Shanghai is Chinese for Florida ... hedgy plays hurting ... why is gold so strong? ... mobiles killing the bees ... Algeria joins OPEC squealers

Despite a strong finish going into the last hour of US trading last night Asian equities are soft as I write as I write this morning. Particularly weak throughout are the commodity plays although financials and real estate equities are soft too. But worth special note is the Chinese market, which was the sole and notable absentee from yesterdays GSE-inspired stock market rally.

When the Chinese mkt started to decline last yearI didn't take it as necessarily telling us anything other than it had been trading on a multiple of 50x, which would have made peak Nasdaq blush. Ownership was far too low for a stock market bust to make any difference to demand. But what happens if you add a property burst onto that too?

It's certainly looking more ominous. China Vanke, China's biggest property company, became the latest company to warn on the health of the domestic economy reporting last night that property sales were down 35% (I'm assuming YoY) in August and that Shanghai new home prices were down 24% ... annecdotally it's not hard to find examples of reckless overbuild of both residential and non-residential property. And all those empty houses and offices are collateral on some banks somewhere's books. It would also be a mistake to add the commodity demand generated from that overbuild as something you could count on until the excesses are unwound ...

BBG reports that Goldman's index of equities which are particular popular with hedge fund managers (Google, Petrobras and Potash Corp being the some of the most loved) have been battered the most ... all the more puzzling that gold has been holding up relatively well these past few days. Why? Buggered if I know. The dollar is doing a very good impression of a phoenix, while the entire commodity complex has gone in the other direction. Yet gold - the classic inverse dollar play - remains at $800. That's still 25% below the peak reached in March, but compare that to Nat Gas, Silver or Wheat, each down around 45% from their respective highs, and Golds move doesn't seem so bad. Moreover, during this most recent bout of dollar strength coinciding as it has with financials' strength in the equity market, Gold, which is the diametric opposite of those credit dependent "alchemy" shares has hardly budged ... Is gold about to catch up with rest of the commodities? Or is it a signal that all is not well with this new confidence that the worst is over on the inflation and/or financial distress front? I've no idea. It's not difficult to see the bull case for gold implied by the nationalisation of half of the US mortgage industry. It's just hard to see why the same logic isn't sending the dollar lower. I suspect gold has further to fall nearer term before it is clean again, and ready to make new all time highs.

OPEC's Minesterial Monitoring Committee appears to have made no recommendation on oil output despite the Algerians joining in with the Iranians and Venezuelans making noises that they wanted less supply. I have no idea what these guys' marginal cost of production is but it costs XOM and COP around $25 to extract a barrel of their oil, with another $25 to invest in further production. In other words, the industry leading and cheapest producers on the planet have a marginal cost of around $50pb. Would state run clowns like those from Mexico, Iran and Venezuela have a higher or lower cost? I suspect the latter, which probably explains their squealing ... they need revenues well in excess of those marginal costs to finance their stupidly populist and military expansionary policies. The only ones who count though, are the Saudis since they're the only ones who appear to have any spare capacity (though I'm still skeptical just how much is actually there). They have signalled that they view current production as adequate. I suppose we should be grateful that the Saudis remain one of the last few bad guys in the world who's interests seem aligned with ours.

Finally, the Independent reported at the weekend the findings of an Ulrik Warnke that the growing "electronic smog" caused by Wi-Fi systems, mobile phone systems, etc is disorientating forager bees to the extent they are losing their bearings and failing to make it back home with the pollen. This can lower the number of bees in the hive to below critical mass, preventing the chances of the hive surving the winter in a fit state. In the last few years there has been a collapse in the honey bee populations of the USA, the UK, Germany, France, China and Taiwan to name just a few (in the US the decline has been in the order of around 35% this year and last). Bees pollinate 70% of the agricultural produce which either we or the meat we eat ultimately rely on, including oranges, soybeans and cotton for the speculatively minded. The declines are worrying indeed, but more concerning is the apparent inability of scientists to reach a consensus on what is causing them.