The market seems to be selling-off on the back of limited bad news imo, apart from the dollar that is.

If you can hold your nerve and apart from any short term requirements to offload poor performing stocks, I have a couple!!, my advice would be sit tight. This does not have the feel of the tech(mining!) bubble at all. Difference being there are a lot of good fundamentals, unlike in 2000 when there were a lot of over rated nothing companies.

WASHINGTON (MarketWatch) - U.S. builders slashed prices by more than 10% in December in a failed bid to boost sales, which dropped about 5% to the lowest level in nearly 13 years, the Commerce Department reported Monday. Sales of new homes fell 4.7% to a seasonally adjusted annual rate of 604,000 in December, far below the 645,000 expected by economists surveyed by MarketWatch and the lowest sales pace since February 1995. The median sales price tumbled a record 10.9% to $219,200 compared with November and were down 10.4% compared with a year earlier. For all of 2007, home sales fell a record 26.4% to 774,000 compared with 1.05 million sold in 2006.

somewhat perversely, Dow has staggered upwards ...... of course, that is everyone banking on another minimum 0.5% cut by Fed ...... meanwhile, European central banks do bugger all.

while one might argue that Fed is taking something of an alarmist stance, Bernanke will argue rightly or wrongly, that the Fed is at least doing something positive to try to head off the worst effects of any recession.

meanwhile, the European banks stand back and assume that Europe will blithely absorb and float through any US troubles ..... that has to be head in the sand stuff!

after those figures i guess 0.5 is a done deal

did i not see in the Times yesterday that this could cause the loss of 2million plus jobs?

Rebates: Congress giveth, China taketh away?
Many Americans believe any rebates from tax stimulus will benefit Beijing more than Baltimore and Bakersfield.

and elliot wave forecast 10.5k

Couple of interesting write ups on China's inflation problems.

http://www.iht.com/articles/2008/02/05/business/yuan.php

http://www.thestar.com/comment/article/300835



And also one for the bears.......

http://kayakman.livejournal.com/79510.html

Chinese inflation still rampant.


http://www.999mixfm.com/news/13/666879/china+faces+pressure+to+raise+interest+rates+to+rein+in+inflation

China faces pressure to raise interest rates to rein in inflation

Fri, 2008-02-15 11:48.

By: THE ASSOCIATED PRESS SHANGHAI, China - China is under strong pressure to raise interest rates to rein in surging prices, a central bank adviser says, as Chinese news media said Thursday inflation likely rose above seven per cent in January.

The challenge is in countering inflation and keeping China's currency steady at a time when the United States is slashing interest rates to stimulate its own wobbling economy, Fan Gang, an adviser to the central bank, said in comments to the Communist party newspaper People's Daily. "We have to stick to a tight monetary policy to prevent rising prices from fuelling overall inflation," it quoted Fan saying. "Right now, our interest rates are relatively low while price levels are relatively high," he said. "Some short-term deposit rates are still negative in real terms. This means there is still pressure in the economy to raise interest rates."

China raised interest rates six times last year and increased the amount of reserves banks are required to hold on 10 occasions, seeking to cool investment and counter inflation. Authorities will continue to use those policy tools, Fan said without giving specifics.

A report in another Chinese newspaper, Wen Hui Bao, forecast the inflation benchmark for January surged above seven per cent, largely due to soaring food and fuel prices. Recent severe winter storms aggravated shortages, causing supply disruptions and damaging crops at a time when demand is traditionally high due to the Lunar New Year holidays while supplies tend to be tight.

Consumer prices were 6.5 per cent higher than a year earlier in December. January figures, due to be released next week, are expected to top that decade-high level, the Shanghai-based Wen Hui Bao said. Other reports have carried similar forecasts. Fan, the central bank adviser, said China would adapt its economic policy to changing domestic and international trends, such as the U.S. slowdown.

But he ruled out a one-step revaluation of the Chinese currency - subject of much speculation as the Chinese yuan's gains against the U.S. dollar have accelerated in recent weeks, as "impossible." "That is not a choice that would benefit stable economic development," Fan said, reiterating Beijing's contention major fluctuations in the yuan's value could damage the financial system. "In my own opinion, the renminbi (yuan) should continue to rise in a gradual, controlled manner suitable to developing the economy," Fan said. The yuan's value against the dollar, set at 7.1890 Thursday morning, has risen by just over 11 per cent since July 2005, when China revamped its foreign exchange system, revaluing the currency by about two per cent.

As I keep on about Chinese inflation and the rising costs of China and how China is no longer "cheap" - perhaps this might be interesting to some.


http://www.chinapost.com.tw/business/2008/02/23/144161/Rising-material.htm

Rising material and labor costs squeezing Chinese factories

Saturday, February 23, 2008
By Elaine Kurtenbach, AP


SHANGHAI -- The teddy bears selling for US$1.40 in Shanghai's IKEA store may be just about the cheapest in town, but they're not made in China -- they're stitched and stuffed in Indonesia.
The fluffy brown toys reflect a new challenge for China: Its huge economy, which has long offered some of the world's lowest manufacturing costs, is losing its claim on cheapness as factories get squeezed by rising prices for energy, materials and labor.

