Chinese inflation rate vs. rare earth minerals

From the Bloomberg:

http://noir.bloomberg.com/apps/news?pid=20601089&sid=a0oK9Fpz4YC0

 

China raised its benchmark lending and deposit rates for the first time since 2007 after inflation accelerated to the fastest pace in 22 months. The one-year deposit rate will increase to 2.5 percent from 2.25 percent, effective tomorrow, the People’s Bank of China said on its website today. The lending rate will increase to 5.56 percent from 5.31 percent, it said.

China’s inflation quickened to 3.5 percent in August, highlighting overheating risks that have prompted the government to curb credit and clamp down on the real-estate market this year. Higher interest rates may encourage inflows of speculative capital from abroad, complicating management of the fastest-growing major economy.

 

News about the Chinese rare earth mineral blockade:

 

http://www.nytimes.com/2010/10/19/business/global/19mineral.html?_r=1&ref=business

 

China mines 95 percent of the world’s rare earths. They are crucial for compact fluorescent light bulbs, hybrid gasoline-electric cars, large wind turbines and other clean energy technologies, as well as for mobile phones and a number of military applications, like missiles, sonar and range finders on tanks.

…

Wang Caifeng, the secretary general of the Chinese Rare Earths Industry Association, predicted at the conference in Xiamen on Tuesday that domestic demand for rare earths in China would soar to 130,000 tons in 2015 from 75,000 tons now, Bloomberg reported. She said that world consumption would be 210,000 tons in 2015, which would seem to indicate that consumption outside China would total 80,000 tons.

By comparison, the export quotas for this year total just 30,258 tons, down from 65,609 tons in 2005.

If China mines the 95% of all of the rare minerals, then the world using only the 22% of all of the production !

The remaining 78% processed in China.

It mean the current blockade is simply a panic move, to be able to capture the last  tiniest part of the market, before they exhausting all growing potential.

 

 

So, summarise (I hope that the numbers are good):

1.,The interest rate lower than the inflation

2.,It driving more and more investment into the Chinese economy

3.,Due to this now they have many industry which  can make the requirement of the whole world.

 

The question after all of this: where is the growth opportunity? They will  exporting to the Mars, after all production capacity will be killed outside China?

Interesting trends in the US treasury rates

 

 

 

The rates are pointing a toward a “collision” within two month on the two years rates, and they will collide on the longer term rates too.

It mean that someone have to liquidate assets, and there have to be more seller than buyer for that asset (because the market limited without the new money from the FED or from the US government)

 It could mean a crisis, or a new round of Quantitive Easing – we will soon see what will happen.

 

 

 

Interesting trends in the US treasury rates

 

 

The rates are pointing a toward a “collision” within two month on the two years rates, and they will collide on the longer term rates too.

It mean that someone have to liquidate assets, and there have to be more seller than buyer for that asset (because the market limited without the new money from the FED or from the US government)

 It could mean a crisis, or a new round of Quantitive Easing – we will soon see what will happen.

 

 

 

Interesting Chinese PPI (Producer Price Inflation) data-and what could be behind it

First of all , if we consider the sensitiveness  of the Chinese export/investment sector to the availability of cheap loans, then the most important data is the interest rate vs. PPI.

It was negative during the bust- at that time many Chinese manufacturer went out from the business.

Now it is positive, however peaked

Interesting the connection with the US trade deific.

 

What could it mean?

 

The Chinese inflation is driven by the interest rate-from one side.

And since 2006 the Government flooded the market with cheap investment loans, just to keep the economy on track.

 

The PPI went down when the US deficit peaked- and during the 2008 downturn.

 

I assume that there is a strong connection between the PPI-interest rate spread, the profitability of the enterprises and the Chinese housing market (the mayor part of the money end in the housing market- the investment financed with 100% loans, so there is no place for the earned money)

 

Intereting.

Volvo long term heavy duty sales trend - (Volvo+Mack+Renault trucks)

US consumer credit in freefall

But the situation is not as bad as it could be – without the US government the dip could be two times more.

In the non-revolving field, the government increased its share on the market from 98.4 (2007) to 217.1 billion $

Without this, the actual dip could be 273.8 billion $ instead of the current 155,1 billion$

And the other interesting point is the drop in the securitized assets ,and the growth in the commercial banks field at the beginning of this year J

Pain for the homeowners in Hungary-and same annoyance for the Polish

 

Two interesting graph.

The % is the deviation of  the exchange rates from the pre-crisis avarage .

 

As it seems,the Hungarian homeowners made a realistic decision to take CHF morgages, due to the stability of the CHF exchange rate

 

The interesting question would be the reason of this stability.

