This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Daniel Gross (Newsweek): The greatest trade ever, November 10, 2009. How hedge fund manager John Paulson bet against the real estate bubble and made $15 billion in a single year.

• abc News: SocGen’s top analyst sees market lows next year, November 9, 2009. Albert Edwards, a top analyst with French bank Societe Generale, expects global markets to hit a new low in 2010, adding that he would not be surprised if the global economy enters another recession next year. Edwards, one of the leading equities bears and a long-term critic of the policies of Western central banks, is skeptical of popular opinion that extreme policy response will safeguard the West against a repeat of Japan’s lost decade of the 1990’s.

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Randall Forsyth (Barron’s): Reflation trade shifting into reverse? October 27, 2009. Risk assets ranging from stocks to commodities to currencies seem to be faltering after being floated on a sea of liquidity.

• Doug Kass (TheStreet.com):   My “fast money” recap, October 28, 2009. I saw some emerging technical signs of market weakness that could override seasonal strength, including three failed rallies in the past week, a contracting number of new highs on the New York Stock Exchange, a breakdown in the Dow Jones Transportation Average and, generally, stocks have begun to sell off on good and bad news. … asked how vulnerable the market was over the short to intermediate term if I used the quantitative models that

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Fred Bergsten (Foreign Affairs): The dollar and the deficits: How Washington can prevent the next crisis, November 2009. If the US is serious about recovering from the global economic crisis, it must balance the budget, stimulate private saving, and embrace a declining dollar.

• Randall Forsyth (Barron’s): Weak dollar equals strong stocks, for now, October 14, 2009. As long as there is no ready substitute for the dollar, Wall Street can celebrate the currency’s steady decline. And U.S. GDP will be boosted by a cheap greenback’s spur to exports and deterrent to imports. This cannot go on forever, however. The dollar’s fall may not have started on President Obama’s watch, but it may become his problem.

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Andy Xie (Caijing.com.cn): Why one bubble burst deserves another, September 28, 2009. The financial crisis taught crucial lessons about the dangers of bubbles, loose regulation and debt. It’s a pity we didn’t learn.

• John Hussman (Hussman Funds): Zen lessons in market analysis, October 11, 2009. The best way of preparing for the future is to take good care of the present, because we know that if the present is made up of the past, then the future will be made up of the present.

• John Authers (Financial Times): Manufactured surprises will keep stocks rolling, October 10, 2009. A stronger recovery would help earnings but would also bring the risk of higher interest rates to

The Top 10 Reasons Why the China Sell Off Will Continue

by Louis Basenese, Advisory Panelist

How much are you willing to pay for good advice? And by “good,” I mean profitable.

A couple of hundred bucks? A couple of thousand?

Before you answer, consider this: Two weeks ago, I alerted members of The Oxford Club to the precarious position of Chinese equities. As I put it, “China could be on a crash course with a correction.”

A contrarian stance, no doubt. But vindication came quickly.

The following Monday, Chinese stocks (represented by the Shanghai Composite Index) suffered a 5.8% drop – the worst single-day decline of the year. Two days later, they got dented by another 4.3%.

Unabashed China bulls will point out that the Shanghai index promptly recovered. But then this week hit…

Rally Rebuffed: Chinese Stocks Take Another Tumble

On Monday, the

Further to my “Shanghai cracks” post of yesterday, a Bloomberg interview with Andy Xie provides additional insight. Xie is a highly regarded analyst based in Hong Kong and a former Morgan Stanley chief Asian economist.

Also read Xie’s thought-provoking article of a month ago, “Famed market analyst says China has “become a giant Ponzi scheme“.

Click here or on the image below to view the clip.

Source: Bloomberg, August 31, 2009.

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Andy Xie (Caijing.com.cn): New bubble threatens a V-shaped rebound, August 20, 2009. Instead of a V-shaped recovery, we may instead get a W curve. A dip next year, although perhaps not statistically deep, could deliver a profound psychological shock. Financial markets are buoyant now because they believe in the government. The second dip would demonstrate the limits of government power. The second dip could send asset prices down - and keep them down for a long time.

• Economist.com: U, V or W for recovery, August 20, 2009. The world economy has stopped shrinking. That’s the end of the good news.

• Ambrose Evans-Pritchard (Telegraph): There’s no quick fix to the global economy’s excess capacity,

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest. Please also add the links to any other thought-provoking articles you would like to share to the comments section.

• Paul Marson (Financial Times): Cause for caution on US earnings, August 12, 2009. The US second-quarter earning season is now ending, apparently on a good note as nearly three quarters of US companies have beaten consensus expectations. But a closer look at these earnings shows there is cause to be more cautious about the health of corporate America than the headline numbers would suggest. The cloud of euphoria that followed recent results had more to do with extraordinarily low expectations, than to any meaningful and lasting improvement in prospects, which still require a rapid recovery in economic activity. This suggests

The plenty more for stock optimists to be optimistic about, of course. One of the commonest (and laziest) tropes doing the rounds these days is that China’s growth engine will pull the rest of the world out of recession.

Anyone who thinks China can save the world from recession needs to read former Morgan Stanley analyst Andy Xie’s opinion on the matter. Andy reckons China is the next giant Ponzi scheme set to collapse. Andy predicted the bubbles in Japan, Southeast Asia, Silicon Valley and most recently in the US housing market. So when Andy speaks, we listen.

Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued. The odds are that both will adjust in the fourth quarter. However, both might flare up again sometime next year. Fluctuating within a long bubble could

 Goldman Sachs Would Have Collapsed If Not For Henry Paulson.

The Dow slipped a bit yesterday – only 39 points. Everyone is watching. They want to see how far this rally carries on. Many think it is more than a bear market bounce; they think it is for real.

The prevailing opinion is that quick action by the feds avoided a more serious meltdown. Ben Bernanke says he was working to prevent a “second great depression.”

And now that the crisis is past, the economy is slowly climbing out of its hole. The second quarter showed GDP falling at 1% per year in the US… rather than the 6.4% rate recorded earlier in the year. Housing sales have perked up. Oil is trading above $71 – a sign of renewed economic activity. And gold seems to be getting ready for another assault on the $1,000 mark – a sign of growing inflation pressures.

At