JPMorgan Chase & Company (JPM) said on Monday that it has appointed Zili Shao as chairman and chief executive of its China operation. It has also appointed Fang Fang as vice-chairman of its Asia Investment Banking operations.   The company has initiated management changes to strengthen its China operations as Chinese companies are now closely focusing on domestic as well as global expansion.   Mr. Shao, currently the head of the Asian practice at the law firm Linklaters, is experienced in some of the biggest financial deals involving China, including the acquisition of Guangdong Development Bank and Industrial and Commercial Bank of China’s purchase of a $5.5 billion stake in Standard Bank of South Africa. Mr. Shao will assume his new responsibilities at JPMorgan’s China business in late January.   Mr. Fang would be responsible for JPMorgan's investment banking strategy and business development efforts involving China and all

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The inflation/deflation debate is hot… It crackles and pops like a pine fire. But it gives off little helpful light. Abe Lincoln may have read by the light of an open fire. But when we tried it, we singed our eyebrows. It made us suspicious of Old Abe; maybe he wasn’t quite as truthful as he pretended to be. Later, we realized he was a mountebank. But that’s another story…

Today, we light a candle and try to interpret the shadows on the wall…

Yesterday, the Dow fell 81 points. Gold dropped $5 to $1009.

Will the feds succeed in causing inflation? Or will they fail? Will the dollar continue to go down? Or will it prove to be a safe haven currency in a time of deflationary trouble?

According to the papers, the feds have already done it. “Fed says recovery underway,” says a headline from yesterday’s press.

Another headline tells us that

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Ever since the U.S. government forced the top U.S. banking institutions to take TARP money to prevent a total collapse of the U.S. banking industry, many have shifted  focus to Goldman Sachs [GS: 110.3485, +4.3285 (+4.08%)] and the company’s next move with this cash.  In October, Goldman was forced to take $10 billion of the TARP money.  Top executives at Goldman spoke out about taking money, insisting that they did not need any assistance, but graciously accepted the government’s money to appease regulators and the markets.

In February, Goldman was quick to state that it is looking to pay back the $10 billion back to the government as soon as it can.  Although Goldman had approximately $122 billion worth of cash and cash equivalents on its balance sheet as of November 28th, it won’t be able to pay the government back immediately.  The

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American Express Co. (AXP) may sell its stake in Industrial and Commercial Bank of China (ICBC) in an effort to raise cash and bolster its balance sheet.

The stock has declined over 2% with volumes at less-than-half normal levels.

AXP is expected to generate more than $600 million from a stake sale. The credit-card issuer can divest the stake after the lock-up period expires in two equal installments on Apr 28 and Oct 20 this year.

AXP said in a release that it "will explore all potential methods of sale that would maximize value and minimize market impact, with a preference for a private sale to investors."

Analysts have cut estimates for this year by 7 cents over the past week and by 24 cents over the past month as the card issuer struggles with huge credit losses.

AXP is currently a Zacks #4 Rank ("Sell") stock.

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After watching the destruction of the financial sector over the past 12-18 months, I (like many investors) became a huge bear on many of its components.  I have been a big advocate that in order for the markets to recover, the financial sector needs to stabilize.  Without a strong financial sector in place, the rest of the economy will lag due to the lack of credit availability, and housing prices will continue to decline.  On Monday, Treasury Secretary Geithner released his Toxic-Asset solution to try to help restore confidence in the U.S. banking industry.  This plan has significantly changed my view on the sector and may be the biggest step, other than the TARP program, to revive U.S. banks.

The markets obviously applauded the move by the Treasury as many of the bank stocks surged significantly during trading on Monday.  Today’s leaders in the

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GS (SELL $80) NEW PRICE TARGET $80,, WAS $140..The problem in the short run is valuation. The company has as a policy the purchase of distressed assets. In the past this has proven to be a very successful strategy generating an estimated $10 billion in revenues. Today this strategy is falling under the new mark to market accounting rules. These rules are forcing write downs of the acquired assets and this may harm earnings.Additionally, the value of the Industrial and Commercial Bank of China holding may have been lowered by as much as 30%.Notablecalls: Ladenburg's Dick Bove is among the Axes. Looks like GS is headed lower.