For years, the Street has looked at any Chinese economic data with a weary eye. Without the checks and balances of a democratic government, Beijing had plenty of reasons to manipulate its growth figures.

Even though all signs point to a strong, stimulus-fueled recovery, most pundits refuse to believe the country’s tales of double-digit GDP growth.

But the folks at Goldman Sachs are taking the disbelief in a different direction. According to reports from the banking behemoth’s analysts, China likely grew by 13.1% last month.

It is a bold claim in a year when Chinese officials estimate domestic growth of a much more moderate 8.5%. It is also a bold claim for a company whose “book” is filled with Chinese investments. After the action of the past two years, Goldman is obviously just as adept at using its shaky “research” to its own advantage.

But why is China’s GDP debated so ferociously? And more importantly, why do we care how fast the country expands?

It’s all about the currency. Without a yuan that freely floats against the dollar, it is in China’s best interest to put its best foot forward. Right now, with such a large gap between American and Chinese economic growth, it is strategically important for China to appear weaker than its foreign competitors.

Weakness means strength.

For Goldman, perceived strength equals stronger trading profits.

Believe who you want. They’re all liars.

*** It is a different story a third of the way around the world in Iceland. For the country that has become the punch line of banking circle jokes, the government’s recent decision to repay its obligations to the Netherlands and Britain was an important step in the recovery process.

If it were not for the Icelandic president’s veto, the country would be cutting a check for $5 billion to the Dutch and British.

With nearly a fifth of the economically ravaged country’s citizens signing a petition stating their disdain for getting stuck with such a sizeable bill, President Grimsson was compelled to veto his government’s legislation for just the second time in the country’s 66-year history.

Now it is not his constituents Grimsson has to worry about. It is his European brethren.

Obviously, London and The Hague are none too happy. The International Monetary Fund, with its plans to send the troubled country a bailout check worth $4.6 billion, is downright confused. And the European Union doubts whether Iceland will maintain its fast track to joining the pact.

All in all, this is a no-win situation in Iceland that proves even the most expensive of government bailouts and stimulus programs will not erase the far-reaching effects of a global financial meltdown.

What these two stories should tell investors is there is one thing controlling the markets these days… greedy, selfish, economically retarded governments.

China is lying about its economic growth. Iceland is realizing why its government up and walked out. And Goldman is raking in money like never before.

All of the conniving and manipulations adds up to volatility and, more importantly, unpredictability.

By traditional measures, market volatility is on the decline. But let me ask you, do things feel any safer than a year ago? Is the future really that much more clear? Absolutely not.

We’ve got guys trying to blow up planes with their underwear and a congress trying to skirt the democratic process to pass legislation that will rewrite a huge chunk of the nation’s economy.

It is far from safe out there. That’s why gold remains above the $1,100 mark, the dollar remains historically weak and it is why few businesses are willing to seek out growth.

The situation is as bleak as ever.

I am not saying we are going back to Dow 6,000 anytime soon, but all this nonsense about the recession being over and a straight road to recovery awaiting us is pure junk.

I’d rather believe in global warming than a safe and secure economy. And we all know how Al Gore is feeling these days.

*** Since China is a hot topic today, you can add Australia to the list of countries not so happy with Beijing’s antics.

After entering a $20 billion deal to buy liquefied natural gas from Australia’s Woodside Petroleum, China has announced the contract’s deadline has passed and it is backing out of its previous decision.

As natural gas prices have plummeted over the past two years, thanks to massive efforts in drilling technology and recovery techniques, China now realizes the figures in the proposed deal are no longer viable.

This is good news for gas investors across the globe.

If you recall, over at TFN Strategic Trader, we recently locked in gains of 400% by playing the industry’s moves. China’s indecisiveness and a recent surge in prices have created yet another profit opportunity.

The LNG market is on the ropes. With the help of economic recovery, gas exporters may be able to gain enough strength to re-enter the fight. But if traditional fuel sources begin to pay off like they are expected to, there may be no reason to endure the hassle and expense of compressing gas and shipping it across the globe.

This is going to be an interesting industry over the next year. Contrarian investors will be wise to pick up any of the “apparent” losers on dips. What is a loser today is likely to be a winner tomorrow. At least until it’s a loser again.

Got it? That’s trading for you.

