Today we are in the process of moving our office.  Thankfully, our telephone numbers remain unchanged.  The new office is located on Oak Rd, across the street from the new AAA building under construction, and which can be seen as you drive on the 680 Freeway.

 

3100 Oak Rd

Suite 250

Walnut Creek, CA 94597

 

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Allow me to ask a rhetorical question;  Who is North Korea's only friend? 

 

Whether N. Korea has more than one friend is a question for another time.  For purposes of our discussion here, N. Korea has one major ally when pressure increases.  If you said China, you would be correct.

And so the China financial theme finds itself expanding into politics this week.  With N. Korea sentencing two female US journalists to hard labor, on top of firing missiles and testing nuclear bombs, one might ask, is there more on the horizon?  What is driving the N. Koreans into such behavior, and why is China silent doing nothing to knock some sense into the North Korean government? 

One can only wonder what China's strategy is given it is both a political friend of N. Korea as well as a financial partner/debtor of the United States.  The world is truly changing right before our eyes.  We do know that china holds trillions in US dollars due primarily from huge trade surpluses with the US.  We do know that China is the largest purchaser of US Treasury Bonds, which makes China America's primary banker.  We also know that China has a strong interest in controlling the value of their currency against other currencies, especially the dollar.  There is some speculation percolating that China may be slowly embarking on a policy to shift the world's currency from the US dollar.  Interestingly enough, today Japan announced today that it was fully behind keeping the US dollar as the world currency.

In other China news, there is a follow up to our earlier report regarding Rio Tinto Group's rejection of a deal with Chinalco, the Chinese state owned company.  A plan by Rio Tinto and BHP Billiton to link up their large iron ore operations was met with a firm response from China; trading sanctions.  China is not happy about this pending merger as China imports all its steel.  China's government plans to impose trading sanctions on Rio Tinto and BHP clearly in an effort to keep steel prices from skyrocketing.  China Central Television reported Thursday that the Ministry of Commerce will require both companies to apply for permission to sell iron ore in China.  Clearly, China is not shy about flexing its growing financial muscle.

 

For the week, the Market moved marginally until Friday when there was much selling going on early in the day, and which continued the selling on Thursday.  Yet, by midday the market rebounded.  Overall, the Market has now advanced four consecutive weeks. The Dow was the last of the indexes to finally give investors a profit for the year, with the Nasdaq and the S&P already doing so earlier.  It seems that confidence has increased that the worst recession since World War II is slowly coming to an end. 
 
There was more news this week that confidence among U.S. consumers rose again, making it four straight months.  It would appear that consumers are feeling that an impending end to the recession is near, despite the fact that prices of imported goods jumped due to rising oil costs.  Given the late buying surge today, coupled with renewed consumer optimism, one might expect Monday to be a good start to the week with institutions doing more buying.
 
Thank you for your indulgence during this very busy week as we move to new office space.  We should be up and running on Monday.

Have a great weekend!