Callum Newman's weekend Daily Reckoning took on a whole new meaning this morning. The Australian Financial Review reports that China just stopped all imports of milk powder from New Zealand. Three strains of bacteria were found in Fonterra's whey ingredients. They can cause an illness called Botulism, which is of course a very ironic name for something you can get from baby milk powder.

Morbid humour aside, it's the opportunity for profit that's got your editor extremely excited.

Who's going to make off with the profits from New Zealand's misfortunes? One small Australian listed company which made it into The Money for Life Letter portfolio only months ago. And it was selected on the very premise that Fonterra had just mucked up the opportunity of a lifetime by becoming embroiled in a contamination scandal.

The latest scandal is just another setback for the Kiwis. And a new opportunity for the local company to gain even more market share in milk's fastest growing market - China.

You see, milk is somewhat of a controversy in China. As Callum explained in his headline, 'Why Sell Heroin or Cocaine When You Can Sell Milk Powder?' You can find out more on the story here, along with which company is set to make a killing now that its competitor is truly tarnished. The stock is up a few percent this morning already.

Even without the scandal, milk is a great industry to be in. As bootlegger Al Capone said when he was asked why he established the milk distributor Meadowmoor Dairy, 'Honest to God, we've been in the wrong racket right along!'

Unfortunately, Callum's wild and reckless football playing style landed him in hospital with a broken leg on Saturday. In his morphine-induced state of bliss he's unlikely to be aware of Fonterra's misfortunes. It's not just milk he's missing out on.

Something's afoot on the Arabian Peninsula. The Americans have extended the closure of their embassies across the Muslim world. They usually just keep them shut over the Eid celebration which marks the end of Ramadan. But the US State Department reports 'we've decided to extend the closure of several embassies and consulates including a small number of additional posts.'

'Posts in Abu Dhabi, Amman, Cairo, Riyadh, Dhahran, Jeddah, Doha, Dubai, Kuwait, Manama, Muscat, Sanaa, Tripoli, Antanarivo, Bujumbura, Djibouti, Khartoum, Kigali, and Port Louis are instructed to close for normal operations Monday, August 5 through Saturday, August 10.'

Why does the closure of an American consulate in Port Louis matter to you? CBS news reports that all the closures are related to a 'terrorist threat' which is based on 'the most specific, credible threat information in years.' Oddly enough, the State Department says all's well and the closure isn't in response to a threat.

So who do you believe; the media or the government? Ha!

Of course, all this is on cue to distract from the ongoing Snowden chronicles. A whistleblower exposed just how much the government's henchmen know about you. And now that Russia's granted him asylum, he's gotten away with it...for now. The Americans can't have its citizens focusing on that. Cue the fear based distraction from ITV News: 'DEVELOPING: AMERICAN FORCES ARE PRE-POSITIONED AND READY TO DEAL WITH THE LATEST AL-QAEDA THREAT'

Still, it might be time to review stop losses or balance your portfolio if you're a trader. A terrorist attack can wreak havoc on stock markets, as September 11 showed.

Not that we haven't got our own problems here in the land of Oz. Election day is set for the 7th of September. Good luck choosing between the knave and the nitwit. The secret lies in determining which is which.

But of course you can't be sure. Being elected changes the man you voted for completely anyway. They go from grovelling for votes to having a sense of entitlement about lining the pockets of their mates with your money. And we know where that sort of behaviour leads, thanks to examples like Detroit and Europe. Accountants PwC reckon our government's debt will hit Eurozone levels by 2050.

Might as well go for the nitwit then. Perhaps he'll spend money a little slower than the knave.

The election means all stock market moves will now be attributed to political news. At least that's a breath of fresh air. We're sick of hearing how the Fed's choice of words makes markets around the word jolt. Since its last update, the Fed changed its outlook for the US economy from 'moderate' to 'modest' and that explained all the moves in the index for days, according to the media. Now it will be down to Rudd's choice of tie.

If Australian politics isn't a good enough explanation for the markets tooing and froing, there's always the Reserve Bank's rate rigging operation, which is scheduled for an update tomorrow. They'll most likely lower rates to spur growth. In the land of economics PhDs, printing money to goose the interest rate is a good idea. Their models say so. Not that it's ever worked.

Meanwhile, everyday reality affects all our lives far more than central bankers and politicians. We spent last night roaming the park outside our house looking for our flatmate's dog Diesel. Our neighbours reported his escape while we were out at dinner. He left his fellow four legged friend Chilli, who has PMS and a cold, all alone. And left all the doors to our home wide open too!

Anyway, we were running up and down Peanut Farm Reserve yelling 'Diesel' at 10pm. A Mitsubishi full of Peruvians and Diesel's mum circled the park looking for him too. Eventually, Diesel's mum got a call that he was found in Caulfield about 5 km away. We did find Milo the cat lurking in the children's playground though.

Why invest in stocks when you can mess about with pets? More on that tomorrow.

Regards,

Nick Hubble+

for The Daily Reckoning Australia