The REAL Big Story for Financial Markets Today… Which No One is Talking About

Friday, October 22, 2010
By Paul Martin

by Phoenix Capital Research

You have to read between the lines on this one.

Few commentators realize what the BIG story is for the financial markets today. The BIG story is not the mortgage fraud, the corruption, or the computerized trading (although the last one dominates US stock markets’ daily action).

No, the big story is the monetary actions of the massively indebted US vs. the credit cooling China.

Indeed, while Bailout Ben Bernanke and several his cronies at the Federal Reserve have been braying for additional QE and currency weakness, China has been aggressively restricting credit lending, raising interest rates, and generally making moves to cool its overheated system.

In plain terms, this is a conflict between the world’s old superpower (its largest debtor nation) and its rising new superpower (its largest creditor nation). It represents the largest conflict in global financial markets as well as THE most significant development to watch for those looking to successfully trade the markets.

Don’t forget, this was ALSO the big story dominating the financial markets in 2008 as well. I know, the banking Crisis took the headlines. But it was China’s stockpiling of commodities that created the massive “inflation trade” imbalance which saw oil at $150 a barrel, commodities across the board exploding higher, and the US Dollar hitting a 20 year low.

Remember how that played out when the trend reversed? Commodities and equities collapsed across the board as the US Dollar exploded higher. This, in turn, kicked off the Dollar short-covering explosire, which began the chain of events leading into the Autumn of 2008.

The Rest…HERE

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