Consider the course of the last 12 months, and then look at this chart… is China even part of the global slowdown?

We don’t want to get too excited about this growth, as much of these sales are a product of Chinese government stimulus. But I.O.U.S.A. is certainly throwing a bunch of money at this crisis as well, and the same measure of auto sales here fell 34% in May… so they must be doing something right over in Beijing.

Chinese property sales rose 45% in the first five months of 2009 compared to the same period in 2008, their National Bureau of Statistics announced today. Heh, notice a trend?

Again, these numbers are manipulated by government intervention… but 45%? That’s pretty big. We also note that real estate investment over the same period rose 6.8%, a rise the U.S. certainly can’t claim.

Thus, the market story today is “buy whatever China wants.” Namely, commodities. Oil’s up to $71, a 2009 high. Copper is at an eight-month high of $2.36 a pound. Aluminum, lead, zinc and nickel are all in the same boat.

Stocks like Alcoa (NYSE:AA) and Exxon Mobil (NYSE:XOM) helped the Dow to open up 1%.

“Buy what China needs, but can’t make enough of for itself,” Chris Mayer urges, taking this investment theme to the next level.

“In other words, as an investor, buy what the Chinese have to buy. Conversely, don’t compete with China. Sell what the Chinese make plenty of. This next chart captures the idea. It shows China’s ability to produce a commodity against its demand for that commodity.

“You want to be in the lower left-hand part of the chart. In short, the very best places to be are in potash, soybeans, iron ore and oil. In these commodities, China’s share of world production is low. For potash, China represents less than 5% of global production, as shown by the vertical axis. It is also not self-sufficient. As the horizontal axis shows, China’s production of potash is little more than 20% of its domestic demand.

“As for soybeans, China was once the world’s largest exporter. In 1995, it flipped to a net importer and has been the largest importer of soybeans in the world since 2000. Much of its supply is in the hands of companies such as Archer Daniels Midland (NYSE:ADM), Bunge (NYSE:BG) and Cargill.

“More broadly, this speaks to China’s growing demand for food, and its growing dependence on foreign suppliers to keep its rice bowls full. This is why we see China in recent months making deals for food.”

Source: Can the Far East Drive American Markets Forward?

This from Fleet Street Invest:

Israeli tanks have just rolled into Gaza…Almost three thousand miles away, Nigerian separatist blew-up an oil pipeline over the weekend…Meanwhile, Russia is locked in a dispute over the price of gas with Ukraine. Today they stopped deliveries of natural gas to Ukraine, Turkey and Europe to force the Ukrainians to pay up…

While fears about political instability drive the price of oil back up again, the OPEC oil barons are tightening the screws on global oil supplies…Oil was trading at just $35 per barrel on Christmas Eve. It’s over $50 this morning. That’s a 40% gain in just two weeks. And you can bet that it is going to go a lot higher. In fact, it could easily rise another 70% by the end of this year.

Investing in oil right now could turn out to be the trade of the year. And you can thank the OPEC oil cartel for that.

A Christmas present from the OPEC oil lords

OPEC has agreed to slash its daily oil output by 4.2 million barrels per day since September. That should have sent the price of oil soaring right away. But it kept falling instead because the market didn’t believe they would actually deliver those cuts. You see, the cartel has cried wolf too often in the past, promising cuts that it didn’t deliver on.

But this time things really are different. The massive fall in the oil price threatened to destabilise the economies of the oil exporting countries. And that directly threatened the political position of regimes that run these countries.

So the OPEC oil barons are deadly serious about driving the price of oil back-up. And there is clear evidence that they’re slashing output sharply.

In October, a barrel of the lower quality “heavy” crude that most OPEC countries produce traded for about $4 less than a barrel of high quality “light” crude. Most of the light crude is produced by non-OPEC countries. Right now, it is only about 40 cents cheaper. That shows how quickly OPEC has reduced supply. And the market is set to get a lot tighter in the month ahead as OPEC keeps cutting production.

Investing in oil right now is one of the smartest trades you make this year. The International Energy Agency predicts that oil will rebound to $85 per barrel this year. That’s a 70% gain on where it is now.

This is the time to invest in oil

We stayed out of investing in oil companies as the oil price soared to unrealistic levels in the first half of 2008. But that has totally changed. The price of oil has now fallen 66% from its peak last summer. And it is now unrealistically cheap.

The big question for investors is how to profit from this. You could invest in the big oil companies like Shell and BP . They are trading at very reasonable valuations right now of about five times last year’s earnings. These aren’t bad investments right now.

But these companies have a big problem. They’re finding it harder to replace their oil reserves. Increasingly, the big oil producing countries are handing over their oil reserves to their state-owned oil companies. That leaves the private oil companies to fight over the scraps.

That will hit the giant oil companies the hardest. Because they would have to make a truly major oil discovery to make a big difference to the size of their reserves. And the chances of that happening are going to get smaller in the years ahead.

Then there are the junior oil companies. A significant oil discovery can send their stock prices soaring. Triple digit gains when that happens aren’t uncommon. But many of them are in a bad way right now. Oil exploration is an expensive business. So the combination of lower oil prices and the freeze in banking lending is hitting them hard.

The potential profit from investing in a small cap oil company that strikes oil can be huge. But so are the risks. I doubt that many of the oil companies with less than $1 billion in market value are going to survive this downturn. So this isn’t a gamble that I would take.

Instead, on my Profit Hunter investment service, we have focussed on the mid-sized oil companies. These companies have the financial strength to get through this downturn. But they are still small enough to benefit massively from new oil discoveries. This is where the real money is going to be made in the next oil bull run.

Source: Get In On The Trade Of The Year