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FreeMarkets (42.19)

Copper Higher, Oil Lower - What YOU Need to Know!



February 07, 2011 – Comments (2) | RELATED TICKERS: TZA

Trying to make heads or tails from the headlines is harder than most investors care to admit.  Todays headlines could appear 180 degrees opposite to the novice investor.  Thankfully I'm not a novice investor, I'm a self-proclaimed, ego-filled opinionated super idiot.  So here are our headlines for Monday:

Copper hits record; stocks, Treasury yields up

World stocks rose on Monday, hovering near a 29-month high on further signs of global economic recovery...

Oil back above $89 amid mixed US jobs data, Egypt

Oil prices inched back above $89 a barrel Monday as mixed signals from the U.S. about economic growth...

So how do you read the above headlines and the first 18 words of each story?  Is the answer two different authors who don't know if the economy is improving or stagnating?  Is it one story is wrong - the one that doesn't fit into your economic vision of the future?  Could BOTH be wrong?  Could BOTH be right?

The answer is the last question - BOTH ARE RIGHT! There is a difference between U.S. growth and World growth.  Those countries following a path nearer to free markets are growing - China, Brazil, Australia, to name a few of the larger economies in the world.  U.S. and European growth isn't translating into jobs because the West is creating inflation, not functional economies that can stand on their own.  

Think carefully, we (the U.S.) are barely growing even though we are debt spending 10% of our entire economy (our $1.5 trillion deficit is 1/10 of our total economic output). We are saddled with 9% unemployment, which many would argue is nearer to 15% if you counted the numbers the way we did in the past. 

So how is it possible the Chinese economy isn't just growing at a double digit rate but also has enough left over to buy our debt and MOST of Europes?  The answer is they have an economy that is far more free (that doesn't mean they have a free market).

Now what does debt mean?  Just take a look at Egypt.  The U.S. is applying pressure because we dangle the $1 + billion we send them every year.  Do not believe the Chinese will not do the same when their aspirations for Taiwan get the best of them.  Will America risk economic disaster over an island that our State Department already calls the "Republic of China"?  

My investing (more like trading) advice is to start looking into shorting the market (about 10-90 days).  I'll keep you posted when I'm ready to make the move..


2 Comments – Post Your Own

#1) On February 07, 2011 at 4:31 PM, leohaas (30.13) wrote:

China as an example of a free market?

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#2) On February 07, 2011 at 5:35 PM, rfaramir (28.62) wrote:

"advice is to start looking into shorting the market"

Do you mean the US market, or the world market(s)? For a while there you sounded bullish on the world (or parts of it) and bearish on the US (or at least dubious). 

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