It’s Official: China Will Be Dumping US Dollars

In case you missed it, earlier this week China announced that its foreign currency reserves are excessive and that they need to return to “reasonable” levels.

In politician speak, this is a clear, “we are sick of the US Dollar and will be taking steps to lower our holdings.” Remember, the US Dollar is China’s largest single holding. And China has already begun dumping Treasuries (US Debt).

This comes on the heels of China deciding (along with Russia) to trade in their own currencies, NOT the US Dollar. Not to mention the numerous warnings Chinese politicians have been issuing to the US over the last 24 months.

In simple terms, China is done playing nice and is now actively moving out of US Dollar denominated assets. This is the beginning of the US Dollar’s end as world reserve currency.

The dimwits in Washington don’t understand this because their advisors are all Wall Street stooges who don’t think debt or deficits matter. After all, why would they? Their entire business model is now based on endless cheap debt from the US Fed. So it’s only logically (in their minds) that the US as a sovereign state engage in the same strategies.

What does this mean? We’re on out own in terms of preparing for what’s coming. The US Dollar has already taken out its 2009 low in the overnight futures session. We now have only one line of support before the US Dollar breaks into the abyss (all time lows).

So if you’re not preparing for mega-inflation already, you need to start doing so NOW. The Fed WILL continue to pump money into the system 24/7 and it’s going to result in the death of the US Dollar.

If you’ve yet to take steps to prepare your portfolio for the coming inflationary disaster, our FREE Special Report, The Inflationary Disaster explains not only why inflation is here now, why the Fed is powerless to stop it, and three investments that absolutely EXPLODE as a result of this.

All in all its 14 pages contain a literal treasure trove of information on how to take steps to prepare AND profit from what’s to come. And it’s all 100% FREE.

To pick up your copy today, go to http://www.gainspainscapital.com and click on FREE REPORTS.

Good Investing!

Graham Summers

Oil Crisis Just Got Real: Sinopec (Read China) Cuts Off Oil Exports

As if a dollar in freefall was not enough, surging oil is about to hit the turbo boost, decimating what is left of the US (and global) consumer. Xinhua, via Energy Daily, brings this stunner: " Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan's earthquake, a report said Wednesday. The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output "to maintain domestic market supplies of refined oil products". Oh but don't worry, those good Saudi folks are seeing a massive drop in demand... for their Kool aid perhaps. "Sinopec would ensure supplies met the "basic needs" of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying." Now... does anyone remember the 1970s?

The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year.

Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products.

It reported a net profit of 71.8 billion yuan ($11 billion).

The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

It had said at the time that it would continue to "expand markets" in China and overseas this year, while intensifying its exploration efforts in the country's western regions.

Oil prices have surged on supply concerns as governments in the oil-rich Middle East and North Africa are hit by popular uprisings, while the Japan quake and resulting nuclear crisis led the country to seek other forms of energy other than atomic.

And another perspective on how China just gave Geithner and his inflation exporting dreams the biggest, baddest middle finger, from Global Times:

China Petrochemical Corp (Sinopec Group), Asia's largest oil refiner by capacity, said Tuesday it had halted refined oil exports, except those to Hong Kong and Macao, in order to bolster domestic supply. Analysts said the move would help prepare for a possible domestic fuel shortage later this year.

Due to the turmoil in the Middle East and the earthquake in Japan, Sinopec is facing pressure just to meet demand at home, the company said.

The company will keep its refineries running at full capacity, but will cut petrochemical production and reduce the workload at its chemical plant installations to boost the domestic supply of refined oil, it said. It plans to produce 10.54 million tons of refined oil products in April.

The company did not say how much refined oil it would hold back from the international market.

"With the weather getting warmer, more cars hitting the road and increased demand from the construction, industrial and logistic sectors, the consumption of refined oil is expected to surge in April," said Wang Shunzeng, secretary-general of Beijing Petrol Circulation Industry Association.

Meanwhile, due to inflation and the rising price of crude oil, many private refineries have reduced production, making it necessary for State refiners to step in to fill the gap, analysts said.

China's refined oil inventories fell last month after hitting record highs at the end of February, the National Development and Reform Commission (NDRC) said Tuesday.

The country's apparent refined oil use in March reached a record high of 21.73 million tons, the NDRC said.