Nothing talks in Washington any louder than money. Today, the big spenders are betting against the land of the free and the home of the brave. But of course, if you’ve been paying attention, the action is no surprise.

If you invested in United States treasuries over the last year, you bought into the worst performing sovereign debt across the globe. Thanks to the Obama administration’s unending yearning to artificially pull the nation’s GDP into positive territory, investors are quickly raising their nose to the country’s ever-growing pile of debt.

In all of 2009, the Treasury Department received loans of $2.1 trillion from the world’s investors. It was an extraordinary year of borrowing that took the nation’s debt liability from $5.80 trillion to $7.17 trillion at the end of November.

Of course, with unemployment likely to show yet another rise later this week and some 45,000 businesses tossing in the towel over the last twelve months, Obama is not done spending yet.

Many experts believe 2010 will mirror the borrowing habits of 2009, when Geithner and the Treasury hit the auction market 79 times.

As we are seeing today, excessive borrowing can lead to strong market opportunities for well-positioned investors.

As long as Uncle Sam is spending more than he is pulling from the pockets of hard-working Americans, the value of the dollar will be at risk.

After a very strong December, the greenback is showing weakness today. It now trades at $1.4436 against the euro, a dip of more than a penny below the 2009 closing figure. A penny may not sound like much to the uninitiated, but a quick look at anything dollar-denominated tells a different story.

Oil is up, gold is up and the equities market is soaring. A turnaround in the dollar is just what we needed to get the pendulum swinging once again.

As I have said many times before, a falling dollar is good, but it can only drop so far before it turns out to be an utter disaster. Once the markets believe the bottom is going to fall out, it is all over for the security of the world’s top currency.

But that’s a problem we won’t have to deal with until the Fed pulls out of the game. Unfortunately, Bernanke’s likely to put the fiscal rejuvenation machine into reverse in the not-so-distant weeks ahead.

For now, however, it is time to make money while you can.

Any good contrarian investor loves the gold markets lately. I love it because we are raking in the gains over at TFN Strategic Trader thanks to recent swings in the precious metals market.

For nearly all of December, I took flak because of my gold-market pessimism. But folks that followed my advice saved themselves some big money as the shiny metal lost nearly 10% of its value.

But in the final week of the year, you may recall, I noticed the market was ready to change direction. On Thursday morning, with just a couple of trading hours left in the year, I made my move. I wrote my subscribers about a strategic option contract.

The move paid off. Thanks to gold prices surging by more than $26 per ounce today, the contract has soared by 44%. I am sure plenty of members are taking the one-day gains, but I’m holding out for more.

2010 will be the year of all years for currency and hard-asset traders. We are already proving it.

*** Here’s a question that will help you get the New Year off to a profitable start.

What do Medifast (NYSE:MED), Green Mountain Coffee Roasters (NASDAQ:GMCR) and Hansen Natural (NASDAQ:HANS) have in common?

The answer: They all make food or drinks designed to make you feel good. Even better, they comprise the three best performing stocks of the last decade.

Medifast, with its popular weight-loss diets, soared over 16,000% over the past ten years. Green Mountain, and its diverse coffee lineup, led investors to gains of 9,210%. And Hansen, the maker of a variety of popular drinks, is up by 7,022%.

Not bad figures for a time that most pundits are eager to call a lost decade. It is not surprising to see a decade that was so focused on consumer spending and short-term happiness to produce these kinds of figures.

Looking forward, however, into a decade when unemployment is creeping higher, discretionary spending is down and it is becoming hip to be frugal (finally, my time to shine), the three stocks listed above may give back plenty of their recent gains unless they reposition their product portfolio.

In ten years, it won’t be “fun” food we will be talking about. With the nation’s population growing by leaps and bounds, it will be staples like corn, wheat and water that dominate the headlines.

Don’t worry. We’ve got plenty of time to figure it out.

Baltimore — (TFN): Want to know when a specific trend has no legs? Simple, when the government backs it, you know its DOA.

Just ask the folks that dumped millions into the biofuels industry. I have never seen an industry fall off the map as quickly as ethanol, except maybe clean coal, but that’s a whole different story.

Now that Cash for Clunkers is in the history books and the economy appears to be in worse shape despite jaw-dropping levels of government prodding, the Obama administration has moved on to the next vote getter, er, I mean, stimulus package, er, I mean, jobs program.

It’s a kiss of death for the “green” initiative.

