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JamesGRickards 

This weekend the Chinese central bank called the 'Peoples Bank of China' raised interest rates by 25 basis points. This move by the central bank was expected weeks ago as the consumer price index was indicating high inflation for the Chinese economy. The Chinese economy has been known to be the growth engine of the world. Should the Chinese take further steps to cool off its hot economy this action could effect many of the leading commodity stocks in the United States and around the world.

Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), and Southern Copper Corp.(NYSE:SCCO) are two of the leading copper producers in the world and this interest rate increase by the Chinese could effect these stocks in the near term. This morning Freeport McMoRan is trading higher by 0.37 cents to $118.54. Southern Copper stock is trading lower by 0.20 cents to $48.46. While these leading copper stocks are not being effected just yet this morning other commodity stocks are under pressure. BHP Billiton Ltd.(NYSE:BHP) which is a leading mining company that mines a diverse group of natural resources is trading lower by $1.22 to $91.10. It would be prudent to look at more leading commodity stocks to see if they are trading lower today due to the Chinese interest rate hike. These stocks may react more severely to rate increases by the Chinese.

The markets opened lower only to move higher as expected. The SPDR S&P 500 ETF (NYSE:SPY) opened just above the 200 moving average support. In addition, the light volume and Federal Reserve propping appears to be good enough to push the markets higher for a majority of the day. The light volume should continue until the new year. Small caps continue to roar with micro biotechnology leading the charge. In addition, small regional banks seem to be hot too. Join the Research Center to gain access to the most exclusive analysis, guidance, swing trade and education group.

Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated

Mark Pervan, senior commodities analyst at ANZ said.

http://www.cnbc.com/id/40810967

very good article to read folks 

Knowledge is power 

Promptly after those two cuddly bears explained how the JP Morgue is manipulating the silver market, and the xtranormal video went viral,forcing the FT to release an indemnification that "according to sources"JPM had covered a major portion of its silver short (only tosubsequently end up with 90% control of other metals markets), here theyare back, explaining in Part 2 of the series just what the next stepsin the unwind of the biggest metal manipulation scheme will look like.The kicker: a JPM insider has told one of the bears that there is nocommercial silver left, "it's all smoke and mirrors, and the CFTC can donothing about it other than pray." Other topical items explained:silver backwardation, that there are two commissioners at the CFTC onthe JP Morgue's payroll, the BIS' fractional gold system and the usageof side pockets for sovereign gold, and pretty much everything that tiesthe loose odds and ends in the PM manipulation story.

As the rest of the world celebrates Christmas, blissfully pretending all is good, and the Fed can manipulate markets to infinitywithout at least one of the numerous violated laws of physics beingreasserted in the process, things in China are once again remindingthose who care that just as liquidity giveth, so does liquidity taketh away. We pointed out a week ago that the 7 day Reporate in China recently hit a post-Lehman high, as banks areincreasingly concerned that following 3 RRR hikes, the PBOC has nochoice but to resort to some tightening measure that actually works. As aresult excess liquidity has suddenly become rares than hen's teeth. Today we get a first hand lesson of why this was material: Dow Jones reports that the Chinese MoFhas failed to attract sufficient interest in its 3 Month 20 billion CNYauction. The result: SHCOMP is now down 1.2%. Bottom line: as the worldis sleeping, China just had a failed bond auction. If news mattered,this would be a very disturbing event. Luckily for Ben, it doesn't. Forthe time being. It will soon. Then Montier's mean reversion meme may just strike with great deferred vengeance and furious accrued anger.

From the Dow Jones:

China shares extend their falls following news the Ministry of Financefails to attract enough bids to sell all of its planned CNY20 billion3-month bills in an auction. The Shanghai Composite Index is now down1.2% at 2819.72 and analysts peg support at 2800. The MOF'sunsuccessful bill auction is fresh evidence of tight liquidityconditions in the market, due to China's three RRR hikes since Novemberand rising cash demand near the year-end. "Institutions are inclined toexpedite pocketing in some profit," says China Post Securities, adding"the situation will increase the likelihood of a bearish market in theshort term." Banks continue to fall on various news reports that Chinais likely to use new measures, such as special RRR hikes, to rein incredit expansion next year.

A year after Charles Biderman's provocative post first appeared on Zero Hedge, in which he asked just who is doing all the buying of stocks as the money was obviously not coming from retail investors (and
came up with one very notable suggestion), today Maria Bartiromo invited
the TrimTabs head once again (conveniently in CNBC's lowest rated show,
during Christmas Eve eve, at a time when perhaps 5 people would be
watching) in an interview which disclosed that after more than a year of
searching, Biderman still has no idea who actually buying. In response
to Bartiromo's question if the retail investor, who left after the flash
crash (thank you SEC), Biderman responds what every Zero Hedger has
known for 33 weeks: "Retail investors are not coming back to the US. Those
investors that are investing are buying global equities and are buying
commodities. We are seeing lots money going into commodity ETF funds:
gold, silver..." and the even more unpleasant summation: "individuals
have been selling, companies are net selling, insider selling and new
offerings are swamping any  buyback and any cash M&A activity since
QE 2 was announced. Pension funds and hedge funds don't really have that
much cash to invest. So what nobody's asking is what happens when QE 2
stops: if the only buyer is the Fed, and the Fed stops buying, I don't know what is going to happen...When
I was on your show a year ago I was saying the same thing: we can't
figure out who is doing the buying it has to be the government, and
people said I was nuts. Now the government is admitting it is rigging the market." Cue Bartiromo jaw dropping.

As for the simple math of where the money is actually going:

"Money flows come out of income, take home pay of everybody plus money that came from real estate is down about $1 trillion a year. It peaked in the
3rd quarter of 2008, at $7 trillion, that's take home pay for everybody
who pays taxes plus the money that came from real estate. It has now
bottomed at $5.9 trillion. We are still down $1.1 trillion in
money that people have to spend each year, that 16%. And some of the
money that is leaving equity markets we think is going to pay bills."

Much more CNBC non-grata truthiness in the full clip, in which Biderman suggest what Zero Hedge readers realized over a month ago, that in June QE3 will likely have at least a partial municipal bond focus.

Update: Charles has just sent in the following addendum to his CNBC appearance:

Due to time constraints, what I didn’t get to address on CNBC today is what will happen after the Fed is either successful or not successful with
QE2. The Fed is rigging the market by digitally creating money that is
used to buy financial institutions assets —  currently Treasuries, last
year all kinds of toxic waste. What will happen when the Fed stops
buying assets?

What the Fed is hoping is that QE2 actually worksand the economy starts growing at 3+%. If that happens, unlikely as it
is, then the Fed will end its QE activities. But for the stock market,
if the only source of buying power, the Fed, withdraws its support, the
market is likely to plunge to well below fair value. At that point
perhaps some new source of money , i.e., China, et al will be able to
buy US assets on the cheap. 

The Fed is legally mandated tomanage the economy, not the stock market.  If the Fed’s QE is successful
and the trickle down impact of higher equities creates a sustainable
recovery, the Fed will gladly sacrifice the stock market to its legal
mandate to manage the economy.

A more likely outcome is thatwhile stocks will be higher by the end of QE2, economic growth will not
be sustainable without government aid. That would then require
additional QE. Stock prices could then keep rising for a while. At some
unknowable now moment in time, unless the economy starts to grow again,
no amount of QE can work forever in keeping the current stock market
bubble from bursting.