"The inventory of refined oil is actually still at the normal level. Sinopec's move suggested that it is making early preparations for peak demand in summer and a possible fuel shortage later this year," Zhong Jian, chief analyst with C1 Energy, told the Global Times.

The country had a shortage of fuels last year, especially a diesel shortfall in the fourth quarter when electricity cuts due to power rationing caused factories to use backup diesel generators to provide power, thus pushing up diesel demand.

Zhong said that China's crude oil processing capability would rise by 17 million tons this year, but this figure is lower than for the two previous years. He also said there would be a 4-million-ton shortage of diesel oil this year

Translation: Shit just got real, and is about to manifest itself in limit ups in both regular, and black gold.

James Grant: Bernanke's Easy Money Party Will Leave A Hangover For Speculators

http://tinyurl.com/428u2za

Video - Jim Grant with Consuelo Mack - April 17, 2011

The interview begins at the 3:50 mark. Regarding inflation, MIT's Billion Prices Project is mentioned which we first highlighted last week.

James Grant Testifies On The Federal Reserve Before Ron Paul's Committee On Monetary Policy

Grant Says The FED Should Be Required To Create A Living Will, He Appoints Ron Paul As Executor Of The FED's Estate

Clashes erupt in Shanghai as truck drivers strike near port

By Royston Chan and Carlos Barria

SHANGHAI (Reuters) - A two-day strike over rising fuel prices turned violent in Shanghai on Thursday as thousands of truck drivers clashed with police, drivers said, in the latest example of simmering discontent over inflation.

About 2,000 truck drivers battled baton-wielding police at an intersection near Waigaoqiao port, Shanghai's biggest, two drivers who were at the protest told Reuters.

The drivers, who blocked roads with their trucks, had stopped work on Wednesday demanding the government do something about rising fuel costs, workers said.

"I want the government to stand up to solve our problems because we cannot take this anymore. We are unable to bear the cost of operating now," said a driver surnamed Chen, 33, a native of Henan province who has been driving for eight years.

The strike comes against a backdrop of rising consumer prices and fuel price increases. China's inflation rate hit 5.4 percent in March, prompting officials to renew vows to use all available means to contain price rises.

Police arrested at least six people and beat up some protesters with batons, said Chen and another driver also surnamed Chen, 35. They declined to give their full names or the name of their company for fear of reprisals.

Both drivers, who work for a small transport company, showed photographs to two Reuters reporters of police carrying a man with a bloodied head, with his wife and daughter at his side.

Repeated calls to the Shanghai public security bureau and the municipal government went unanswered. Continued...

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US Dollar - The Rodney Dangerfield of Currency

After S&P downgraded the debt outlook of the US, the stock market sneezed, drank some high liquidity kool-aid, and then regained a lot of its lost ground. The real interesting phenomenon of course, was in the bond market, where market participants all but ignored the warning from S&P and bought US treasuries for their 'safety'.

While some people may think this might be due to the damaged credibility of the credit rating agency after the financial tsunami, or that the US's house of finance is fundamentally strong, the real reason may actually be the strong faith in the bi-winning fed's determination to destroy the dollar by keeping interests rates artificially low. The evidence is best seen through the currency market.

With all the problems in Euro due to its PIIGS members, the latest being the risk of Greece restructuring its debt, the Euro fell from 1.45/dollar to 1.42/dollar, but then reversed its course and marches steeply towards 1.45/dollar again. Another evidence is on USD/JPY. Japan, with a 200% debt/GDP ratio, and a devastating tsunami that will cause the BOJ to keep its interests rates low for a long period of time, reversed its course of its weakness against the dollar, causing USD to trade below its pre-tsunami level once again. While we don't believe the JPY can continue its ascend, and that the repatriation of Yen might be at work here, it nonetheless reflects the relative strength of the dollar.

So when will the dollar strengthen again? Long-term wise, it will probably be after the bi-winning fed exits its QEn program, with the likely scenario that n being a double digit number. In the short-term, however, everyone should be tuning to bi-wining Fed Chairman's April 27th briefing, where every word will be parsed, however un-convoluted his message may be. The markets, whether it be equity, treasury, or currency, are currently placing tremendous faith in the chairman's continued determination to destroy the dollar in order to bring unparalleled prosperity to the US. While this can make a great trade for reversal if there's any surprise, it is hard to argue that the Fed worshipers have the upper-hand given the bi-winning Fed's history.

