FX Charts Reaching Turmoil Zone

China vs USA Proxy

CADAUD. Breakouts in 2008 and 2020.

Nationalism Rising: Canada Boots Chinese Miners

Reuters: Canada orders three Chinese firms to exit lithium mining

Canada ordered three Chinese companies on Wednesday to divest their investments in Canadian critical minerals, citing national security.

China in response accused Ottawa of using national security as a pretext and said the divestment order broke international commerce and market rules.

The three ordered to divest their investments are Sinomine (Hong Kong) Rare Metals Resources Co Ltd, Chengze Lithium International Ltd, also based in Hong Kong, and Zangge Mining Investment (Chengdu) Co Ltd.

The Canadian government ordered the divestiture after "rigorous scrutiny" of foreign firms by Canada's national security and intelligence community, Industry Minister Francois-Philippe Champagne said in a statement.

Loony

The Loonie is set for a quick 7-percent drop if it pierces the blue line. Prior moves above took one month, but with two weeks of rally to top and one week in the second instance. I suspect this one would also be done before October completes.

Canadian Banks

EWC is the Canada ETF. Banks have been outperforming in recent years. In relative terms, RY has done best compared to EWC. CM is the most exposed to the housing market.

Here is residential home prices and RY on the same chart. Prices are down 20 percent from the February 2021 peak. Interesting that it peaked at the same time as ARKK and other speculative stocks.

Canadian Skanks

They took the plunge today. These were second-half trades I was saving for later. Hopefully a bounce for a good entry in late August or early September. CM is my top taregt for a housing bust, probably guaranteed if the central banker comments below are put into policy.

U.S. and Canada Are At War With Russia

VD: Canada is at War with Russia

Troops are on the ground, but not a signficant amount.

My take: Russia was at war with the United States in North Korea and Vietnam, but it never escalated into a hot war. Iran was supporting Iraqi forces during the occupation and helped kill American soldiers, but it was not at war with the United States. The U.S. armed the Mujahadeen in Afghanistan. Nothing new here. Enemies will often help an enemy of their enemy. The problem I see is, are we back to a Cold War mentality with defined economic blocs and expectation that enemies will intervene in wars? Or is there greater risk of WWIII because these lines aren't clearly defined? It seems more like the latter than the former here.

Another Trade Setup That Will Emerge

Short Australian and Canadian housing, via various proxies.

Eliminate Electricity Production, Shift to Electric Cars

Toronto Star: Ontario energy grid emissions set to skyrocket 400% as Ford government forced to crank up the gas

Since all renewable energy projects were cancelled when Premier Doug Ford was elected, the province currently has no other way to compensate for the looming shutdown of a major nuclear reactor in Pickering, responsible for roughly 16 per cent of province-wide power. Only natural gas is available to meet rapidly growing demand for electricity, according to the IESO projections.

The projections show that the province’s natural gas plants — which only operate about 60 per cent of the time now — will run non-stop by 2033.

“The province has ignored energy planning for the last four years because there was no need. We had an energy surplus,” said Gord Miller, Ontario’s former environment commissioner — an independent watchdog position eliminated by the Ford government. “But now we’re in an energy squeeze. When Pickering turns off, we have no plans … and the default option is to up the gas.”

The story of how Ontario went from being a polluter to a beacon of green energy and back again is a political one that spans almost two decades and three premiers.

It starts in 2003, when then-premier Dalton McGuinty went out on a political limb to announce the complete phaseout of coal-fired generation. Over the next 12 years, carbon emissions from the electricity sector dropped precipitously — from more than 35 megatonnes of carbon in 2005 down to six in 2014, when Ontario became the first jurisdiction in the world to completely wean itself off coal.

But the cost of this achievement — a tripling of electricity rates — demanded a political price.

Green ideology is retarded because it is infested with central planning mentality and functions more like a religion. It fails on so many levels because it is irrational, faith-based and anti-scientific. Even if they were correct on the threat from CO2 emissions, which they wildly overstate, they are politically incompetent. Physics, logic, politics, on every level the plans are ludicrous. 

