Where'd the China Econ Content Go?

I started blogging heavily here about 10 years ago. Chinese sources of information were superior to Western media, which was stuck on a narrative as accurate as Russiagate and coronavirus didn't come from a lab. Western media was saying China would unleash stimulus to boost growth. Chinese officials and media made it clear that China would focus on quality over growth as the economy slowed. While the CCP did go back on its word several times and never got around to serious reforms in the direction of opening up, instead slapping on strict capital controls to prevent currency collapse, they were far more accurate than Western reporting.

Chinese media was remarkably open on economic and financial topics into the 2010s. It hasn't been that way for a couple of years now, starting around the time the trade wars intensified. Chinese economic coverage, like its counterparts in the West, increasinlgly serves the regime. Dark times are coming to the entire world. Truth is cheap in price and priceless in value, if you can find it.

ZH: China Is "Cleansing" Online Content Of Anyone Critical Of The Country's Economy

This week the country began a two-month campaign targeted at cracking down on "commercial platforms and social media accounts that post finance-related information that’s deemed harmful to its economy," according to Bloomberg.


Barron's Rings the Bell on Tech and China

They suggest buying stocks such as Alibaba.

Argentina Goes Tech

The top two holdings in the Global X Argentina ETF (ARGT) are tech stocks. They account for nearly 50 percent of the portfolio.


Take Two More

Take Two short looking good so far...Powell looms at 10am though...

East Asia Popping Bubbles

ZH: South Korea Unexpectedly Hikes Rates On Growing Housing, Debt Bubble Fears
Overnight, South Korea became the first major Asian economy to raise interest rates since the start of the pandemic, as record household debt and soaring housing prices outweighed fears over Seoul’s struggle to contain the Delta coronavirus variant. In the closely watched decision on Thursday, the Bank of Korea raised its benchmark rate by 25bps to 0.75%, increasing the seven-day repurchase rate 25 basis points from a record low of 0.50% with a majority vote.
Reuters: China's property crackdown stalks credit markets
China's push to wean property developers from excessive borrowing is spilling over into loan losses at banks and pain in credit markets as cash-strapped builders fall into distress, raising the risk of fallout rippling across the economy.

Debt and land-buying curbs and hundreds of new rules are hitting developers far harder than they had expected, setting off a scramble to sell assets as well as a steady drumbeat of bankruptcies, defaults and cut-price takeovers.

The regulatory push is the latest in years of efforts to reduce risks in the real estate sector and, as with crackdowns roiling the internet and education sectors, has not been formally announced.

China's economic outcomes aren't always intentional, but the CCP is clearly risking a financial event with current policies. A good question is whether, fresh off their coronavirus "victory" —being seen as handling the virus far better than the USA— China isn't also aiming for a global financial panic "victory?" The CCP would maintain political control through a panic or global recession with its crackdown on corporations already in full swing, while the floundering Baizuo administration in Washington descends into utter chaos as the wheels fly off the economy, stock and crypto bubbles simultaneously.


Activision and Pfizer Again

The ATVI short worked well. I expected more of a bounce. This looks ready for a trip to long-term support whether or not the broader market cooperates, but no position yet.
The Pfizer short opened yesterday is going well so far. There could be much larger downside potential. I'm not trading on this, only filing it away for later. Japanese research paper says SARS2 has developed 3 of 4 needed mutations to render Pfizer vaccine useless.

The SARS-CoV-2 Delta variant is poised to acquire complete resistance to wild-type spike vaccines

Abstract: mRNA-based vaccines provide effective protection against most common SARS-CoV-2 variants. However, identifying likely breakthrough variants is critical for future vaccine development. Here, we found that the Delta variant completely escaped from anti-N-terminal domain (NTD) neutralizing antibodies, while increasing responsiveness to anti-NTD infectivity-enhancing antibodies. Although Pfizer-BioNTech BNT162b2-immune sera neutralized the Delta variant, when four common mutations were introduced into the receptor binding domain (RBD) of the Delta variant (Delta 4+), some BNT162b2-immune sera lost neutralizing activity and enhanced the infectivity. Unique mutations in the Delta NTD were involved in the enhanced infectivity by the BNT162b2-immune sera. Sera of mice immunized by Delta spike, but not wild-type spike, consistently neutralized the Delta 4+ variant without enhancing infectivity. Given the fact that a Delta variant with three similar RBD mutations has already emerged according to the GISAID database, it is necessary to develop vaccines that protect against such complete breakthrough variants.


Short Pfizer

My line is at $50.18 today, $50.21 tomorrow...short below. The company received FDA approval for its not-vaxx today.



The 1970s are calling.
Here's a sugar producer from mainland China.
Canadian one:


Yield Spread vs Nasdaq-SP500 Ratio

Looks like the late 1990s to me. Note the brief dip into an inverted yield curve (30-year below Fed Funds) in August 1998 and August 2019.
I've discussed the parallels with 1998 before, as well as the potential for coronavirus to be the "Y2K bug"money printing excuse of this cycle. The latter post has links to many prior posts discussing cycles.