Daniel Ho is the founder of 10xreturn.com, a financial portal providing financial information and market statistics for investment professionals.

(c) 2011 Benzinga.com. All rights reserved. This material may not be published in its entirety or redistributed without the approval of Benzinga.

Oil Crisis Just Got Real: Sinopec (Read China) Cuts Off Oil Exports

Sinopec Station in Hong Kong
Wikimedia Commons image

Zero Hedge

As if a dollar in freefall was not enough, surging oil is about to hit the turbo boost, decimating what is left of the US (and global) consumer. Xinhua, via Energy Daily, brings this stunner: "Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan’s earthquake, a report said Wednesday. The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output “to maintain domestic market supplies of refined oil products”. Oh but don’t worry, those good Saudi folks are seeing a massive drop in demand… for their Kool aid perhaps. “Sinopec would ensure supplies met the “basic needs” of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying.” Now… does anyone remember the 1970s?

The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year.

Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products.

It reported a net profit of 71.8 billion yuan ($11 billion).

The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

It had said at the time that it would continue to "expand markets" in China and overseas this year, while intensifying its exploration efforts in the country's western regions.

Oil prices have surged on supply concerns as governments in the oil-rich Middle East and North Africa are hit by popular uprisings, while the Japan quake and resulting nuclear crisis led the country to seek other forms of energy other than atomic.

And another perspective on how China just gave Geithner and his inflation exporting dreams the biggest, baddest middle finger, from Global Times:

China Petrochemical Corp (Sinopec Group), Asia's largest oil refiner by capacity, said Tuesday it had halted refined oil exports, except those to Hong Kong and Macao, in order to bolster domestic supply. Analysts said the move would help prepare for a possible domestic fuel shortage later this year.

Due to the turmoil in the Middle East and the earthquake in Japan, Sinopec is facing pressure just to meet demand at home, the company said.

The company will keep its refineries running at full capacity, but will cut petrochemical production and reduce the workload at its chemical plant installations to boost the domestic supply of refined oil, it said. It plans to produce 10.54 million tons of refined oil products in April.

The company did not say how much refined oil it would hold back from the international market.

"With the weather getting warmer, more cars hitting the road and increased demand from the construction, industrial and logistic sectors, the consumption of refined oil is expected to surge in April," said Wang Shunzeng, secretary-general of Beijing Petrol Circulation Industry Association.

Meanwhile, due to inflation and the rising price of crude oil, many private refineries have reduced production, making it necessary for State refiners to step in to fill the gap, analysts said.

China's refined oil inventories fell last month after hitting record highs at the end of February, the National Development and Reform Commission (NDRC) said Tuesday.

The country's apparent refined oil use in March reached a record high of 21.73 million tons, the NDRC said.

"The inventory of refined oil is actually still at the normal level. Sinopec's move suggested that it is making early preparations for peak demand in summer and a possible fuel shortage later this year," Zhong Jian, chief analyst with C1 Energy, told the Global Times.

The country had a shortage of fuels last year, especially a diesel shortfall in the fourth quarter when electricity cuts due to power rationing caused factories to use backup diesel generators to provide power, thus pushing up diesel demand.

Zhong said that China's crude oil processing capability would rise by 17 million tons this year, but this figure is lower than for the two previous years. He also said there would be a 4-million-ton shortage of diesel oil this year

Translation: Shit just got real, and is about to manifest itself in limit ups in both regular, and black gold.

Visit ZeroHedge for some of the best economic news and commentary on the Internet.

China oil giant Sinopec 'cuts off oil exports'

Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan (NYSE: MCO - news) 's earthquake, a report said Wednesday.

The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output "to maintain domestic market supplies of refined oil products".

Sinopec would ensure supplies met the "basic needs" of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying.

AFP was not immediately able to reach a Sinopec spokesman by phone for comment.

The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year.

Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products.

It reported a net profit of 71.8 billion yuan ($11 billion).

The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

It had said at the time that it would continue to "expand markets" in China and overseas this year, while intensifying its exploration efforts in the country's western regions.

Oil prices have surged on supply concerns as governments in the oil-rich Middle East and North Africa are hit by popular uprisings, while the Japan quake and resulting nuclear crisis led the country to seek other forms of energy other than atomic.