Ranting on Bubbles

There a huge line between being a bear and being Chicken Little. Chicken Little, as the story goes, is constantly crying out that the sky is falling. A bear is one who believes the market is going to crash and is waiting patiently to start feasting on cadavers.

Over the last few weeks we have been bombarded with alerts that there is a bubble going on in China. No shit Sherlock. I mean, is there some idiot out there buying in that believes we're only at the beginning of the market cycle? A quick search on Google for 'China + bubble' gave us 7 million hits!

Rather than constant writing about the obvious these people get need to get involved. Just think about the recent credit crunch, people have been "predicting" a housing crash for the past 4 years. Would you have shorted the ABX 2 years ago? Your portfolio would look like bloody Iraq right now.

The point is that we are always in one bubble or another, that's just the nature of business or credit cycles. But say you do have a timeframe for the eventual Chinese meltdown. You know that Shanghai is going to have its ass kung pao-ed. As this Forbes article believes it will after the 2008. Don't write articles about it, put your money where your mouth is.

Do you really have what it takes to be a bear on this market? Are you willing to buy puts or short the index? With Ipos coming out that rise 50-60% on the first day you are either loony or brilliant. To tackle this bull you have to ask yourself, do you have the moral fortitude and the balls the size of mangos to put on a short position in front of the charging train?

You're a brave one Chicken Little. We who are about to die, salute you.

evening commute links

figured with the breakfast links, we needed some just before dinner right after we begin our descent. homeward bound we are.

1. Market Strategists see not only domestic threats being a problem to US economic growth, but also those from EM.

2. Quiet honestly, if you're going to read an article on EM, this is the one for you to READ!

3. I'm tired of beating you guys over the head over Chinese IPOs! Giant Interactive Unit! It should price at around 16-17 (above it's range) and open somewhere north of $25. Demand on these things are like crack!

4. Your dentist was right about brushing at least twice a day. Seems like folks throughout the Emerging Markets might be brushing about three times a day.

Breakfast Links

1. Chinese oil giant Sinopec loses money in oil as oil prices go up. Huh? Ohhhh. That’s why Communism blows.

2. China bans the use of "seductive" words like "foxy lady", "handsome guy" and "moneybags" in personal ads. I’m guess they prefer ones like “Single, parent honoring, female available - will produce many sons…”

3. Bank of China posts 40% rise in its nine month profit. Would have done better but took a hit in US subprime.

4. Petrobras’ finance arm prices $1 billion bond. 2018 @ 98.612 with 5.75% cpn to yield 1.67% over Treasuries.

5. JP Morgan to $2 billion to invest in Indian Infrastructure.

If Buffett says it, then it must be true

Signaling caution about China, Buffet warned about investing in China after he excused himself from the PetroChina party he'd been attending since 2000
The man from the Cornhusker state says he is "appreciative" of the performance of PetroChina and that he doubts he'll find another stock like it. Cheer up old Chap, Alibaba is just around the corner.

fuqme? no fuqu! no fuqi!

In the great tradition of assystem, wang on group, wienerberger AG; Fuqi Int’l Inc brings us another company with a semi-obscene, yet funny when you said it aloud name.
The 21 Chinese IPOs listing for the first time in the states year to date have 1 day returns of 18% and one week returns of almost 23%.
How do I know? Use your terminals people!
Also be on the lookout for Longtop Financial which opened today at 27.01, 34% higher than what it priced at last night.
Nothing in the world makes us here at Markets Emerge! as happy as Chinese IPOs do. Maybe except some really good tapas.

Is your recently launched IPO not performing how you'd like?

Well then Noah Education has the solution for you.
Rather than sit back and watch as it's stock price dipped, the executive team took action! After it's ADS's priced at $14, it opened it's first day of trading at $22.90 to meet it's seeminly high demand. But by yesterday's close the stock had dipped to below $17. So, what did management do?
Did they panic? Did they immediately short the stock? Did they dump their entire position? No, no and no. They immedediately chartered what in our own sick fantasy was a fully equipped private plane with plenty of green tea to cleanse the dirtiest of sinners (we should've flown with them.)
Destination you ask?
New York City. And not just anywhere in NYC, but the NYSE, where Noah's team greeted traders, specialists, the guy who hates the fact that he had to replace Grasso and all of the other big boards' movers and shakers.
Result? Stock finished up 23% for the day recovering yesterday's losses and then some.
Let this be a lesson to you Chinese companies out there soon to be listing on the NYSE: make nice with the good folks who walk daily on that treacherous cobblestone on Nassau Street. It might be in your best interest.

For those of you who missed out on Baidu.com in 05, fret not

Hope may very well be around the corner in the form of Alibaba.com
For those of you who have been in the witness protection program without access to the internet, alibaba.com is sort of what would happen if e-bay and craigslist got married and learned how to speak Chinese.
The aforementioned Baidu.com often referred to as "The Chinese Google" has returned 316% since it listed on Nasdaq just over 2 years ago. Although Alibaba isn't yet available to retail clients here in the states (only available to institutional guys via 144A), the fact that it's been oversubscribed 50 times gives an indication of the demand for this stock.
In other words, be patient; it's coming.
There's so much demand for this thing that they just revised the range today from 10-12 HK$ to 12-13.50 HK$

With a 40% stake in the company, Yahoo may finally have something to smile about when staring at Google. We'll find out on Monday.