Those expenses, plus higher taxes and stricter enforcement of labor and environmental standards, are causing some manufacturers to leave for lower-cost markets such as Vietnam, Indonesia and India.

"It's true that we are facing difficulties regarding increased costs in China," said Linda Xu, public relations manager in China for Swedish retailer IKEA.

Though the competition for lower prices is not new, "we are constantly having to compete with other countries and suppliers," she said.

While costs in China are rising nationwide, the greatest pain is being felt in the south, where about 14,000 out of the 50,000 to 60,000 Hong Kong-run factories could close in the next few months, said Polly Ko of the Economic and Trade Office in Guangdong, which neighbors Hong Kong.

"Wages are rising, materials cost more. Overall, costs are definitely higher," says Duncan Du, general manager of Shenzhen Oriental e-Tecs Ltd., an electronics maker in the southern city of Shenzhen. To adapt, many multinational manufacturers -- including Intel Corp., iPod-maker Hon Hai Technology Group and Japanese companies like Canon Inc. and Sony Corp. are expanding operations in Vietnam.

Auto parts makers are decamping for the Middle East and Eastern Europe, textile makers to Bangladesh and India.

Thousands of smaller Hong Kong, Taiwan or Chinese-run factories in south China's traditional export hub of Guangdong are closing or moving out. As many as 300 of some 1,000 shoe factories in the Guangdong factory zone of Dongguan have closed down, according to a report by the China Light Industry Council. It said half of the shoe factories set up by Taiwan investors had already shifted production to Vietnam.

Costs have climbed so much that three-quarters of businesses surveyed by the American Chamber of Commerce in Shanghai believe China is losing its competitive edge.

The higher costs mean Western consumers are bound to face steeper prices for iPods, TVs, tank tops and many other imported products made by small Chinese subcontractors.

"Americans continue to want to buy at lower prices," said Kevin Burke, president and CEO of the American Apparel and Footwear Association. "They are used to going to the store during Christmas and getting something cheaper than a year ago."

That's no longer a sure thing.

Chinese inflation, meanwhile, has risen to its highest in more than 11 years, jumping 7.1 percent in January, as snowstorms worsened food shortages. The biggest price hikes have been for food, but longer-term pressures on prices for manufactured goods will persist, analysts say.

"China needs to reprice its exports and that has to be accepted by international buyers," says Andy Xie, an independent economist based in Shanghai.

But raising prices is tough for Chinese manufacturers when the quality of their products is suspect after a slew of scandals over tainted or potentially dangerous products.

At the same time, despite its huge pool of unskilled rural laborers, China's supply of experienced, skilled talent falls far short of demand. The gap has been pushing wages up by 10 percent to 15 percent a year.

A new labor law requiring stronger employment contracts is expected to raise costs even more.

Prices for plastics and other materials have climbed 30 percent or more, and electricity rates are surging, too. The government has also slashed export tax rebates -- originally given to promote exports -- on more than 2,800 products accounting for nearly 40 percent of all Chinese exports.
The steady appreciation of China's currency, the yuan, also contributes to the problem.

At IKEA's Shanghai store, a stroll down the aisles finds most products made in China, rather than Europe or the U.S. But a growing share of the goods come from less developed markets: stuffed toys from Indonesia, wooden train sets from Bulgaria, colorful rugs and throws from India, bed sheets from Ethiopia, baskets and wooden trays from Vietnam.

It also is sourcing from inland cities like Luoyang and Wuhan, outside the traditional export zones of Guangdong and the Yangtze River Delta, near Shanghai. In inland China, wages still lag far behind the richer eastern and southern coastal areas.

For many companies, especially those focused on the huge potential Chinese market, leaving the country would be a last resort, says Jonathan Woetzel, co-author of a recent book, "Operation China," that outlines strategies for competing in the country's fast-changing business environment.

"You'd have to start over, essentially," he said in an interview. "There's still quite a lot of opportunity to take cost out of the system. What we do see is supply chains extending inland, for example, going inland for final assembly."

Despite those strategies, prices for China-made products will likely continue to rise in the next few years, causing companies to increasingly look elsewhere, says UBS economist Jonathan Anderson.

"Over the medium-term, where are you going to invest if you're building a factory? Maybe not China anymore. Maybe Bangladesh, Vietnam, Indonesia. Maybe India."

the elliot wave forecast has failed

onday is going to be fun, perhaps three days of serious red before a pick up for Thu/Fri next week ?


http://money.cnn.com/2008/02/29/markets/markets_wrap/index.htm?postversion=2008022917


Brutal selloff on Wall Street

Dow tumbles 315 points, the second worst day of the year for stocks, after
AIG's big loss and UBS's outlook on financials.NEW YORK (CNNMoney.com) --


Stocks tumbled Friday, in the second worst day of 2008, after AIG's record loss added to worries about the financial sector and more weak economic news intensified fears about a recession.

Treasury prices rallied, sending yields higher, as investors sought safety in the comparatively safer haven of government debt, while the dollar held near a record low versus the euro. Oil prices dipped after topping all-time highs over $103 a barrel during the session. Gold prices jumped too.

