DOW 10,600, China and Google, EU, Sweden, PacSun, Greece!
So the DOW broke 10,600 yesterday and held despite a gloomy day for International markets. Well, we could ask France evidently about the average cash positions of some HSBC private banking clients to substantiate that there is a considerable amount of Cash on the sidelines. Again we reiterate our opinion that investing in the US stock market is one of the more attractive opportunities currently. It could be argued in a myriad of directions, but our economy is gaining de facto strength by the weakness the EU is experiencing and uncertainty in China. Google will see some beta increase today as China and Google are hashing out issues related to hacking issues traced back to some of China’s “government universities computer departments.” In keeping with the humorous positioning we have seen many governments take in statements related to “diplomatic issues,” China has neither admitted nor denied wrongdoing and a China minister was quoted, “Hope Google will respect China law…internet will develop in China with or without Google.” It’s also odd to watch the IMF and Amnesty International line up in Nigeria (after a massacre of 100-500 people this week in ethnic conflict), Congo and Sudan. All countries that China has invested Billions in with the Sovereign Human Affairs clause “we don’t tell you what to do, you don’t tell us what to do.” Western Africa is also coming under tighter scrutiny. The Continent is a powder keg that is becoming a focal point in the international game of Raw Materials…China are like the Borg on Star Trek. The Borg are an alien race that assimilates everything they come into contact with into a dense matter floating platform. Again note that 100,000 people have been displaced in Somalia since January while China has pumped more than 10Billion into infrastructure in the Country planning a railroad track across the continent to access the iron ore and other natural resources they can take from the Country. This is going to come to a head with the IMF and the UN. They are smart and run everything through dual tax treaty tax havens. Ironically, the Chinese entrepreneurs are taking after their Western counterpart with the brightest and “most creative” figuring how to even get around full tax exposure between African economies and China. Cameroon cracks down on journalists.
The BOK intervened in and the Won traded up. This is a platform for artificial parity with the dollar rally vs. the Euro. Perhaps Korea is also attempting to pace with the Yuan hikes in China. China traded down today as there is still concern growing about regional banks and tightening.
UBS is urging the Swiss government to pass what is a quasi dual tax treaty document. As Obama plans to kick his effort to eliminate offshore tax benefits. It will be interesting to see how the Swiss government responds. The recent exposure of HSBC private banking information most likely has the country on edge. Anyone who plays the game of RISK or has done business in Switzerland knows how seriously they take business. It is still unclear what stance Switzerland will take thought it seems the US is challenging some very sensitive sovereign issues. I think that Zurich will go silent for a period until the storm blows over.
Europe is trading up on new relative negative news and a strong day for the DOW. Most of the EU could use ending the week on a positive note after much uncertainty prevailed throughout the week. Especially after it is being reported that the European Economy will take 2-3 years to recover. What does that really mean? It would seem as if the other (or many) shoe(s) may drop in Europe as Greece, Spain and Portugal continue to remain in serious risk of defaulting no matter how they attempt to sugar coat it.
Sweden today recognized the WW1 Ottoman slaughter of an unknown number of Armenians as genocide. Turkey begged to differ. Having studied the matter we have an opinion, but the stock market cares little for History. In fact, its greatest strength and greatest weakness is the inability of the market to learn from historical cycles. We base much of our trading decisions on current international and national trends in conjunction with various algorithms allowing us to process the information in relation to historical trends. Of course, disciplined trading is a difficult skill to develop. Accepting stop loss trading points is essential to long term success as a clear definition of risk tolerance must be associated with any trading model. It has been said that mathematics can provide the answer to any question. ..it would seem the world could use some answers.
The Stoxx 600 US Index is up on the day. Sign of futures being up in the US, but that can always change over the hours leading up to the bell. It will be interesting to see if the Dow can hold 10,600 today to go test 10,750 of if profit taking and the Bears will test 10,500.
On a side note, the Oslo exchange is up 78% over the last 12 months. The performance is amazing and I can’t even interject pickled herring slight as numbers speak for themselves. We do think that some of the better performing markets may have reached a bit of resistance and the US and perhaps a few South American Indexes, will be the next to perform. We must also note that Carlos Slim of Mexico just replaced Bill Gates as the wealthiest man in the word per Forbes at 53.7 Billion. To accomplish this in a country that manages to have the approximately the 5th highest per capita murder rate notwithstanding current international crisis abroad is nothing short of amazing. Though if we consider the monopolies of Cemex and Pemex (Cement and Oil/Gas), this enormous growth in wealth makes sense. We will leave conjecture based on banking activities related to ill-gotten gain from drug trafficking out of our discourse on Mexico.
