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Two Ways: Rio Tinto Steeling China's State Secrets?


Strengthen your portfolio in good times and bad.

The Rio Tinto (RTP) employee being held by Chinese authorities has been accused of espionage. According to the Wall Street Journal, Stern Hu, general manager of Rio's iron-ore division in China, has been accused of stealing state secrets.

So far, there isn't much word from the Chinese government. But Australian Foreign Minister Stephen Smith said there doesn't seem to be any association between Hu's detention and Rio's current negotiations with China over the price of iron ore.

Regarding the talks, China has been adamant about a 40% cut on last year's contract price -- despite other Asian steelmakers settling on cuts of 28% to 33%. Still, the negotiations continue, despite a previously set deadline of June 30.

Rio Tinto ADR shares still finished higher today, up 0.96%, to 125.68.

From the Bull Pen: Despite Smith's claims that this had nothing to do with the negotiations, word is that the Chinese's decision to play hardball with Australia has thrown the commodities market into disarray. One thing is for sure: Investing in commodities and related stocks requires an cast-iron stomach. As for steel, Arcelor-Mittal (MT) holding $28 support is bullish for the intermediate term. A sell stop can be set below that level.


Click here to enlarge.

From the Bear Cave: The iShares 20+ year Treasury Bond ETF (TLT) has had a strong rally since mid-June, but is now showing signs of being overbought. Bears can consider fading (read: sell) the stock into $98 resistance. A buy stop can be set above that level.

In finance, people often quote Mark Twain's "History doesn't repeat itself, but it often rhymes." Allow me to quote another one of his famous lines: "Denial aint just a river in Egypt."

Have a good night!
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