All Posts Tagged With: "china"

Big Dog in the Pac

US President Obama is in da house! And he’s received a pretty warm welcome since stepping through the door. Now while China isn’t over the moon about his trip to Australia, it’s a nice change for the president. He’s not too popular at home.

It will be the greatest garage sale in European history. This week, for two days only, China will have unlimited access to a huge inventory of trophy assets in Europe. The Eiffel Tower! The Colosseum! The Parthenon! Those assets are marked to move. And everything must go! Two days only!

What a difference about 170 years makes. Before the outbreak of the First Opium War in 1839, between Europe and China the British ran chronic trade deficits with China. Chinese tea for export to Britain had to be paid for with silver. To stem the outflow of silver from London to Beijing, the Brits hit upon selling opium from India to the Chinese.

Another week in Australia without a new government. Not bad for a Monday. The current Prime Minister is set to meet with three so-called independent members of Parliament to discuss forming a minority government. This gives us a chance to correct an error we made awhile back.”Every election is a sort of advance auction sale of stolen goods,” wrote HL Mencken. We misattributed that quote to Mark Twain, another great American wit.

It’s a given that increases in household wealth support higher consumer spending. For one, when people see their share portfolios or housing investments go up, they are, in fact, richer on paper. This may give them more disposable income to actually spend. Or maybe they just feel richer and spend more freely (the wealth effect).But one thing we recall seeing at the peak of the U.S. housing bubble is a massive increase in borrowing against home equity.

Can you be a world dominating company when there’s inherently cyclicality and volatility in the underlying price of the commodity you produce? Or even more simply can commodity stocks be world dominators? If you accept the premise that you’re investing in a great transitional period in history where, generally speaking, standards of living are falling in the West and rising in the East, what Australian companies (if any) are in the best spot to dominate (or at least profit) from this trend?

Uranium prices appear to be bottoming, as China buys major supplies from Cameco (NYSE:CCJ). On June 24, China agreed to buy more than 10,000 tons of uranium oxide – yellowcake – over 10 years from Cameco. According to Thomas Neff, a physicist and uranium industry analyst, China is buying unprecedented amounts of uranium.

China’s General Administration of Customs reports that the nation’s exports hit a record and June and generated a big trade surplus. Exports were up 43.9% year-over-year, while imports were up 34%. The $22.84 billion surplus gives China more money to buy U.S. bonds, if it so chooses. But the alarming statistic, from an Australian perspective, is that imports of iron ore and copper were down for the third straight month.