Another Reason Why I Don't Fly China Airlines

I have always flown Eva Air when flying to and from Taiwan. Even when it was more costly to fly Eva Air over China Airlines, I've chosen Eva Air. Even these past few years when China Airlines seemed to have cleaned up its act somewhat, and offered better/larger/roomier seats (from what I hear) compared to Eva Air, I've chosen Eva Air. Furthermore, China Airlines provides personal TVs for each seat, whereas Eva Air economy class did not.

Why? Things like, severe turbulence injuring 30 passengers (Sept. 21, 2008), and exploding jets (Aug. 20, 2007), I tend to like to avoid.

Unfortunately last year when I was in Taiwan and made a trip to Hong Kong, I had to fly China Airlines due to certain time constraints. That was probably the most scared I've ever been on an airplane. Even though there was hardly any turbulence, you just never know with China Airlines.

Take a look at this website here that has a list of all airlines and their "accident rates."

China Airlines ranked 90 out of 90- where 1 is best, 90 is worst. For some reason Eva Air is not on the list, not sure why, but Eva Air is regarded as one of the best airlines in the world in regards to safety.

From Eva Air's Wikipedia:

Internationally, EVA Air's rapid expansion and increased passenger volume was boosted by its safety record, in [stark (emphasis added)] contrast to its primary competitor, China Airlines.

Especially for those who fly between Taiwan and Seattle, is there any reason to fly China Airlines? Considering the fact that China Airlines has discontinued flights between Taiwan and Seattle, there shouldn't be any reason. Do yourself a favor and avoid CAL. Is that 2-4 inches of extra seat width worth it when you consider they have one of the worst, if not worst, safety records of all airlines?

Market Action

The volatility was ridiculous today. S&P was down 40, then back up 60 to close up 3% or so. VIX off the charts as well, spiking into 52-wk high territories above 40. The "fear" is here. It seems that the breakdown of the SPY is failing, but that's what I said a few days ago before it dropped into the 116s. Huge news regarding shorting all over the place today, most notably the UK banning short selling of financials, which quickly prompted shorters to run for cover and marked the significant reversal today. After hours, rumors of the SEC to temporarily ban short selling (on financials only?) as well, has created a positive opening for tomorrow.

I took a significant position in SPY puts today and will likely hurt for a few days as the market responds to possible short selling rule changes. I still remain significantly bearish on the market, and there is probably temptations to get on the bull train and ride this rally for whatever it's worth. But, just as quickly as the indices reversed today, it could be just as fast and hard to reverse the other way.

I have some LDK 40 calls expiring tomorrow with a cost basis of $5. Prior to today, it looked like the best I'd be able to get was around $2, a loss of $3 per contract. But, hopefully with the gap up in the morning, I will be able to get out with even a profit! If the calls are above $5 at open, I will likely exit half the position, and set a trailing stop on the second half.

Good luck, happy tradings!

Toxic Milk From China, Wait Panda-Love!

A couple days late, but if you haven't heard, tainted milk powder containing melamine was exported to Taiwan from China, resulting in a few deaths and thousands sick. Furthermore, the tainted milk powder was apparently known way back in June, but was kept quiet due to the upcoming Olympics. "We don't want to mess up our coming-out party, so lets cover this up, and let it blow up in Taiwan." Although I'm not too familiar with the actual trade regulations currently in place and the actual details concerning this specific export of milk powder from the Chinese company, Sanlu, to Taiwan, I think it is safe to say that stricter oversight and regulations need to be in place regarding trade between China and Taiwan. The people of Taiwan should be calling for their government to do more than just set a temporary ban on dairy imports from China. This article states,

During the meeting, Liu also promised that the government will tighten safety inspections of all dairy products imported from China, with each shipment subject to careful scrutiny.

Is it just dairy products we need to be worried about? What about the previous toy products contaminated with lead? What's next after dairy products? The government of Taiwan needs to tighten safety inspections of all dairy products imported from China. This is even more imperative as Ma, Ying-jeou continues to relax trade with China. In a world where, God forbid, there exists a "Taiwan province, China", to me it would seem like trade regulations would completely cease to exist. No regulations and no oversight would mean any and all products made in China would easily be shipped around, including to a, "Taiwan province."

I'm almost prompted to even say, Taiwan deserves this, as the majority chose to pick the leader who will literally open up the island to China. With everything comes consequences. I've mentioned in the past, sure the opening up of trade to China may even boost Taiwan's economy for a bit (something that has yet to materialize), but at the same time, Taiwan will be more reliant on China. Thus, when China's economy busts, so will Taiwan. And in this case, when China's products bust, they'll just pass it on to Taiwan, because that's what Taiwan wanted. "We want to enjoy the economic growth that China has."