One does not eliminate electricity supply while increasing electricity demand via electric cars and expect anything but wholesale disaster. The Toronto Star article is trying to lay blame on the current premier, but the ultimate blame belongs on the morons who came up with this policy mix. I'm leaving out the possibility that people behind these policies are evil, but it is hard to imagine people being this stupid. A shift to electric vehicles has a range of outcomes. What if electric cars prove very popular? What if a tech breakthrough drops the price quickly and adoption accelerates? Where will extra power come from? Unless there's idle hydro power laying around, I don't see how anyone thinks this is possible without nuclear, natural gas or, the ultimate backfire, a return to coal. 

Look at the chart above. I'm eyeballing it, but it looks like there's barely a rise in electricity demand ex-transportation. The entire problem is being caused by electrification of transportation. Since markets are priced on the margin, a small deficit can create very large price increases. 

ESG and alternative energy are the biggest scams going. An economic agenda created by an anti-science, anti-physics, anti-capitalist, anti-human religious cult. It seems impossible today, but I really wonder if coal will make a major comeback. Not a full comeback, but maybe a serious player in the energy market. 

The Closing of the West Begins

Two different stories, two different continents, same multi-generation trend underway. ZH: Canada Set To Announce 2 Year Ban On Foreign Purchases Of Residential Real Estate

"The foreign buyers ban will apply to condos, apartments, and single residential units," according to CTV. "Permanent residents, foreign workers, and students will be excluded from this new measure. Foreigners who are purchasing their primary residence here in Canada will be exempt."

The effects will likely be dramatic, as foreign purchases of real estate accounted for a lot of the bid that helped Canadian housing skyrocket to begin with.

"The timing is a classic case of closing the barn door after the horses have left," ForexLive's Adam Button wrote this week. He noted that the market had already started to cool in March amidst interest rate hikes.

It seems that way, but not if you realize this ban will last 20 or more years. Note that the Liberal government (nominally pro-diversity and pro-foreigner) is doing this, which means when the right returns to power, it will likely expand the rule.

Marine Le Pen is leading in a run-off poll for France's presidential election. Immigration is coming to an end. Mass deportation of unassimilated immigrants is coming. Western Europe could be virtually Muslim free by 2040, via deportations and assimilation and religious conversion.

As for the real estate topic, I discussed that before and explained why it is inevitable. A combination of affordability and demographic reality. Quick summary: the West was open because it could afford to be. The West made up the vast majority of middle class and wealthy people all the way until the fall of communism in the 1990s. In another decade, there will easily be several hundred million people who can outbid Americans for their homes. See this post from 2019: The West Will Restrict Foreign Home Ownership

Italy has been at the forefront of nationalist action and also, it drives home the point about the demographics. Here in 2017: Socionomics Alert: Europeans Hate Tourists, Let Alone Migrants and here in 2018: Mass Deportations Coming to Italy. (That was a provocative title as deportations are in the future, but I do expect Italy will lead the way unless France overtakes it here.) The big story there: they want tourism restricted! Italian cities that are popular tourist destinations, where it is a major part of the economy, want restrictions. For the same reason as real estate bans are coming: the number of people who can afford to visit far exceeds the carrying capacity of the culture.

I do not say this as an anti-natalist, but as reality: there are too many people. Only so many can live in a place without creating overcrowding. Each culture has a different definition. Chinese can live packed into small apartments, but many Americans want to live like lonely hermits in the woods. Chinese like "re nao," lots of loud noises, lights, fireworks going off. While the U.S. has noisy business districts, many places restrict noise and light pollution. I've lived in both countries and each has their merits. If forced to choose I'd pick rural American living, but I would miss China's cities. Still, the reality is the cultures are like oil and water in some ways, yin and yang. They cannot coexist on the same space of land. Hence noisy Chinatowns in China. And if you go to a foreign area in Beijing or Shanghai, you notice the population density and noise drops a great deal. Once I had a Chinese friend visit my hometown in the USA, a somewhat rural area, and she said "Oh it's so empty here, you can build so much!" Meanwhile, trying to get any development in that area is like pulling teeth because people live there because it is spacious.

Mass immigration into the West is already triggering conflict and it will boil over. Additionally, many immigrants came to the West because it is spacious and affordable, so you have situations such as immigrant Chinese demanding bans on foreign real estate buying in Vancouver. While the native white population might still have some misplaced racial guilt, recent immigrants may lead the charge for closing the doors to preserve the West they came for.