If you loved Cash for Clunkers, you’re going to flat-out be infatuated what the press has dubbed Cash for Caulkers.

It includes the same market-bending incentives. It gives your hard-earned tax dollars to somebody that likely doesn’t deserve a penny of it, plus it allows immense room for corruption and deceit.

But best of all, it isn’t limited to just $4,500. Nope, this time Uncle Sam’s writing checks for up to $12,000.

Fall in line, folks.

It’s a buy-one-get-one-free extravaganza at the White House. For every dollar you spend on “weatherizing” your house, Obama wants to hand you fifty cents in return.

If the first stimulus created scores of jobs in previously unrecorded political districts, imagine what this program will do.

I think I’ll install a high-tech “man cave” in the basement and label it as “internal carbon sequestration.” The former Acorn thugs rummaging through the reams of paperwork will never know the difference.

I’ll thank you in advance for the hard-earned tax dollars.

More seriously, we’ve got another politically motivated Ponzi Scheme on our hands here. It may send a well-tuned shockwave through the economy at a politically sensitive time for Obama, but it will do nothing for the nation’s failing attempt to pull up our boots and strut out of this mess.

What it will do is have much the same effects as the ill-planned Cash for Clunkers program. (I wonder if all those car dealers got their rebate checks yet.)

As mentioned above, just about anything will fall under the cloud of “weatherization.” We’ll see taxpayer funded swimming pools, sunrooms, outdoor kitchens, sprinkler systems… you name it.

Before you know it, Obama will be calling this thing a bigger success than he imagined and Congress will shove another sticky hand in our back pockets to fund some more votes.

Meanwhile, the price of just about everything you need to pick up at Lowes this weekend will surge in value.

Want to insulate your attic? It’ll cost you plenty more if Obama gets his way.

Want to replace the window Lil’ Johnnie broke with an errant foul tip? Get out your checkbook.

But the news should be good for McCain’s favorite campaigner, Joe the Plumber. His business is going to be through the roof… for about a month. Then just like we’re seeing at the nation’s car dealerships, he’ll be lifting his phone checking for a ring tone.

As for consumers, this is a great deal if you were already planning a new kitchen or some renovations.

But for the out-of-work father of two with a drafty house and a leaking roof, it’s going to do little more than incentivize him to break out the credit card and go even further in debt.

By why deal with that now? Just like national debt, that’s something the future can deal with.

*** Really, why should I complain? We’re making money hand over fist thanks to this political pandering.

I should be more specific. TFN Strategic Trader members are making money hand over fist.

Just today, we sold the second half of a position for gains of 100%. If you recall, we sold the first half for whopping gains of 400% just a couple of weeks ago.

All of our recent gains forced me to run some calculations today. It turns out, we’re kicking some serious behind.

Out of the 35 positions we closed since our debut in March, 26 of them have been breakeven or better.

Thanks to 14 trades with 50% gains or better (yes, you read that right), we’ve got a batting average of 0.743.

Nearly 75% of our trades have led to gains. That’s nearly unheard of for an options-trading service.

Let’s just say I can’t wait to see what next year brings.

*** It’s been a strong year for TFN Strategic Trader and it’s been a strong year for the biotech sector. As I told TodaysFinancialNews.com readers this morning, if the year would end now, biotechs would beat the market by a two-to-one margin.

The S&P 500’s up by about 18%. The biotech sector is up by 39%.

That’s good news for one biotech player, Fact Biotech (NASDAQ:FACT) as it searches for a deep-pocketed buyer.

Here’s some of what I told investors this morning:

“To be certain, if your goal was to beat the markets in 2009, the biotech sector was the place to do it. Unless something dramatic happens between now and the end of the month, biotechs will have outpaced the broader markets nearly two to one over the past twelve months.

“The S&P is up 18% year-to-date, while the biotech sector (according to the AMEX Biotech Index) is up by a whopping 39%.

“That kind of figure is good news for Fact Biotech as it mulls its future.

“Since September, Biogen Idec has had its eye on a Fact takeover. Its first offer of $14.50 per share was promptly rejected. And now we are receiving word that the company’s second tender offer of $17.50 has been unanimously rejected by the company’s board.

“According to the letter released to shareholders this morning, Fact’s top brass believes Biogen’s offer significantly undervalues its product pipeline and overstates its liabilities.

