Abe Mishima

China's New Purchasing Powerhouse: Women

Shaun, we need more articles like this. Investment firms should commission a survey of Chinese female consumers, to determine if they prefer Tiffany to Fuqi, BMW to GM, etc. Guo Jingjing, Gong Li, etc., have always been an enigma to me. Much to be learned, and earned.

Thursday Outlook: Commodities, Global Markets

UNG hit an intraday 52-week low for the second time this year. It looks like a 3rd 52-week low will be made in the next week, and if a 4th one is made, then this ETF is history. In spite of this, the volume is there and traders are still buying. Don Dion is signaling DUMP, DUMP, DUMP, as though Mr. Smarty Pants is doing us a favor. I won't be dumb enough to go out on a limb and predict how this is going to resolve itself. A NAV that is 10-12% below share price is not going to curry favor, but what's the big deal? At the gambling table, you pay a premium to play the game. UNG's long term fate could be as follows. CFTC tells all commodity etf's to limit the number of contracts they can hold. The LP redeems some shares at NAV and the longs take a short term hit. UNG rewrites its charter to trade in short and long term ng positions. That one move could remove the overhead and volatility of month-to-month rollovers. Bingo, that's the reason to stay in the fund. Wishful thinking? Yes. But most investing is based on a certain degree of faith.

China's Stimulus Takes a Page out of Greenspan's Book

Glen, we have to blame the intellectual laziness of bankers, ratings firms, and wealthy investors who fueled the real estate craze. My own lack of due diligence (PhD and all) is something I'll have to live with for a long time. Greenspan may have knowingly contributed to the bubble, or possibly, he was just stupid. History has to decide that. Joe 6P was merely on the bottom grabbing bananas made available to him by the above. Joe was just a pawn in the game of life.

China's Stimulus Takes a Page out of Greenspan's Book

The bubbles in the US and Japan were promulgated by overpaid people with an false sense of wealth. Who were the overpaid? Real estate brokers acting like hogs, brokers pumping worthless stocks, tech workers with low productivity and exaggerated salaries, and high school graduates who thought they should be paid more than college grads. Now that the recession has forced people to look in the mirror and face the fact that they are replaceable/expendable in the grand scheme of things, the entire foundation of our consumer economy has been undermined. There are fewer fools to purchase that which is overpriced or unnecessary. China may crash eventually, but not like us. Hopefully the citizens still have a work ethic. In America, only the illegal Mexicans work their butt off. Until we get rid of the slacker mentality in our society, and the "something for nothing" attitude that afflicts our workers, this will not be our last bubble. Lazy is as lazy does. Every bubble is due to mental laziness. Think about it.

China: A Look at the Real Estate Picture

In the US, as a result of the great society program of LBJ, the government subsidized public housing, and hundreds of thousands of units were built. This could be the blueprint for China. As an incentive for low income families to work harder or increase their education/skill level, the government could be providing economic incentives to people to move into these buildings. A sense of ownership encourages the populace to accept steady work, make payments on mortgages, and spend money responsibly. Unlike the US, where public housing abetted welfare, China is probably writing contracts to evict deadbeats asap should the unit owner default on payments. Does this mean that China can avoid the bubble that has enveloped real estate in democratic nations? Sure. If the owners cause a bubble, there will be consequences, e.g., relocation to farms and "re-education" per Chairman Mao's cultural revolution. Where does China get the money to prime their real-estate market? Simple, use the trade surplus. The US dollar still buys plenty of useful items, such as construction equipment, building materials, etc.

Wednesday Outlook: Commodities, Global Markets

David, I look forward to your comments after an ugly extended trading session on July 2, where the traders kept taking down many stocks, including big oil, gas, and commodities. The fear of being long has seized investors again. IYR, an ETF I have been watching, got slapped on the face today. I just can't get myself to push the buy button on this one. As for EFA, if you just close your eyes and buy it, it will produce double digit gains by 2010. But that is just my intuition. Every good card player has to have a sense of intuition and timing. And be blessed with (lady) luck. POT was a rollercoaster on Thursdays. Where it stops, nobody knows.

Friday Outlook: Commodities, Global Markets

David, I can see why you are the #1 most followed writer on seekingalpha. Your analysis of each chart is succinct and to the point. As I try to understand what happened to the markets in the past year, I find Fareed Zakaria's article in the most recent issue of Newsweek magazine the most enlightening. We let a bunch of cowboys and speculators nearly destroy our banking system and economy. We had something that worked (or sort of worked) for decades, thanks to the Glass-Steagall act. Now we have to regulate risk. But we should go further than requiring "skin in the game." Anyone in a position of power, whether in government or finance, who makes a life wrecking decision has to pay in lost earnings, higher taxes, or reduced benefits. Examples: Congress should suffer a reduction in pension for the Iraq fiasco. Angelo Mozillo should be fined heavily for actively promoting/marketing subprime mortgages. The trouble with society is that there is no accountability.

Anyway, not to sound overly moral, I have skin in the UNG game, not because I believe that NG prices will go up, but because I sense that the price of UNG is being actively manipulated by hedge funds, and I feel I can piggyback on their moves. Known as trading what I see. The smartest members on Yahoo message boards have been trying to figure out the NG market for weeks. There is nothing divine or esoteric about natural gas. It is a commoditiy and as such it is and always will be subject to manipulation. UNG just throws in rollovers, swaps, and exchange traded volatility into the equation. Everyone and his uncle is in on the action.

Bear Market Rally Getting Some Leadership?

If this is a new bull market, let's give credit where credit is due. John Roque was the second to call it. The first was who?

China Concerns, Crashing Currencies and the Future of Gold Purchases

Gold is as artificial as currency. Unlike paper money, gold is fairly illiquid. Want a demonstration? Put two kilotons up for sale on the open market, and see the price plummet to $500/oz. The author indicated that the retail demand fell when the price went above $750/oz. With extraction costs amounting to $400/oz, what is the impetus for increasing supply? If not for jewelry and electronic plating, what use does gold have? Gold bugs have got to stop being enamored by this shiny asset. In a Great Depression, gold is no more valuable than a loaf of bread. As a hard asset, the utility is less than land (another finite, tangible asset). With value so dependent on "perception", all that glitters is not goog.

When and Where to Go in China

I'll step into FXI when FXP goes over 100. Neither FXI or FXP holds its gains very long, but since FXP is a bit dicier, getting in FXI when FXP is bumping the top of its channel is the prudent thing to do. Why am I using a reverse ETF instead of looking at the core ETF? Because I trust neither, and see FXP as the tail that wags the dog. Heavy volume in that ETF invariably affects FXI. Funny how activities we engage in here in the US affect an index based on Chinese stocks. I am aware of the adr's traded on US exchanges, but they represent only a fraction of the shares in each of the corresponding PRC companies. Again, the tail wags the dog here too. Talk about magnification! Good luck to any investors in these etf's or adr's. You have a tiger by the tail.