But then I take a step back and realize, no one deserves this (Except for maybe the CCP, and Hu, Jintao, and China's foreign ministry spokesman Qin Gang, and the unscrupulous business owners who try and nickle-n-dime their way through life at the expense of other people's lives).

But hey! Look on the bright side, we're getting pandas, so all is good and well. This specific article is nice in that it touches upon the facade that China is putting up. A sort of hand-waving technique that China is so good at. If there was an Olympic sport for hand-waving, China would win, hands-down-- or is it hands up? China has a Staples Easy Button™ with the word "Taiwan Only" on it. But don't mind that button that will unleash 1000+ missiles at Taiwan, here's some pandas. The article also mentions the history of panda giving by China, citing a "Tradition of Giving,"

Tradition of giving

— Panda diplomacy existed centuries ago, when Empress Wu Zetian (690-705) gave two to the Emperor of Japan

— In 1972 President Nixon was given a pair of pandas by Chairman Mao while visiting Beijing. Two years later Sir Edward Heath received a pair from Chairman Mao

— China offered the reunion pair to Taiwan in 2005, but the gift was refused

— In 2006 Robert Zoellick, the US Deputy Secretary of State, cuddled a five-month-old panda cub during a visit to China, which was seen widely as a signal that he wanted to improve Sino-US relations

I'd say, the pandas are more like a symbolic gesture of China telling you that you are their bitch now.

No Love for Bailout

US markets starting to look like Taiwan markets. The Dow shedding more than 700 points in the last 3 trading sessions. Apparently the bailout news is now causing more concern rather than it being an instrument to save the financial stability of the U.S. This is notable in the VIX spiking again today into the mid 30s, also known I guess as the fear factor.

Looks like some sort of bear raid, or perhaps even capitulation is happening sooner than I thought. The mini-rally I thought that would come, did not. Interestingly enough, there was a little strength in the energy sector, notably natural gas- perhaps spilling over into alt. energy with LDK relatively unchanged on a day when the indices were screaming downwards > 4%. This break below the July lows should be confirmed (or not) tomorrow. Normally I would consider one close below a support a good sign of a break below, but in this volatile market, it may be smarter to wait for the second consecutive break below to go short.

A break below 120, it looks like we're headed for SPY 109, where it found support numerous times way back in 2004. That's another good 6-7% down, and considering how well the Taiwan markets are magnifying whatever losses are happening on Wall Street in their own markets, ^TWII could easily see the 5500-5600s again for their market tomorrow, and then follow through to the 5000 level in another week if the U.S. indice breakdowns are confirmed.

Be one, or a combination of these three:

1) Short
2) Cash
3) Fetal position, sucking thumb

There is no reason at all to enter long positions right now! Use any rallies to go short or exit existing long positions. If you're thinking about going long, just think of this bear, and what he'd do to your long position.


Although I've not yet been in the markets long enough to actually experience significant capitulation happening, but from the description, it seems like we're close- volume has been double the normal these past two days, and we're heading into an exponential downward curve.

Where's The Money Coming From?

We've just bailed out another institution, AIG. 85 billion dollars. Eventually this will result in the government holding an 80% stake in AIG. Public companies becoming government companies, scary. The impact of these bailouts will be hard to see until a few more years down the road, after we're out of the recession. But, what do we know, perhaps these bailouts are actually necessary to save us, but at what cost?

Now, to the markets! I gladly took the opportunity given in this early morning's gap down to exit my puts. Not only did the SPY break the 120 intra-day, it gapped way down to open at 117. But, as the charts show, the markets closed significantly positive relative to the start of the day. The breakdown of the 120 support of the SPY failed it seems, and with this AIG news, we'll likely rally for a couple days off this apparent "double bottom" of the July low.

Will likely try to unload some of my LDK calls that will expire in 3 days and depending on how strong this rally is, maybe start building SPY puts on Friday. We're still in a bear market, any rallies are short lived and should be used as opportunities to exit long positions and stay in cash, or go short- depending on how gutsy you are.

And on a sidenote, fall quarter will be starting soon, so I will be back to being a full-time student, part-time blogger. My blogs will definitely drop off in frequency, and likely return to politics for the run-up to the November elections. Furthermore, since to me it's a lot easier to blog about politics than analyzing technical patterns and reading all the details of what actually is happening in these bailouts and coming up with a conclusion, my stock blogs will probably drop off as well. Probably just some short ones on stocks may appear, but likely for my own interest as a pseudo history-log of what my thinking was.

