You can find us on Twitter now at http://twitter.com/Cashflowtrader

the Oracle

ASX up for the day (so far)

the All ords is up for the day (39.1 points) at midday
as for the ASX 200 it's up (37.1 points)

things are looking good for the weekend guys

the Oracle

Overnight Review

Another great night on the NYSE with the S&P500 moving forward 1.2 percent to 986.75 at 4pm. Movers and shakers consisted of Motorola rallied 9.4 percent, the most since November, as job cuts helped the biggest U.S. mobile-phone maker report a smaller loss than analysts projected. Mastercard added 3 percent on earnings that topped the average forecast by 11 percent. GE advanced 6.9 percent for its steepest gain since April on speculation new banking rules will let the company keep its finance unit.

Over in Europe we saw much the same with U.K. stocks rising to the highest since January after earnings at BT Group Plc and Rolls-Royce Group Plc topped estimates and a Nationwide Building Society report showed house prices in Britain increased for a third month in July.
BT soared 13 percent after the largest U.K. fixed-line phone company reported net income in the three months through June 30 that beat analysts’ forecasts. Rolls-Royce gained 8.7 percent. BHP Billiton Ltd. and Rio Tinto Group led a rally in mining companies as metals prices advanced in London.

The benchmark FTSE 100 Index added 84.08, or 1.9 percent, to 4,631.61, a 13th day of gains in the last 14 trading days.

The Oracle

The rise of China in the Middle East

Another one from The daily Reconing Australia

This one by Ben Simpfendorfer

In early 2009, China overtook the United States as the world's largest exporter to the Middle East, having already raced passed the United Kingdom and Germany. It was the first time in over 60-years that the number one ranking had changed. The event marked an important milestone in what is a rapidly strengthening relationship between China and the Middle East.

But it is not Arab-style Wal-Marts who are responsible for the flood of "made-in-China" imports. It is instead individual Arab traders. Many of the traders can be found in Yiwu, a small Chinese city four-hours south of Shanghai. The city claims the world's largest wholesale consumer goods market selling the type of cheap gifts and household goods that sell in low-cost retail stores across the world.

Yiwu receives 200,000 Arab visitors annually. It is a virtual Arab market town with over a dozen Arabic restaurants lining its main street. However, the number of Arab visitors only started rising after 2001. Higher oil prices helped explain the increase, as they left Arab governments, and ultimately, Arab households with more money to spend on consumer goods.

However, visa restrictions were also important. How so? Western governments made it tougher for Arab traders to visit the West after September 2001 even as the Chinese government unofficially relaxed its visa policy. A few years ago, an Egyptian national might have taken 18 days or more to receive a visa to visit the United States. The same Egyptian could receive one to China in less than a day.

The number of Arab visitors to China surged as a result, filling up flights between Dubai and the main Chinese cities of Guangzhou, Shanghai, and Beijing.

The economic crisis has only intensified the trend. It's no wonder. The Middle East's imports from China are still growing, albeit in low single-digit figures, even as the United States imports from China collapse at near twenty percent rates relative to last year's levels. And Chinese manufactures are searching for new markets in the Middle East as a result. It is just one more sign of the change in demand.

Take Yang Linshan, for example, a fabrics manufacturer in the coastal province of Zhejiang. The Middle East now accounts for almost twenty percent of his exports. He is looking to set up a branch office in Dubai. Other manufacturers like Yang are meanwhile scouting for locations in the Middle East to build factories even as production costs at home rise. Egypt, with its low-cost workforce, is a particularly attractive investment destination.

There are other signs of the growing strength in trade relations. Wang Weishang, a local entrepreneur, also from the coastal province of Zhejiang, has set up Asia Business TV, a cable television channel. The channel broadcasts throughout the Middle East via Nilesat. It runs regular English-language promotional spots for Chinese products and services to the Middle East's traders.

It is individual stories such as these that help to underscore the depth of trade relations between China and the Middle East. And while the Middle East's $58 billion worth of purchases from China annually will grab headlines, it is the efforts of individuals like Yang Linshan and Wang Weishang that provide a more complete picture of strengthening economic relations between the two regions.

FOREX NEWS UPDATE

As reported by Korman Tam 7/29/2009

Risk aversion propped the dollar higher against the majors in Wednesday trading amid a retreat in the global equity markets - with Shanghai's Composite Index plummeting by 5% overnight. Commodities also slumped with gold falling to its lowest level in 2-weeks just above the $927 per ounce level and crude oil sliding to below $64 per barrel. The greenback pushed the euro toward the 1.40-figure and the Swiss franc around the 1.09-handle.

