China 'hot money'

A torrent of speculative capital is handcuffing China's efforts to fight inflation and casting doubt on its willingness to allow its currency to continue increasing in value — something U.S. manufacturers have long sought.
Undocumented "hot money" is sneaking past China's official controls through a variety of channels, including phantom trade involving no real goods, and foreign companies padding investment receipts. Estimates vary as to how much cash has made its way into the fast-growing Chinese economy.
But today's hot money is still potentially dangerous. It's coming from investors making the safe bet that China's undervalued yuan — up more than 21% in the past three years against the dollar — is certain to rise further. And it's going into Chinese real estate and stocks, which could suffer sharp price declines if investors ever all changed their minds.
Inflation emerged about a year ago, and last month increased to 7.1%, well above the government's 4.8% target. Central bankers normally fight inflation by raising interest rates. But doing that would only attract more speculative capital.
China also could curb inflation by allowing the yuan's value to increase more quickly, effectively making imported products cheaper. But unless the yuan were suddenly revalued by a large amount, perhaps as much as 20%, investors would only be encouraged to bet more money on a continued increase. Plus, a stronger yuan would hurt exporters by making their products more expensive in world markets.
Tracking the Dow on Wednesday,30/07/08 PIVOT WEEK
9:30am--60.0 points Gap Up.
The SEC extended its temporary rules to restrict naked short selling on several financial stocks and President Bush signed the housing bill into law that includes support for Fannie Mae (FNM) and Freddie Mac (FRE).
10:30am--Hangman & Shooting Star.
Open a SELL,short position.An unexpected increase in jobs while President Bush signed the housing bill into law.
11:30am--A shooting star.
Crude prices rebound from a decline of 0.9% to a gain of 1.0% following the government's energy inventory data.
12:30pm--The Hammer.
The indices are near the session MAV.The Fed is extending the length of its Term Securities Lending Facility program through Jan. 30 and is introducing longer terms to maturity for its Term Auction Facility. The facilities were implemented to improve liquidity during the recent credit market turmoil. The Fed's latest move was spurred by "continued fragile" markets.
1:30pm--Bearish engulfing.
The main candlestick at this moment has a long upper shadow with a bullish shaven bottom.Buyback and close position.
2:30pm--Bulls spike up.
It's heading towards the MAV.Gold is under selling pressure, falling 2.1% or $17.94, to $896.50 per ounce
3:30pm--MAV Breakout.
The rebound in oil prices helped the energy sector make a 5.6% advance. Investors have rotated out of the energy sector in recent sessions, but oil’s rebound induced buying in large names like Exxon Mobil (XOM 84.38, +3.48) and Chevron (CVX 87.26, +4.42).
4:00pm--A bullish hammer and a bull trap.
Investors looked past a strong rebound in crude prices to focus on data that showed an unexpected gain in nonfarm private payrolls and word that the Fed extending its liquidity measures to Wall Street.
It's a 2nd day running,and the bulls will need a pause on the 3rd day.