EU Bluffing

The market is excited about the Greece bailout. But the language is so vague, you just wonder if it is just bluffing. It is quite possible that any loan guarantee will not pass the German Parliament. Remember, Chancellor Merkel has a minority government and which is not very popular right now. Eventually, the market will force EU to show its hand. The reason Germany and French government want to support Greece is their banks have enormous exposure to Greece and other PIIGS countries. A showdown among market, government and public opinion may happen soon. Stay tuned.

INTC

The market is up over 100 points. I reduced half of my intel positions. I sold 200 INTC @20.15. I still like intel but felt the market has further downside risk. Would love to buy them back around 19.

Greece agreement

As I expected, EU had reached an agreement to aid Greece. The agreement is vague which means no consensus on how to do it. In reality, there is only one country, Germany, in Europe has the capacity to help. France is OK but not strong enough. All other countries are weak and most of them need help. I can see investors start to attack Portugal in next few weeks.

summary Feb 10, 2010

The market is waiting for Europe to take action on Greece. The most likely case is a vague pledge of support from Germany and France on condition of Greece government implementing the spending cuts.

China's PPI number is 4.3% which is very high. The inflation is going to be a big problem if China does not tighten aggressively.

Closing Value
Portfolio 1 (U$): 111005
Portfolio 2 (C$): 80393

bought MDVN

Bought 100 MDVN @ 36. I gave the reason yesterday. I will hold this one until the phase 3 trial finished (June this year).

High speed train vs. plane

The buildup of high speed train in China and potentially in U.S. will put pressure on airlines. China is building high speed train from Shanghai to Beijing, Guangzhou to Beijing and other route and most of them will be finished by 2012. Some finished part already put pressure on the airline. Airline has to discount 80% of its price to compete against high speed train. The demand for airplane from China will start to diminish in 3-5 years which will have a negative impact on Boeing and Airbus.

Greece bailout?

It is being reported that Europe is going to help Greece on its debt. The market is very excited. I think the bailout is more difficult than the market thinks. People are still angry about the bailout for financial institutions. Now Germany and France are being asked to bailout another country, how furious people will be. If Germany bailouts Greece, then what about Portugal and Spain? Regardless of the bailout, Greece will be asked to cut spending dramatically and large scale of strikes can be expected.