“What’s even better for investors, however, is the fact that the board is essentially putting a for sale sign on the company’s shares. “Beat this price and we’re yours,” their actions say.

“The news is good for share price. As I write the stock is up by nearly three percent, surpassing Biogen’s tender price by nearly forty cents.

“What comes next?” Keep reading to find out.

*** What am I watching for tomorrow? You should know by now. It’s all about the dollar and its sudden strengthening. The greenback’s up again today.

Gold bugs managed to stop a week’s worth of bleeding this morning, but if the dollar rises again tomorrow, don’t expect today’s gains to hold.

What’s more, next week is the final expiration date of the year. All sorts of crazy things will happen as those big institutional buyers shore up their books for an end-of-the-year review. It won’t be good for bullion hoarders.

This from Investor’s Daily Edge:

It’s finally here.  The long awaited and hard fought election will end tomorrow (at least I hope we don’t see a repeat of 2000 where we don’t know who won for weeks).  Rather than make predictions about the election itself, I want to tell you how I think things will play out after the election.

First, I think the overall market will rally after the election regardless of which candidate wins.  There could be a knee-jerk reaction to the downside should Obama win, but this is part of the old belief that Democrats are bad for business and investing.  History tells a different story than the actual belief though.

The thing that will happen on Wednesday is that the uncertainty will be removed.  The uncertainty of the election has been weighing on the market for the past few months.  It’s been hard to tell, because of the credit crisis, but trust me the election has been weighing on the market as well.

So overall we will likely see the market rally over the next couple of months.  Historically the market rallies after elections, regardless of whether it is a Republican or Democrat that is elected.

Secondly, as I have expressed in recent articles, the market is extremely oversold and the sentiment is extremely bearish.  So even if this weren’t “the most important election of our life” we would likely see a year-end rally.

As far as each candidate and the sectors they will impact the greatest, the scenarios are very different in some areas and very similar in others.  Let’s look at the winning and losing sectors under both Obama and McCain.

The big winners with an Obama victory will be Biotechnology and Alternative Energy.  With Biotech, the fact that Senator Obama wants to give the healthcare system a complete overhaul will push for new technology that improves healthcare at a lower cost.  Look for incentives to flow into this sector whether it is with tax credits or grants, there will be a push for new developments from the group.  Senator Obama also supports stem-cell research and should he win, look for a boost to stocks in this arena.

Alternative Energy, particularly solar, will be a big beneficiary of an Obama administration.  On the campaign trail he has said he wants to direct $150 billion towards alternative energy and lowering our dependence on foreign oil.  As we all know, what is said on the campaign trail and what is done after the fact can be very different.  While he might not able to direct the whole $150 billion toward the sector, you can bet there will be money pushed that way, how much money is available will be determined later.

One sector that will certainly get hurt with an Obama administration is big-cap pharmaceuticals.  The same desire to overhaul the healthcare system that I mentioned as a benefit to biotech will be a hindrance to pharmaceuticals.  The reason for this is that he will likely push for lower drug prices at the consumer level.  This will limit what the drug makers can charge and limiting their revenues.

As for McCain, the obvious winners will be the Defense sector and oil and gas sectors.  While Obama believes a timeline should be set for withdrawing from Iraq, McCain doesn’t believe such a mandate should be put forth and the U.S. will likely continue to spend heavily on Defense should McCain win.

A McCain victory should also provide a boost to nuclear energy companies. He has made it clear on the campaign trail that he is in favor of finding alternative energy sources beyond oil, but where Obama prefers wind and solar energy, Senator McCain prefers nuclear energy.

One area that will likely lose should McCain win is the infrastructure sector.  Senator McCain wants to curb government spending, at least that is what he is saying on the campaign trail.

Like I said about Mr. Obama wanting to spend $150 billion on alternative energy sources, what is said on the campaign trail and what actually happens after the election are two different things.  Remember President Bush campaigned on less spending as well, but there haven’t been any cuts in spending over the last eight years.

Regardless of which candidate wins, they will be inheriting one heck of a mess.  The current economic environment is one of the worst I have seen in my lifetime, the deficit that we are facing is astronomical, and the job losses we have had over the last year have combined to make this a daunting task for the next administration.

Consumer confidence is at an all time low recently.  The best thing the new President could do for this country is lift the spirits of our citizens.  Consumers are not likely to open up their wallets until they see hope that the economy is improving.  Lifting the confidence level might get them to open their wallets a little.