 

My favourite theory is the inflation chasing of the central bank.Due to that,the Bank of Hungary increased the intrest rate to strenghten the forint if the exchange rate been too high.

 

 

 

#END

Interesting drop in the treasury rates (US)

Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
6/10/2010	0.06	0.10	0.18	0.34	0.79	1.27	2.12	2.78	3.33	4.06	4.25
6/11/2010	0.04	0.08	0.16	0.3	0.75	1.21	2.03	2.68	3.24	3.97	4.15
6/14/2010	0.02	0.07	0.15	0.31	0.77	1.23	2.07	2.73	3.28	4.02	4.2
6/15/2010	0.03	0.09	0.16	0.31	0.79	1.26	2.1	2.77	3.32	4.06	4.23
6/16/2010	0.06	0.10	0.17	0.3	0.75	1.22	2.06	2.73	3.27	4	4.18
6/17/2010	0.05	0.09	0.16	0.28	0.72	1.18	2.01	2.67	3.21	3.95	4.13
6/18/2010	0.04	0.11	0.17	0.3	0.74	1.2	2.04	2.7	3.24	3.97	4.15
6/21/2010	0.05	0.12	0.17	0.29	0.74	1.21	2.05	2.72	3.26	3.99	4.17
6/22/2010	0.08	0.13	0.18	0.29	0.71	1.15	1.98	2.64	3.18	3.92	4.1
6/23/2010	0.07	0.13	0.19	0.3	0.66	1.11	1.93	2.58	3.13	3.87	4.05
6/24/2010	0.07	0.13	0.19	0.29	0.67	1.1	1.93	2.59	3.14	3.91	4.09
6/25/2010	0.05	0.13	0.2	0.29	0.65	1.07	1.9	2.57	3.12	3.89	4.07
6/28/2010	0.07	0.17	0.22	0.3	0.62	1.03	1.83	2.49	3.05	3.82	4.01
6/29/2010	0.09	0.15	0.22	0.31	0.61	0.99	1.78	2.43	2.97	3.76	3.94
6/30/2010	0.17	0.18	0.22	0.32	0.61	1	1.79	2.42	2.97	3.74	3.91
7/1/2010	0.16	0.17	0.22	0.32	0.63	1.01	1.8	2.43	2.96	3.71	3.88

Like in the bad old times, in 2008

 

 

US oil consumption

It is better than in the same period of the last year

The 2010 consumption is slightly bigger than the 2009 , but 8% less than the peak in 2007

 

 

1995	17,219	18,279	17,484	17,142	17,293	18,131	17,147	18,044	18,026	17,651	17,979	18,366	212,761
1996	18,261	18,620	18,301	17,885	17,957	18,107	18,211	18,658	17,655	19,171	18,535	18,334	219,695
1997	18,554	18,398	17,863	18559	18,293	18,617	19,107	18,565	18,562	19,071	18,578	19,250	223,417
1998	18,362	18,316	18685	19,044	18,375	19,182	19,466	19,347	18,895	19,188	18,673	19,419	226,952
1999	19,029	19,107	19,497	19,152	18,705	19,836	19,820	20,093	19,483	19,868	19,087	20,498	234,175
													0
2000	19,026	19,635	19,218	18,816	19,605	20,054	19,696	20,496	19,899	19,798	19,328	20,814	236,385
2001	20,092	19,689	19,876	19,729	19,501	19,561	19,919	20,153	19,016	19,824	19,396	19,003	235,759
2002	19,454	19,444	19,676	19,552	19,728	19,875	20,076	20,221	19,461	19,678	19,991	19,943	237,099
2003	20,017	20,375	19,708	19,830	19,344	19,793	20,094	20,586	19,933	20,182	19,873	20,679	240,414
2004	20,479	20,872	20,453	20,545	20,313	20,780	20,880	21,028	20,529	20,861	20,805	21,229	248,774
													0
2005	20,694	20,830	21,009	20,137	20,606	21,198	20,939	21,666	20,142	20,253	20,623	21,495	249,592
2006	20,436	20,577	20,608	20,201	20,457	20,982	20,740	21,434	20,559	20,769	20,669	20,795	248,227
2007	20,567	21,309	20,536	20,536	20,620	20,723	20,747	21,025	20,415	20,476	20,535	20,719	248,208
2008	20,247	20,029	19,831	19,815	19,798	19,678	19,557	19,272	17,839	19,698	19,052	19,142	233,958
2009	19,125	18,706	18,672	18,471	18,176	18,762	18,771	18,732	18,362	18,727	18,550	19,163	224,217
2010	18,528	18,860	19,070	18,910