Testing of July Lows

LEH to file for bankruptcy, and BAC to attempt to buy MER. Right now the SPY is staging a mini-comeback but it's fading just as quickly as it started. A retest of the July lows is likely to happen tomorrow, pending no more "emergency" Fed decisions. The July lows is crucial to the nearterm movement of the market, a break below the July lows, which is also pretty much the sentimental 12000 point of the S&P500, would likely start another round of selling that has yet to be seen.

Here's todays chart fort he SPY which is still being finalized in the last 10 minutes as I write this:

Note the bearish Inverted Hammer appearing today, a reversal from the previous two up days.

Many have been calling for the non-bailout of companies like LEH, and I hope we get it. Our market will not correct if the government keeps stepping in. It only delays the inevitable to the point where the collapse will be utterly hard and fast, you won't know what hit you. As far as BAC buying out MER for the ridiculous price of $29/share, that will have a hard time getting approved by regulators, which is likely why MER's price only gapped up to $23 today, and has now faded to the low $17s. Even taking approval by regulators out of the pictures, the shareholders of BAC will likely want to reject the buyout; the ridiculous price of $29/share when MER was just trading in the low teens last week is horrendous.

Anyways, look for the test of July lows, if we break it, we're headed lower. I read this on the Yahoo! Message Boards:

The Fed is officially out of bullets.

Oh sure, they can bail out Lehman, and they can lower rates some more.

But that @#$% don't fly with wall street any more...so down we go.

You either gotta be:

1) Short
2) In cash
3) Fetal position, sucking thumb

Pick one and act. This one is gonna get ugly!

This will necessarily affect the Taiwan markets, as they've already taken a hit since they are a day ahead of us in the U.S. As I stated last week, use any rallies to get our of your long positions or even go short. But #2 above is likely the most safest route, cash is king right now.

As always, the appearance of these alone should not indicate a reversal; the safe trade should be to wait for confirmation in the next candlestick (trading day). And the necessary disclaimer:

Disclaimer: Any stocks or equities mentioned may or may not be part of my personal holdings, and thus may affect my outlook on the mentioned stock. Any trades/investments made as a result of my comments are committed at your own risk. In short, you losing your own money is not my fault.

Same Old, Same Old

Took a break this week, and it seems like I could start taking breaks and not miss out on anything. The Ma presidency still shaping up to be the presidency that paved the way for unification. Been hiding in a cave for 3 months and aren't up to date? Here we go!

- 'Unification' pandas coming soon to Taiwan as China's only gesture of 'goodwill'
- President Ma calls Taiwan-China relationship a 'special relationship,' furthermore, not a 'state-to-state' one
- Taiwan no longer applying for full membership to U.N., instead seeks to have 'participation' in sub-agencies, likely under a name unrelated to Taiwan or even ROC
- The so-called '1992 consensus' is back in play, reverting Taiwan back to the times of 一個中國, 沒有台灣
- Plans to scrap visas for Chinese, Macau, furthering the idea that travel between Taiwan and China is domestic

Enough of that. Besides, the real story is Chen, Shui-bian right?
- Chen, Shui-bian admits to moving campaign money out of the country
- Chen, Shui-bian removes himself from the DPP
- Chen, Shui-bian denies separate allegations of embezzlement
- Chen, Shui-bian cleared of separate defamation charges
- Chen, Shui-bian cause of all problems, including 'bad' economy of Taiwan, bad relations with U.S., increased tensions with China, drop in birth rates, increase in suicides, leading Taiwan's 'seccesionists', repeated failures to join the U.N., provoking people to kick him, and the list likely goes on... cancer, AIDS, global warming, global unrest, etc.

Ma has tossed Taiwan out the window and replaced it with an island that resembles some sort of "Taiwan"-like region, but not really named Taiwan. Meanwhile, it seems like most of the government's efforts is directed at making Chen, Shui-bian look like the scum of the earth rather than trying to figure out how to fix Taiwan's economy. It's no overnight fix, but continuing to dwell on the Chen is certainly not going to get Taiwan anywhere. Chen will be dealt with in due time/process, but do the people of Taiwan have the liberty to wait around for that to happen? I'm not one with much "governmental experience" or "executive experience" like Sarah Palin ;), but the current Taiwan administration's plan seems pretty simple; it has got one solution to all the problems that Taiwan currently faces, and a few back-up plans:

(1) Play the China card: More China, more Chinese tourists, more Chinese investments, more "China" in company names, more deregulation of laws dealing with China, etc.
(2) If (1) fails, blame Chen, Shui-bian
(3) If (2) fails, blame global economy
(4) If (3) fails, say we'll "do our best!" and "have faith in us!"
(5) If all else fails, revert to (1), rinse and repeat