Investors 411 Blog

WHAT’S UP – China leading world out of recession; Huge stimulus and Chinese banks loan package has dramatic positive short term impact on stocks; Shadow banks are winning in their tug of ear with Obama’s administration: Stress test results; Investors411 recommended positions have possibly best day ever!

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China

Chinese Banks are lending money - big time They were not nearly as over leveraged as American shadow banks and China. Their stimulus which is bigger per capita than the USA’s is also helping turning the Chinese economy. A second stimulus package is projected soon. Some outstanding growth stats announced yesterday. Some details on China’s stock’s explosion higher yesterday here and here

For more see 4/16 Investors411 blog on China or (recommended) Positions section of blog

Bottom Line – China is leading the rest of the world out of the recession. In the long run this much stimulus is going to be inflationary.

Shadow Banks

There’s the good, the bad and the ugly about shadow banks. But the the good is the fact that they are leadings stocks higher, It seems in the tug of war between increased governance  by our government and allowing US banks to continue to move in the shadows is moving in one direction –  the Shadow’s are winning, NYT story.

Stress Test

Shadow bank, Wells Fargo was thought to be one of the banks that failed the government’s “Stress Test” and it moves up +24% on the stock market.  Talk about moving higher on bad news = great for stocks.

“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter”    Full WSJ story

Why Tom Friedman is Wrong (part 2)

Sorry Started this when my server/modem went crazy on me last Thursday. See his editorial “A Tortuous Compromise.” in which he invisions a decent wesern US democracy in Iraq. 

Imagine Rush Limbaugh and the far right coming together as “brothers” with Move On and the far left. Multiply that times 10 and add a mountain full of oil money/power to fight over and you have how the Shia feel about the Sunni’s in Iraq.

What happened is the Shia (60% of the population) kicked ass in a civil war over the Sunni’s (20% of the population and Saddam’s group) Add to this years/decades of mass killings. This is almost as bad as imagining Hamas and Israel coming together in one democratic love fest. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals & Fundamentals

China (FXI =+8.95%) (see April 16th blog)and Financials (shadow banks) added high octane jet fuel to last week’s breakout.

S&P 500 turns positive for the year! SPX closes at 907 – First major technical resistance level at @ 940 (an old high and close to the 50 day moving average)

XLF - The ETF that tracks financials (mostly shadow banks )Broke out of its consolidation pattern and rose +10.14% in increased above average volume.  Therefore, volume confirmed a huge breakout. If you’re in recommended ETF’s that do 2x & 3x what the XLF day you did spectacular. (see positions)

The XFL had been consolidating between @ 9.4 & 11.3. XFL closed  above breakout levels at 11.73 .

A Wowie Zowie Rally!

Wow! Yesterday was a fabulous day for Investor’s 411 recommended Positions.

See Positions at top of blog. Most Investors411 recommended  positions did 2 to 4+ times better than US markets. Both China and Financials are recommended ETF’s (see positions) 

Even GEX (alternative energy) was up +9.95%.  Also Brazil (EWZ) was up +5.98%.

Reading the tea leaves - Obviously, would love see stock positions hold onto their gains and not rocket higher or lower. Moving too far too fast is reason for concern. Consolidation over a few weeks is best in the long term for bulls.  

Those shorter term traders should obviously book some profits soon. Why be greedy? There should be a whole lot of traders buying the first dip today.  Let’s see what happens after that.

Caution – Don’t get all caught up in this good news. There are massive economic problems out there in the USA and many foreign countries.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

China 中國 -  The Trend.  It almost seems inevitable that our children are going to have to learn to speak  Chinese unless there is a dramatic shift in the major economic trend  - China - The Good , the Bad, and the Ugly.   Its Exchange Traded Fund- Ticker Symbol FXI has been the #1 Investment recommendation of Investors411.

China from Google maps

The People’s Republic of China 中國

For some basic information see

• Positions section at top of blog (scroll down to FXI) – contains  reasons to invest.
• Wikipedia will give you a more comprehensive overview

GDP –  China’s GDP numbers have just been published for the last quarter – +6.1% See BBC story. China (@$7 trillion per year GDP) is getting hurt by the worldwide recession. However compare it to the USA 4th quarter GDP -6.3% (@ $14 trillion per year GDP)  

China’s figures are the lowest since they started keeping figures in 1992. They are down 0.7% from the previous quarter, obviously because of the worldwide recession.  The economic trend is also obvious. China’s economy is growing far faster than the USA’s. It may only be a matter of years rather than decades before they become the #1 economy in the world.

Recent Headlines

• China moves into Latin America – Today’s NYT
• China moves to become #1 in the electric car – NYT
• China’s Shopping spree – Time magazine

China has over a $2 trillion dollar surplus compared to USA’s $11 trillion dollar deficit  

Note – all these figures are suspect. China’s even more so than the USA’s.

The Bottom Line – The economic trend is clear. China is economically rising and the USA is sinking. Right now, the economic gap between these two counties is closing at an accelerating rate.. You may not like this trend – but if you have kids or grandkids teach them to speak Chinese.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

STOCKS

Technicals & Fundamentals

Major US stock markets (and most foreign markets) rose yesterday in decreased below average volume. 

XLF - The ETF that tracks financials (mostly shadow banks) rose +4.83% in decreased, below average volume.  Financials have lead this rally and if they  collapse so will almost all other sectors. The loss in volume (the #1 confirmation factor of a price move) is troubling for the bulls.  This could be the first sign of a correction.

Short Term Outlook - Similar forecast to yesterday – First technical chink in the bulls armor appeared Tuesday.’s big volume sell off. A small gain yesterday in decreased volume is not bullish.  

Too early to make a call, but short term traders should pay attention. The Danger signs to watch for - another big price/volume decline probably led by financials and/or stocks moving lower on no news or good news.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!