The Dow Jones industrial average (INDU) lost nearly 316 points, or 2.5%. The broader Standard & Poor's 500 (SPX) index lost 2.7% and the Nasdaq composite (COMP) fell 2.6%. The Russell 2000 (RUT) small-cap index also got slammed, tumbling 2.7%.

Stocks tumbled for the month of February as well, extending the wretched start to 2008.

"It's a debacle today," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "There's just no good news out there.".......................

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3465296.ece



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http://www.iht.com/articles/ap/2008/03/03/america/Economy-Manufacturing.php

Survey shows manufacturing activity falling in February after slight expansion in January

The Associated PressPublished: March 3, 2008

NEW YORK: U.S. manufacturing activity declined in February to its weakest level in nearly five years, an industry group survey showed Monday, heralding more instability in the job market and frailty in the overall economy.

After reporting modest growth for January, the Institute for Supply Management said its February manufacturing index registered at 48.3 its weakest reading since April 2003, but above Wall Street's even poorer expectations.

A reading above 50 indicates expansion, and anything below that shows contraction. The February figure was a bit better than the median forecast of 48.1 of economists polled by Thomson Financial/IFR. But it was slightly worse than December's reading of 48.4.

Manufacturers have been struggling with the rising cost of raw materials and languid demand in the housing market. Industries reporting declining activity last month included furniture, textiles, machinery and chemical products; those reporting growth included apparel, leather, wood, plastics and rubber, and food and beverage.

It's too soon to determine whether economic reports prove that the nation's economy is headed for, or already in, a recession. Recession is normally defined by two straight quarters of declines in gross domestic output. But recession or not, Monday's manufacturing data supported the argument that the economy is indeed on the wane.

Today in Americas
Clinton vows to press onMcCain's evolving positions threaten image of straight talkerColombia links slain rebel leader to Venezuela"You can't paint a happy face on this data," said Wachovia Corp. economist Mark Vitner. "The economy may not be in recession, but it's not that far off."

The report's employment index fell to 46.0 from 47.1 in January, indicating accelerating contraction an inauspicious piece of news ahead of Friday's employment report for February from the Labor Department. On average, economists are forecasting a slight increase in payrolls, but some predict they will decline for a second straight month. January's net jobs loss was the first in almost four years.

And meanwhile, production stalled sharply the production index fell to 50.7 in February from 55.2 in January.

Other worrisome categories were new orders, which also showed an accelerated contraction, and prices, which continued to increase, albeit at a slower pace than in January.

The big reason manufacturing is not dropping off more severely is exports, said Norbert Ore, chairman of ISM's manufacturing business survey committee.

"It appears right now that manufacturing is weathering the storm better than other parts of the economy, particularly the financial sector," Ore said. The ISM's survey of February's service sector will be released Wednesday the group's most recent report showed the service economy contracting sharply in January.

Ore said eight of the 18 industries that the ISM manufacturing survey follows are closely tied to the export markets. Exports are holding up well due to the weak dollar, which makes U.S. goods attractive to foreign buyers.

The ISM's manufacturing index was released at the same time the Commerce Department reported that construction spending fell by 1.7 percent in January, its widest drop in 14 years. The two reports bolsters the argument for the Federal Reserve, which has already lowered key interest rates by more than 2 percent since last summer, to reduce rates again. Rate cuts tend to spur economic growth.

Going to be a nasty day ahead perhaps, Asian markets tanking 3% so far after credit worries in the US.

Not that credit worries should be a surprise, but hey, the media and various fun managers keep trying to talk the markets up so they can keep selling their large holdings down, so they have to be "surprised" every so often at "credit crunches" or "rising oil" or "falling oil" or whatever........ LOL :)

Hardly dubious anymore! here goes test of 12000...

Very good thread on TMF, with some potentially very interesting news and comment :


http://boards.fool.co.uk/Message.asp?mid=10958184&sort=whole



.

Given the number of fund managers who decided to retire before things came to a head last year....... I don't think any of them (the good ones at least) where particularly surprised.

No matter how people try to kid themselves, at the end of the day the economy has gone in cycles since the year dot, a big boom is often followed by a big bust. Monetry policy makes no difference because it's fear and greed of the market participants that cause (and often exagerate) these cycles.

In my opinion.

Strawbs.

The main difference between previous booms and busts and today, is that it is a whole lo easier to short all and sundry than ever before!

http://www.marketoracle.co.uk/Article3942.html


.

Looks like it is quite safe to buy into the market again. The Fed has certainly turn around the markets. Well done!

Don't know if anyone is interested, but I have just been informed by HBOS that from midnight on Saturday they are pulling out of subprime lending to all self certification cases and to full status cases where the proceeds are for the purpose of debt consolidation.

In order to end the sell-off and rising inflation they will have to scrap $ for oil and gas commodities. Its the only solution. US is stuck as it cant lower the rate even further, cos the whole thing will just go crazy.

Why dont they just switch the currency to euro. I remember one of the oil producing countries Venezala was in favour of this.