Featured Trades: (FXI)
iShares FTSE China 25 Index ETF

4) China Can't Boom Forever. Last week, China (FXI) announced that its first half GDP grew at a blistering 11.9% annualized rate, more than triple the growth seen here in the US. And this is how they're doing with central bank tightening in place! How long can this laudable performance last? Not forever, says the country's Development State Research Center of the State Council. The economic research think tank sees the Middle Kingdom on a gentle glide path from the current double digit growth rate down to as low as a 6% average by 2030, as it matures. Of course, I'm sure that reality will come in far choppier than this. I watched Japan do exactly this from the sixties to the present, its own growth rate falling from 10% to 6%, them 5%, 3%, and today's 1%. Suffice to say, make hay while the sun shines, and never stay married to your positions.

Featured Trades: (FXI), (WMT), (CMED),
(MR), (PTR), (CHL), (CYB)
iShares FTSE/Xinhua China 25 Index ETF
Wisdom Tree Dreyfus Chinese Yuan ETF

1) Exclusive Interview With Jim Trippon of the China Stock Digest on Hedge Fund Radio. Jim Trippon, of the China Stock Digest, says that investors better start scaling into China now, or risk missing the biggest economic opportunity of our lifetime. Quality growth stocks can be bought for price earnings multiples under 11, and often for 4-5 times, compared to an average 13 multiple for the S&P 500. You are already investing indirectly in the Middle Kingdom whether you realize it or not. Just take a stroll through Wal-Mart (WMT).

Jim has been publishing his widely followed China Stock Digest for six years, running a full time group of analysts out of offices in Shanghai, Hong Kong, and Houston. Financial markets in China are still primitive, with no options or futures, short selling, international accounts, arbitrage, spotty disclosure, and tough currency restrictions. Individuals account for up to 70% of turnover, compared to only 10%-20% in the US, which can lead to higher highs and lower lows in share prices.

Jim overcomes many of these obstacles through buying US GAAP audited, Sarbanes-Oxley compliant, American listed ADR's, or Hong Kong listed 'H' shares. Although these shares correlate highly with the US equity markets, a stock picking strategy focused on undervalued names will outperform over time with reduced volatility. This eliminates the need to reach for returns by taking on inordinate risk. Jim won't touch a company unless he sees a '3-5 bagger' in it.

Recent moves by Chinese authorities to remove restraints from the renminbi, or Yuan (CYB), give investors a potential double play. Rising share prices fueled by the steroids of an appreciating currency can create a 'J' curve effect for profits, much like I saw in Japan during the eighties.

Trippon blithely dismisses claims by naysayers, like Jim Chanos of Kynikos Associates, that a real estate induced crash in China is imminent (click here for my piece). Buyers in the mainland cities are required to put down deposits of 30-40% which they are unlikely to walk away from. This enabled the Mandarins in Beijing to spend their $500 billion reflationary budget last year on infrastructure instead of bank bailouts. If only they'd thought of that in the US! A GDP growth rate of 9% last year compared to an American economy that shrank, also tends to bail out a multitude of sins. If you need more reasons to invest in the Middle Kingdom, please read 'How China's Economy is Already Bigger than the US by clicking here.

Jim posts a model Chinese portfolio on his website for subscribers, and revealed a few of his favorite names. China Mobile (CHL) has a domestic monopoly, with more cell phone customers than the entire US population, and is still clocking impressive growth. Huge swaths of the country are leapfrogging land lines and going straight to mobile. PetroChina (PTR) will make a killing from the upwardly mobile, exponentially growing car market. China Medical Technologies (CMED) and Mindray Medical International (MR) will benefit from the extension of health services into the country's rural hinterlands.

Trippon admits to being an out of the closet scripophilist, and includes in his collection share certificates for the Titanic and the original Standard Oil Trust and bonds from the Revolutionary War. I confessed my own orientation in this direction, and admitted my holdings of shares in the Trans Siberian Railway, bonds for the construction of the Golden Gate Bridge, and a collection of Japanese wartime occupation currency from throughout Asia.

Jim started out his career as a CPA with Price Waterhouse, advising the pension programs of companies like Exxon and Shell Oil. He then struck out on his own to found one of the most widely read investment newsletter families in the US. They include the ETF Profit Report, the Dividend Genius, and the top rated China Stock Digest. Jim has published two books, Stay Rich Forever: Retirement Planning Secrets of Millionaires and How They Can Work for You, and Becoming Your Own China Stock Guru: The Ultimate Investor's Guide to Profiting From China's Economic Boom. To learn more about Jim, you can visit him at his website at http://www.chinastockdigest.com/ .

To listen to my interview with Jim Trippon on Hedge Fund Radio in full, please go to http://madhedgefundradio.com/ and click on the 'PLAY' arrow in the top right corner. Or, you can download it to your iPod.

Featured Trades: (BP)

3) Take the Money and Run from BP. If you followed my advice to buy BP at $29 on June 17 (click here for my piece), please sell it. It peaked at $40 yesterday. Take the easy money and run. I've never seen a better opportunity to buy the rumor and sell the news. The long awaited announcement that the April 22 blowout in the Gulf of Mexico was at long last capped has sent the stock on a tear. This limits the pariah firm's liability to $50 billion max, down from estimates that ran as high as several hundred billion dollars only days ago. The final answer won't be in until hell freezes over. Sure, if you end the moratorium on offshore drilling, get it back up to its old multiple, tack on higher oil prices, and take in $20 billion in asset sales or equity capital raises, you might be able to squeeze another $20 out of the trade. But do you really want to hang around and run the market risk? Or the dilution risk? BP now has 43,000 locals working to clean up the spill. Would you want to meet that payroll? Don't be the pig that gets slaughtered. A profit of 38%, some 76% if you used margin, and over 150% if you played the options is better than a poke in the eye with a sharp stick, especially in this miserable environment.

Featured Trades: (BALTIC DRY INDEX), ($BDI),
(CONTAINER RATES), (US RAIL TRAFFIC)

1) The Baltic Dry Index Versus Container Rates: Who to Believe? There is a ferocious debate underway among economists over which leading indicator to believe, the Baltic Dry Index, or international container shipping rates. The BDI, a measure of the cost of chartering bulk carriers for coal, iron ore, wheat, and other dry commodities, has just suffered one of its most dramatic sell offs in history, plunging some 60% since May. The downturn has been accelerated by the recent delivery of a glut of new ships that were ordered during the boom years 3-4 years ago, when getting cheap money was as easy as falling overboard. There is no doubt that this index is shouting loud and clear for a double dip in the world economy. On the other hand, and if you notice, most economists are two handed, the rates for standard 20 foot containers shipped to international destinations has gone absolutely through the roof. The Maersk Line has even gone to the extreme of diverting its fastest ships to return empty containers from the U.S. to China. The big driver here has been intra Asian trade, as well as rising imports by big US customers like Wal-Mart (WMT). This shortage has been exacerbated by the large scale cancellation of orders to build new containers during the 2008-09 crisis, and strikes at key manufacturers in China. The data points to a global economic recovery centered in Asia, and trickling down to the U.S. and Europe. Who to believe??? I'll let American rail traffic cast the tie breaking vote, which you can see in the chart below. After crashing in 2008-09, it performed a 'V' shaped recovery, and has been holding its gain's ever since, although is only at 80% of full capacity. This is my 'gull winged' chart, which you see for the prices of almost all financial assets these days. And the envelope, please! The conclusion is unequivocal. We are in for a slow, bumpy long term recovery that will deliver the long term U.S. growth rate of 2% that I have been predicting all year. Too bad the stock market doesn't know this yet.