US economic reports released this morning saw durable goods orders decline sharply in June, posting a monthly decline of 2.5% versus a downwardly revised increase of 1.3% from May. The excluding transports durable goods orders improved to 1.1% compared with a downwardly revised 0.8% increase a month prior. The Fed's Beige Book revealed the pace of economic decline had moderated or stabilized at a low level in most districts adding that the manufacturing sector remained subdued but slightly more positive than in the past. The Fed said there was still slack in the labour markets, with most sectors reducing jobs or holding steady and net employment falling.

Meanwhile, NY Fed President Dudley expressed optimism over the economy, saying he expects moderate growth in the second half of this year, albeit considerably slower than in past recoveries. Dudley said "the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation", suggesting that the Fed will likely maintain low interest rates for some time to come. Lastly, he said that "if the recovery does, in fact, turn out to be lack lustre, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low" in the near-term.

Lihir Gold Quarterly Output Jumps 66% on New Mines

This might be of interest to some of you that follow commodities, just in from Bloomberg

By Jesse Riseborough

July 30 (Bloomberg) -- Lihir Gold the second-largest gold mining company on the Australian Stock Exchange, said second-quarter output rose 66 percent after buying mines in Australian and Africa.

Production increased to 294,024 ounces in the three months ended June 30, from 177,111 ounces a year earlier, the Port Moresby, Papua New Guinea-based company said today in a statement. That compares with an estimate of 289,000 ounces by RBC Capital Markets.

Lihir, which bought Equigold NL last year to add mines in Australia and the Ivory Coast, is also expanding its namesake Papua New Guinea mine to boost output after gold prices rose in the past eight years. Full-year output is “on track” to be in the previously forecast range of 1 million to 1.2 million ounces after record production in the first half, the company said.

Production will be lower this quarter due to plant maintenance at the Lihir Island mine, it said. Gold sales totaled 322,000 ounces in the quarter at an average price of $907 an ounce, up from $876 an ounce in the previous quarter, the company said.

Lihir rose 1.1 percent to A$2.73 at 12:41 p.m. Sydney time on the exchange. The stock has dropped 9.6 percent this year.

Housing Goes Mad

I was looking this morning at an email I received from the Daily Reckoning Australia, yes I do read some very left of centre stuff, but that is how you get to hear what others are thinking. And yes it is important as a trader to be abreast of what can make a big difference down the track.
Here is an excerpt of what was in that email.

From Dan Denning at the Old Hat Factory:

--With each passing day it becomes more obvious that Australia is in the grip of a housing dementia. Let the madness and unafforadability multiply!

--House prices were up 3.3% nationally in the second quarter of the year, according to Australian Property Monitors. The group said that the weighted average median house price in the most expensive capital city suburbs was $796,559. In the slightly less expensive suburbs the weighted average median house price was $405,872.

--Ouch.

--Aussie stocks are up as we write, bucking the global trend from yesterday. This comes after a 7% retreat by Chinese stocks in Shanghai and lower stocks in New York. What happened in China? Well, China's benchmark CSI 300 Index was up nearly 93% for the year before yesterday's retreat. China's monetary authorities have ignited a speculative bubble and made noises about reining it in yesterday.

--Bloomberg reports that Chinese stocks, "Plunged amid speculation the central bank is poised to order lenders to set aside larger reserves, Beijing-based Caijing magazine reported today on its Web site. Market News International said Chinese equities fell on speculation regulators will increase a tax on stock trading."

--Yesterday we asked the question of what would make Australia's economy grow in the next twenty years. We return to that question today. The Reserve Bank has said that Aussie banks will have to move cautiously as they repair their balances sheets. This suggests growth through debt may be harder to achieve. The RBA also said that the household sector's twenty year credit binge is over (now that asset prices are returning from orbit). Again, growth through debt is looking dubious as a national survival strategy.

--Let's also assume that the government cannot borrow its way to larger stimulus payments. With lower spending forecast for government, businesses, and households, you begin to wonder if Australia's economy has a home grown engine, or if it will rely on something else, or someone else beyond the borders. If domestic demand falls, that leaves housing as the only industry firing on all cylinders (for now).

--Now you can try building a national economy around the housing industry. But what you get is a nation or mortgage lenders, builders, real estate agents, speculators, and bombastic television presenters. You also get a huge speculative bubble. It's been tried in America and didn't work out so well.

--If not housing, then why not resources? "Over the medium term," said Glenn Stevens earlier this week, "the emergence of China (and other countries such as India) will continue, and will offer opportunities for Australia." This is not news. But what the Governor said next is newsworthy.

--"If commodity prices do stay at their relatively high levels on the back of strong emerging world demand, the mineral extraction sector and all those parts of the Australian economy that service it and feel its flow-on effects, will expand. Other sectors, will, relatively, contract over time."

if you want to know more about The Daily Reckoning Australia then look up there RSS feed you might find it very interesting

The Cashflow trader Oracle

This blog is dedicated to the world of stock trading. We are open to discussion on anything to do with trading the markets anywhere around the planet.

the Cashflow trader Oracle