Regardless of who wins tomorrow, I wish them luck.  They are going to need more after the election than they need it in the election.

Source: Winning And Losing Sectors After The Election

Almost immediately, pension funds and hedge funds from around the world poured money into this BRIC nation. In fact, Brazil sold over $500 million in bonds to these hungry investors. That doesn’t even count the investment assets that poured into Brazil’s stocks, real estate, etc.

Brazil’s tax revenue also jumped 13% last month alone. Household income has increased, unemployment has gone down, and Brazil’s booming real estate market has all added new money to the government’s coffers.

Brazil has made huge strides in recent years. Just 20 years ago, Brazil was an entirely different country.

The largest economy in South America was drowning in debt. The Brazilian currency, the real, was practically worthless. And even in the ’90s, Brazil was still trying to get its act together and dig itself out of years of debt.

Today, it’s a completely different story. For the past decade, Brazilian officials have capitalized on its expanding commodities and completely rebuilt the economy from the inside out.

And now, Brazil is one of the hottest emerging markets on the planet. I believe Brazil will continue to soar for years to come. I say that because Brazil’s economy expanded 6.2% in just the fourth quarter alone (when other economies around the world were slowing). That’s the highest growth rate since 2004.

Brazil’s currency, the real, has now gained 28% against the buck in the last four years. That’s the very best performer of the top 16 currencies of the world.

And right now, things have never been better for Brazil. Petrobras, Brazil’s state-owned oil company, is hiring another 14,000 engineers, geologists, and drillers as it taps into the biggest crude discovery in the Western Hemisphere since 1976.

In fact, this latest “oil find” may allow Brazil to overtake all of OPEC’s output with the exception of Saudi Arabia. So this will be huge. It will provide a huge base going forward for Brazil to divert some of its oil money into other viable investments.

Money just keeps pouring in as the demand for Brazil’s bonds, stocks, and commodities continues to pump money into the economy.

So what will Brazil do with all this newfound money? Brazil’s reserves have already doubled since 2006 to a whopping $195 billion. Not bad for a country that had trouble paying its debts just a few years ago.

Brazil’s policymakers have considered many options lately. Rather than touch the $195 billion in reserves, they have decided to start a $20 billion sovereign wealth fund (SWF). This new SWF would take this newfound wealth and diversify it into many different investments.

What’s the plan now? First, Brazil’s policymakers will use the proceeds from the recent bond sale to pay off more expensive debts. Then they’re planning to build their SWF. They’ve already announced they’re investing at least part of that $20 billion in U.S. dollars.

Brazil’s policymakers are also planning to use part of this money to buy rivals overseas, fixed income assets, and finance companies seeking to invest in their operations.

Brazil is becoming more solid all the time. And as they diversify their income streams, Brazil’s leaders will just create a brighter, more stable future for themselves.

I find it interesting that they feel buying dollars at this point in time is a worthwhile investment. You buy things only because you think they will go up in value…as far as investments are concerned.

Even the epic dollar bear Jim Rogers agrees there could be a short-term dollar rally. He estimates that it may last only about a year. He’s going to use that dollar rally to finally exit his dollar-denominated assets.

He also stated another reason why the U.S. dollar may rally for about a year: America is a huge agriculture producer. The world is in dire need of agricultural commodities, so our American farmers are going to pick up the slack where the economy has fallen.

So, in the near term, you can see that both Brazil and Jim Rogers are betting on the greenback.

In the longer run, Rogers believes the commodity dollars (Australian dollar, New Zealand dollar, and the Canadian dollar) will do better than those that aren’t commodity exporters during this commodities boom. In fact, he especially emphasized his Aussie dollar position (and since Brazil is also a “commodity currency,” I believe it will prosper right along with these others that Rogers has listed).

So don’t get me wrong, over the years, the dollar will have problems. But in the next few months, there’s money to be made by investing in dollars, and Brazil knows it.

Sean Hyman
For International Living

Editor’s note: Fascinated by currencies? Want to learn more about how the currency markets move and shift your money from your wallet? You can subscribe to the free e-letter, My Two Cents. You’ll hear currency insights, including how to diversify out of the sinking dollar, from experts five days a week.

Source: Brazil Is Hitting the Town and Buying…Dollars?