Market Musing 2007 12 04 AM

The markets are still turbulent and from a technical viewpoint still in state of flux. What is a state of flux...

The state of flux is a scientific word for confusing. Most of technitians / and I am not a technitian, but I respect technical levels because a lot of other market participants trade using the technical levels like 50 day or 200 day moving averages for indexes as well as stocks...

I do believe that perception of earning changes drive stock prices. And, these earnings increases or decreases are based on an evaluation by individuals like me or stock analysts at various brokerage houses like Lehman, Merrill Lynch or Goldman Sachs or gurus like Bob Brink (on radio) or Bob Prechter (a few years ago) or other famous soothsayers or magazines like Barron's or Money or Business Week.

Buzz is that next few days markets could go either up or down. Chinese are flexing their money muscles by possibly purchasing RIO TONTO to integrate the raw material supply line. And, this will probably cause uproar and concerns in the Developed world, as they would fear takeover by the Soveraign Economies that are getting a large cash flow due to increase in raw material prices in oil, gold and others.

Sovereign nations or nations like China, Russia, Saudi Arabia, Iran or UAE are essentially closed economies. Western Companies can not purchase businesses there. And sovereign nations can use national wealth to purchase profitable companies in the west. And this activity is generally not welcome. Europeans do not want Microsoft to purchase any software company in Europe for fear of monopolist issues. And MSFT is a private company, and a monopoly at that. But, has no army or nuclear bombs, unlike China...

This trend will cause concerns in many circles. And, this will diminish the spirit of global trading framework. This global economy has increased productive capacity of the South American countries, China, India and many East Europen countries.

This is all well and good. Now, these countries have earned a lot of money and have a balance of payments with China, Saudi Arabia and Russia leading the list. And, these countries are not happy with earning low interest rates in dollars and want to invest in other economies. They may end up investing in Australia, India and South America as they would welcome these investments.

But, I feel that USA and Europe should welcome and encourage these economies to integrate further with our economies, but, I am not smart enough...