The Hits Just Keep on Coming!

It seems that in addition to Chinese pig farmers storing their wealth in copper instead of Yuan is not the only market distortion coming out of China. Tim Iacono's blog links to a story that parking lots full of new cars are reported to have been "sold." Somehow, China is supposed to have become a bigger car market than America, yet gasoline sales are flat? Who'da thunk? Sounds like it's time to short China, with a smaller short on copper.

And in U.S. news, SURPRISE, SURPRISE!!! Home prices fell in the third quarter! Just as housing was undergoing its fourth or fifth recovery, according to the media.

The valuations I've been seeing lately are in bubble territory: ANF, 70 X earnings, PCU, 67 X, SBUX, 40 X. Are you kidding me?

Trade!

short 5% position in PCU @ $34.71.

David Rosenberg today is reporting that the current commitment of traders data shows record long positions in Gold and Oil. Copper is at a cycle high. Huge long positions have been taken in the Aussie, Loonie, and Euro. The S&P also is hugely bearish.

The only shorts are in Dollars and 10-30 yr. Treasuries.

I'm going to lever up here. Possible moves for the rest of the week are to take a 5% short position in FCX. FXI is hard to borrow, so I may try an option on them, as well as a 5% position in FXP. ANF is no longer hard to borrow. The shorts have been covered, which probably caps the stock. Earnings come out on Friday.

My ideas are: short 5% FCX, buy 5% FXP, short 5-10% of ANF, and buy an FXI put.
I can buy a Jan. 2011 put that prices a 4% chance of falling 38%, or 7% chance of falling 30%. In my opinion, China is a huge bubble, and there's a 50-50 chance of rising or falling by at least 50%. The chance that things stay the same are very low, in my opinion.