The world needs to make room for China if China is going to be able to continue to grow.

The world needs to make room for China if China is going to be able to continue to grow. That will cause stresses in other world economies. China and Japan re-liquefy their banking systems on the backs of their people. Highly intelligent poor people have enormous savings rates. In the USA the Chinese immigrants rose rapidly because the USA gave them the market interest rates. But China is following the Japanese technique of keeping internal interest rates low and exploiting the high savings rate of their people to finance new projects. Eventually China will have to relax on private property. Perhaps there is a solution to that. Perhaps if they tie property to single individuals and the property reverts to the state when the individual expires would be a solution. That is effectively what happens in free economies with estate inheritance taxes that return part of the value of the property back to the state. In reality, the benefit of the right to own property exists only during our lifetime and more often than not the next generation squanders all the value. China should consider private ownership limited to the life of the owner as at least a starting point. This is a second way to raise capital by selling property and then recovering the property upon death. It would essentially be a lifetime rental agreement and then the state takes back the property. But then it is likely that the private owners would allow the property to depreciate. Using the private owner’s money to restore the property before the children inherit anything could stop that.

It is now highly likely that the Obama’s communist style fraudulent moving of bad news backwards is likely to result in a surprise that will shock the stock market. The FED will have to announce that the 4% improvement they predicted for the first quarter is now lower than the last 4th quarter and it could be as low as 2%. Recently they have dropped the 4th quarter numbers so they can quickly inflate the 1st quarter numbers. Again Obama deceives the world pretending today’s bad news happened in the past. We are entering a triple dip now primarily because Obama has ignored the housing sector because to him anyone who makes $50K/yr is wealthy compared to his homelands of Nigeria and Indonesia. Obama is psychologically an illegal immigrant. He knows he is not a real American and that is why he sides with Ortega and other socialist tyrants who criticize America.

Egypt’s public prosecutor ordered the detention of former President Hosni Mubarak for 15 days while he is being investigated as part of a corruption probe.

Obama voted against raising the debt limit while he was in the senate, the deficit was under control and a Republican asked for it. Now Obama’s deficit is out of control due to flooding his welfare-voting constituency with money. 6% of Americans now pay all the cost of government for the 50% of Obama voters who pay no taxes. The next 44% of Americans pay for themselves. The Obama 50% are the cause of the national deficit. Education does not seem to help Obama’s constituency. It that continues there will be another American Revolution and Obama’s voting constituency will have no voting rights. When America was created you had to work and contribute to American prosperity to have a right to vote. Lazy people and criminals had not right to vote. Women worked for their family not in the national work force so they did not vote either. America may have to take away the voting rights of criminals and lazy people again so incompetent presidents, judges, and legislators can be removed from office.

World Markets:
Today Squawk Box was kidding around and saying China may be the 51st state ahead of Puerto Rico. The USA is a Republic so China would have only two votes in the Senate but a majority in the House of Representatives.

Fitch Ratings lowered its outlook on China’s AA- long-term local-currency rating to “negative” from “stable,” citing a “high likelihood of a significant deterioration” in banks’ asset quality within three years. Bad loans could rise to 15 percent to 30 percent of the total, with concern at the quality of lending compounded by growth in off-balance-sheet credit, Fitch said. Chinese banks extended 7.95 trillion yuan ($1.2 trillion) of new loans last year, while the government claimed they were tightening credit.

The yen weakened against all 16 of its major peers, while China’s yuan climbed to a 17-year high versus the dollar. The interest the US pays in on the five-year Treasury debt jumped three basis points.

Lisbon asks $116 Billion Portuguese Bailout.
Japan’s Nuclear and Industrial Safety Agency lifted the rating level to 7 from 5 on the global scale, the same as the 1979 partial reactor meltdown at Three Mile Island in Pennsylvania. Japan’s nuclear crisis may be raised to the highest level of severity, matching Chernobyl’s rating, as increasing radiation prompts the government to widen the evacuation zone.

Under Jimmy Carter, gold rose to over $800/oz. But by 1999 gold fell back below $290/oz again. Now it is about $1470/oz. We need to warn you now to liquidate gold and silver when it has run up, not after it drops quickly back to about $400 and $8 respectively. Ending QE2 will deflate all metals prices.

Canadian job hiring took a pause.
Ireland's ratings were lowered again. Inflation in China and India is not yet in control.
Inflation in India and China is getting out of limits. Gasoline and fuel oil prices doubled under Obama but he and Bernacke say inflation is less than 2.5%. Only morons still believe that.

US Market Highlights
Latest reports
Trade Balance Feb -$45.8B relative holding from last months -$46.3
Export Prices ex-ag. Mar rose 1.3% up from last month’s 0.9%
Import Prices ex-oil Mar inflation doubled to 0.6 from last month’s 0.3% rise.
Treasury Budget Mar -$188.2B triple the Obama deficit growth rate from -$65.4B last month

Yesterday
MBA Mortgage Index 04/08 fell -6.7% three times as bad as last week.
Retail Sales Mar were up 0.1% compared to 1.0% last month because gas prices ate up 0.3%.
Retail Sales ex-auto Mar up 0.5% compared to 0.7% last month correcting for gasoline prices.
Business Inventories Feb increased another 0.5% on last months increase of % 0.9%.
Crude Inventories 04/09 were at 1.627M down slightly from 1.952M last week.
Fed's Beige Book Apr indicates QE2 will slowly be phased out.

This week
Read more: http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm#ixzz1JRQ2uZfF
Apr 14 8:30 AM Initial Claims 04/09
Apr 14 8:30 AM Continuing Claims 04/02
Apr 14 8:30 AM PPI Mar
Apr 14 8:30 AM Core PPI Mar
Apr 15 8:30 AM CPI Mar
Apr 15 8:30 AM Core CPI Mar
Apr 15 8:30 AM Empire Manufacturing Apr
Apr 15 9:00 AM Net Long-Term TIC Flows Feb
Apr 15 9:15 AM Industrial Production Mar
Apr 15 9:15 AM Capacity Utilization Mar
Apr 15 9:55 AM Mich Sentiment Apr


Market Outlook April 14, 2011
Market volume dropped on yesterday’s advance but there was still little change in the VIX.
Structural imbalances continue in the economy. The third economic dip is beginning but likely will only slow growth and not go negative.

QE2 is destroying the incentive for Americans to save and should be ended now before we have 20 years of Japanese style stagnation.

The stock market is continuing to test its head and shoulders now. The markets all appear to be topping out. To us it looks like the 47dma is no longer a support level but instead has become the resistance level for a topping trend (head and shoulders) line.

S&P
http://finance.yahoo.com/q/ta?s=%5EGSPC&t=1y&l=on&z=m&q=l&p=m50&a=m26-12-9&c=

We think the next stock market support level will be down at Nov 4, 2010 levels.

World Markets
International trade shows that the world economy has only revived about 25% not the 60% shown by the stock and commodities markets. That means more than half of the stock market rise from the 2009 lows is unsupportable and could evaporate. See:
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

Asian markets were mixed last night. China down -0.2%, Hong Kong down -0.5%, Jakarta down -0.7%, and Japan up 0.1%.

European markets are down this morning in a range of about –0.7% to –1.7% half way through their day.

US pre-market futures are down about -0.6 % at 8:30 AM EST.