The timing hasn't exactly lined up. Depending on what measure is used, the top is late or we're still early. Take the rate spread above. That lines up pretty well assuming that we agree the Nasdaq in 2000 was more speculative or more divergent from the S&P 500 than today, the latter being proven by the weight of top Nasdaq stocks in the S&P 500. Let's say that works. We have an August 1998 bond market signal that repeats with an August 2019 signal. The Fed pumps liquidity in 1999 with Y2K bug looming and in 2020 with coronavirus and lockdowns spreading. In 2000, the dotcom bubble peaks in March. In 2021, sepculative stocks represented by the ARKK fund peak in February. In 2020, the major indexes finanlly give way in September 2000. Stock markets sink into a multi-year bear market. The parallel starts breaking down here because the major indexes didn't make new highs after March 2000 and went sideways instead. Except for the Russell 2000 Index, which peaked in March, the S&P 500, DJIA and Nasdaq have all made new all-time highs since then.

History doesn't repeat, but it does rhyme. There's enough smoke to wonder if a fire is burning somewhere. Taking this in concert with other data, one such example here, A TIC Trio of More Serious Deflation Potential: Asset Rebound, Banks Can’t Borrow T-bills From Foreigners, And The China Cringe Which Goes Along

I see potential for either a correction or perhaps the end of the bull market. If that is an upward sloping H&S forming on ARKK, the target is below the horizontal—though the horizontal might hold—a decline of 75 percent or more over the next couple of years. Having said that, until there are key breaks in major indexes such the Russell 2000 Index and MSCI Emerging Markets Index, two of the indexes closest to signal a possible bull market top, one must assume higher prices are likely for the major indexes. Bears must keep to individual stocks until the majors crack.


Welcome to Demographic Reality: Copper-Gold Ratio Set to Plunge Again

I looked at the copper-gold ratio in 2019 and some potential price levels based on those ratios. In prior posts, I've discussed the case for a breakout in the gold-copper ratio, or new low in copper-gold. It boils down to demographics.The government cannot print growth. It doesn't matter how the endgame plays out because there won't be enough organic physical growth (the virtual economy is another story). Let the bubble burst and gold will outperform, even if it falls a lot, because it will attract safe haven buying. If governments try printing their way out, even if they do a push to electric vehicles, they will destroy economic growth because planned economies aren't efficient at resource allocation.

The price of copper could rise in a "green" central-planning scenario, but it would likely erupt into uncontrollable stagflation that leaves an economic depression in its wake. Falling demographics means slowing car sales, for example, even before adding in regulations that will drive up car prices. The government could mitigate some of these issues if it had a cheap energy policy instead of an expensive energy policy, but pushing harder in the direction of expensive energy will only accelerate and intensify the coming disorder.

The gold-copper ratio is at a critical juncture. If it breaks lower, it would slide into the levels seen during the 2000s with inflationary growth. If it moves higher, it would be back in the post-2008 range associated with slow growth and negative interest rates, as well as the range seen in the early 1980s echo from the 1970s inflation crisis. The short-term pattern looks bullish though, which suggests gold is beginning a longer stretch of outperformance relative to copper. The best way to express this in a trade would not be long gold or hedge, but to short copper and related assets outright.

Take Two And Call Me In the Morning

Looks like it could free fall if it gets through the $150 level.


Copper Cracks

Red horizontal is a neckline on an upward sloping H&S pattern.

Short Tesla and Amazon

With SPDR Consumer Discretionary (XLY). Amazon is 21.89 percent of assets and Tesla 13.42 percent. If using options, I like the risk-reward offered by XLY. The stock filled a gap and dropped today, plus it failed at the 50-day moving average.

Gold Fakeout or Breakdown?

A lot of gold miners are near support or have broken support. Below are a list of stocks that are worth putting on a buy list. I still think there could be one more flush lower when the Federal Reserve announces its taper. As I understand Powell's convoluted language, they will announce that they will later announce a taper, followed by announcing the actual taper date, followed by the start of the taper. Maybe the first two of those will be combined, but I don't expect that. What I do expect is a repeat of the taper tantrum. Last time, rates increase from the tantrum in May 2013 until the start in January 2014. China almost immediately hit a slowdown that would culminate in yuan depreciation and a final bottom for commodities in Januray 2016, led by gold bottom in December 2015. I'm not sure the economy can handle a 2-year slowdown at this time though. The question for a gold investor is whether the Federal Reserve reverses course sooner rather than later. There's still a long way to the bottom if the Fed unleashes another deflationary wave, but how long will it last? Have a buy list ready for whatever assets you would buy in a panic drop or a short, brutal correction similar to October to December drop in 2018.