Year of the Dragon – Chinese New Year

Chinese New Year was on Monday and the Year of the Dragon has commenced. How do I know this? My 4 year old daughter came home from pre-k with a dragon mask that she made in school and told me. That and her education of Ni Hao Kai-lan eclipses my knowledge base for the week.

So now that the New Year is upon us how will this impact us Westerners on the other side of the pond….here are my thoughts….

1. As mentioned in an earlier article that typically the economy has to be good for the President of the USA to be re-elected. The economy isn’t good. So, the President will try to make the economy good. If they pump a lot of money into it more jobs will be created, less unemployment, more money created, etc. The economy will be good and the stock market will do well. OK, I dummied up the English in this paragraph but it’s to make a point that the White House will do everything in it’s power to boost the economy in a positive light.

2. If the economy is going well then industry will buy more materials. If memory serves me correctly the shelves are bare but companies have a lot of money. If the above holds true manufacturing will start to build up and inventory levels will also build…good stuff for everyone down the line. Prices should stabilize and hopefully everyone prospers.

3. That means that in the true market economy that stabilization should take effect unless there are acute shortages. So I look for stabilization of the rare earth materials and elements until supply reaches demand which could take a year or longer. This also will impact solar cells and polysilicon in a positive light. That industry has been in a death spiral for the last 6 months.

We’ve been in a recession/depression for quite some time. Unemployment has been high, homes have been foreclosed and the general “friendly” business atmosphere has been uterly despicable. Perhaps the Year of the Dragon will be the difference that everyone has been looking for…only time will tell.

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Heavy Rare Earth Materials – Far East Rising

China produces roughly 90% of the world’s rare earth materials. It wasn’t always like that…but then again, what is?  Since usage has increased and sovereign needs are typically higher than foreign for heads of state, China has enacted quotas on the materials as to make sure they have enough for themselves.  The quotas established for rare earth materials in China have been changed a bit. China’s projected quota will be roughly 31,000 tons of rare earth material. Compared with 50,000 tons in 2009 you see things have changed.

Before China said a rare earth material is a rare earth material…much like “parts is parts”. But now, the heavy rare earth materials (those with atomic numbers of 64-71) will only be 10-15% of the entire quota. I suspect abuse in the system for this change. As the heavy rare earth materials are often more expensive and greater profits, the traders wanted to export those instead of the cheaper and less profitable light rare earth materials.

Prices of light rare earth materials have been coming down and may continue to do so but if my economics degree is worth it’s weight in Europium I would say the heavy rare earth materials to stabilize or increase in price. We’ll see how this unfolds during the year.

SkySpring is a manufacture and distributor of both light and heavy rare earth materials.


Elements, Economy, Industry and Politics

Economy, Industry, Elements, and Politics

What do those four things have in common???

Presidential terms.

I read something interesting some years ago and I thought it would be interesting to look it up again and see if it holds true. First of all, the best day to buy stock is typically Monday and the best day to sell it is Thursday afternoon. Rational is that companies put out good news on Mondays and bad news on Fridays. Besides, all of the notorious big-loss days have been on Fridays. Other days of the week are Wednesdays to buy and Tuesdays to Sell but the main ones are Mondays – Buy, Thursday afternoon – Sell.

How does this deal with elements, politics and industry? Absolutely nothing. But the next interesting thing I decided to look up again is related. The first two years of a presidential first term president are typically bad but the third and fourth years of the president (first term) have always been very good.I could not get details broken down by the first or second term presidents but this is the average stock market returns by presidential year in office:

Year 1: 4.5%
Year 2: -1.2%
Year 3: 18%
Year 4: 6.7%

Typically, a first term president wants to become a second term president and the first two years they slash budgets and do everything they hoped to do. Then, they need the economy moving to get re-elected and then look at the numbers. First two years a 3% gain combined, second two years 25% combined.  Hmmm….very interesting. BTW, in the last 50 years only 3 subpar 4th year stock market returns were achieved. Each of those years the incumbent party lost their race (1960, 1980, 2008).

If the market is moving, then industry is moving along very well. Companies are purchasing and selling more products and using more materials (elements, compounds, CNTs, rare earth materials, etc.) and the political incumbents would be doing well. So, if the economy will most likely do very well in 2012 helping all involved to very merry and prosperous year.

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