consequences. China planned to dampen its own stock market, not the world's markets. Along with the rest of the world, Beijing did not expect the contagion effect to be so extreme. Yet, for now at least, China's own exchanges are its primary concern, and it will act according to that belief.
Second, everyone else now is going to chew on the fact that Beijing did this intentionally. They will either agree with the Chinese that the exchanges are overvalued and that additional measures are needed, or they will be terrified that Beijing did this intentionally and not care about the reasons. Whether what is sold is a domestic Chinese firm or a foreign firm invested in China does not matter much. Neither does it matter if the stock is on an exchange in China or abroad. Either way, the reaction will be the same: Sell.
Third, trading in 800 of the 1,400 stocks on the Shanghai exchange was suspended during the sudden drops Feb. 27; they have a lot farther to fall, even without any engineered drops caused by panicky selling.
Considering the flaws on which the Chinese system is based, this certainly will not be the last engineered drop. In theory, the move will make foreign investors far more cautious before diving into the Chinese system, but as longtime Stratfor readers know, we have been wrong on the timing of that particular development before.
meow...???
anyway, have a good weekend...!
I'm outta here.
patience, and restraint.
are my themes for today
nothing to buy, just yet
...just going over the hourlies and the one that stands out is Cameco ... check it out.
-- but please be patient, and show restraint. :)
yeah, I hear you... same problem-- could be much richer if I had more patience. The workaround for me is to pay myself often and keep my accounts small.
-- the markets will always be there-- no need to squirrel away shit load of dough because I think I'll feel the need to retire.
The fact is, I'm already retired-- and I'm poor.
...so fucking what...!
if you're looking to get better at trade management, margin is the last thing you want to do in times like these.
I like margin in strongly trending markets-- other than that, its suicidal.
anyway, it's the last 15 minutes of the day that matter to me. I'll be fully cashed up if there isn't anything meaningful going into the close.
looks like a reversal going into the last hour
we shall see...
phew... glad it's over, not the best of days.
nice 200-day MA hammer on PDP.TO
my call for tomorrow... fwiw,
general markets - up
XEG.TO -- up
XGD.TO -- down
I think energy looks better-- some stocks (like ECA) were not even remotely affected by the Chinese flu ... but then again, an ugly chart can give the market an element of surprise.