The Trading Deck - Market Talks, Ideas & Opinions

China Currents

Details

Tuesday, 07 August 2012 09:05

By Benjur

Hey Shines Room,

It's been awhile. 

I've been in China for the last two weeks or so. And boy is it hot here.. Well I just sort of wanted to give you guys an idea of what i'm seeing out here. Lots of questions about China slowing and I just wanted to give you guys are report. The wealth being created here, is astronomical, middle class is growing like weeds out here. Is inflation happening? Yeah it is. Let's just say for a 3-mo CD here they are offering north of 3% while our 10 year bond is yield around 1.5%. 

Real estate bubble? Well probably, i'm sure people were using leverage to buy, only difference is that people HAVE to put down 30% or so to even buy properties here, not like they did in the states during our bubble when they put nothing down. They are still building like crazy out here, except not as much as it was 4 years ago, when I was in Mainland China last. It's tough to grow at 9%+ y/y. They are probably going to grow 6.8% - 8%. 

People are going to be moving from rural areas to come into the big city. Think of people leaving the farmlands in the mid west and heading to the big city to make it in NYC. That's basically all it is, China has many years of prosperity in front of them and i don't see stagnant growth any time soon. 

While out here, i haven't been able to keep eyes on the market as close as i like too. But just a heads up on a few moves i'm doing.

Drillers (i've started taking profits) i still think they are cheap and energy is still in high demand i think these guys got smashed, i was buying SLB down in the low 60's and some buys in the high 59's, i've started taking profits. BHI taken it off buying in the 39's. 

I'm still buying TBT slowly but surely. I'm just not a believer that rates will stay down here for ever. (this trade has worked against me for 100 bps) when i first started buying. but i'm Long term, and this is as long term as it gets. 

This is what i've been doing recently. Boy is Europe a mess, they need to BAZOOKA just to blow the shorts to smithereens. Will Draghi and Merkel get their SH*T together? who knows? I'm going to europe in two weeks, i'll report what i see there, as i'm always looking for that next big idea. 

Regards,

Benjur