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8/7/12

Chinese economic numbers are always questionable.  The government can report anything they want (or need) as it is part of the propaganda machine that keeps them in power.  One of the ways investors have used to gauge the health of the Chinese economy is to review electricity usage.

Electricity usage may not be as manipulated as a “headline” number.  Increased energy usage should indicate a growth in economic activity.  Bloomberg has an article today that questions this indicator.

Their premise is that the Chinese economy is converting to provide more services that are not energy dependent.  Heavy users of energy have also worked to become more efficient.  June’s Industrial production increased 9.5% according to official reports, but electricity production was unchanged from June 2011.

China’s July Manufacturing PMI was released last week at 50.1 with the Services PMI at 55.6  China will release trade data on Friday.  Economists expect export growth to have slowed.  Bank lending will be released on Aug. 15.  Economists expect loan demand in Yuan currency decreased in July.

The Chinese government cut interest rates in June and July.  The government’s official GDP growth target for 2012 is 7.5%  Last quarter’s GDP grew at a 7.6% rate.

Insurgents killed sixteen Egyptian policemen in Gaza and stole two armored vehicles on Sunday.  The gunmen loaded explosives on the vehicles and drove towards the Gaza/Sinai border then towards Israel.  One vehicle exploded in Sinai but the other was destroyed by Israeli aircraft when it crashed through a security border fence.  Not to pass up a chance to blame Israel for something.  The Muslim Brotherhood’s Egyptian website asserts the attack “can be attributed to Mossad.”

Mohamed Morsi is the new President of Egypt, and the Muslim Brotherhood’s candidate.  He has condemned the attack by Islamist gunmen.  The government has referred to the insurgents as “infidels.” It is too early to tell if the Muslim Brotherhood is challenging President Morsi’s government or just falling back to their favorite target to blame.

The International Business Times has a good follow up story on the Egyptian attack.  Debkafile reports the head of Iran’s National Security Council traveled to Beirut yesterday to meet with Hezbollah’s leader Hassan Nasrallah. Coordinated action is being considered in Syria if President Bashar Assad’s government falls.

Iran’s Armed Forces Chief Gen. Hassan Firuzabadi threatened Turkey.  Iran is propping up Syria and sees Turkey as supporting the Syrian rebels.  Firuzabadi said “Turkey will be next in line for violence after Syria if it continues to work on behalf of Western interests.”

The market continues to rally this morning.  The reasons are puzzling.  Gold is even to lower, silver is holding higher but looking toppy.  We closed our AGQ position this morning for a nice 22% gain in the SwingTrader.  This follows closing multiple positions in TEF yesterday, one for over a 200% profit.  The dollar UUP etf is steady but interest rates look a little higher.  If optimism is contagious, the market caught the bug.  We are more worried about a nasty case of the flu.  Meanwhile Spain and Italy mark time before they have to request a bailout.  Greece fiddles their thumbs over what they can do without spurring more protests.

Treasury Secretary Tim Geithner and Auto Bailout officials have been caught in another lie.  It appears some may have perjured themselves before congress and in federal court.  When General Motors went bankrupt, the government had to decide what to do with Delphi, the division that manufactured parts.

Pensions were terminated for 20,000 non-union employees while the pensions for union employees were protected at the expense of bondholders.  The Daily Caller has copies of emails between the Treasury Department and the Pension Benefit Guaranty Corporation (PBGC).  PBGC has to take over pensions for companies and is responsible to operate independently.

The White House and administration officials have maintained the PBGC made the pension decisions independently.  Not really.  Political decisions were made and enemies were punished.  You can read the story and the emails.

Quote:
We can easily forgive a child that is afraid of the dark.  The real tragedy of life is when men are afraid of the light.---Plato

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