Toss in declining social mood, economic decline and the eventual financial and economic crises that will turn much of the West into "developing nations," plus the growing wave of nationalism, the coming wave of religious revival, the fracturing of the world into economic and information blocs...it's inevitable where this is headed at least for a time, if not for centuries to come. It could lead to a more peaceful world if nationalism turns inward instead of outward, but either way, the West will close its doors. Western universalism is ending right now, as we see with the Baizuo admin claiming "the world" is against Russia, which is far from the case. The West will eventually refocus on its European heritage, Christian religion and historic and cultural ties.

Since East Asia has far higher population density already and is far more culturally confident, it might become more open than the West for travel and living. It's likely the West will become intellectually open again. Today is the intellectual and moral Dark Age in the West with universities, media and science subverted by Mammon and Satan. The future will be brighter on that score, but good luck moving in for a few decades or more.

Will WeChat Become an Alternative Payment System for the West?

A money should function as a store of value and a medium of exchange. Credit money is ultimately backed by the financial system behind it. When the banking system begins destroying the credit, it destroys the currency.

Global News: Canada’s banking industry will carry out emergency orders to stop trucker convoy (Archive)

Canada’s banking industry says it will follow through with the federal government’s emergency orders targeting the trucker protesters as discussions on how best to implement them continue.

The government published details late Tuesday on the requirements covering a wide range of the financial industry including banks, credit unions, insurance companies, portfolio managers and investment counselling services.

The Canadian Bankers Association said in a statement Wednesday that, as with other financial service providers, banks will “need to diligently implement the required measures.”

...The emergency orders direct financial institutions to suspend services to both individual and business clients who they suspect are aiding the blockades.

...Banks have been given protection from civil liabilities for actions done in following the orders.

Cryptocurrency platforms are also covered by the order and some, including Toronto-based BitBuy, say they’ve already received guidance on cryptocurrency addresses from law enforcement.

Finbold: Five major Canadian banks mysteriously go offline in hours-long outage (Archive)

On February 16, five major Canadian banks went offline, preventing a number of customers from using e-Transfers, online banking, and mobile banking services.

The financial institutions affected by the outage included the Royal Bank of Canada (RBC), BMO (Bank of Montreal), Scotiabank, TD Bank Canada, and the Canadian Imperial Bank of Commerce (CIBC).

The number of complaints of people experiencing difficulty accessing their online banking peaked between 5 p.m. and 6 p.m. Eastern time on Wednesday, February 16, while accounts of this issue are still occurring on Thursday, February 17, according to a report by BleepingComputer.

At this point, there is no safe money in the world. Every one of them is intrinsically flawed. For store of value, gold. The point here is not making money, but retaining value. Silver is more volatile than gold, making it good speculation, but a bad savings vehicle if your holding period is less than a full bull-bear cycle. BTC and other cryptocurrencies are ultimate speculative vehicles right now, not for savings.

The best money for transactions is cash. That's why there is a war on cash: you can avoid the banking system and its attendant censorship with physical fiat. The government cannot "block" physical cash transactions and if it tried, the value of all its currency, including electronic, would plummet. Operating entirely in cash has risks such as physical security.

An alternative is a foreign payment system such as Alipay in China or WeChat. Bloomberg: Why China’s Payment Apps Give U.S. Bankers Nightmares

Alibaba Group Holding Ltd. created Alipay in 2004 to let millions of potential customers who lacked credit and debit cards shop on its vast online marketplace. Tencent Holdings Ltd., similarly, debuted its payments function in 2005 in a bid to keep users inside its messaging system longer.

Alipay and WeChat have since swelled in popularity, boasting 520 million and 1 billion monthly active users, respectively. Consumers sent more than $2.9 trillion inside the two systems in 2016, equivalent to about half of all consumer goods sold in China, according to the payments consultancy Aite Group.

It makes sense to get Alipay or WeChat as a backup. Yes, China also enforces political and social credit blockades, but are you planning on running afoul of the Chinese government? If not, they aren't going to notice or care. Although I think the yuan is also in trouble in terms of devaluation risk, using physical yuan outside of China (or any nation that can stand up to the U.S.) has merit. Many people use U.S. dollars because it is the reserve currency, but it maintained that status in part because of the nation's open banking system and just law.

Perhaps a new monetary standard will emerge from this chaos. There is opportunity for one now that the Canadian government has fired the first totalitarian shot in the West. While I never believed they would be proven wrong, predictions of totalitarian financial repression were still mostly predictions. Not anymore. All banking systems are now suspect. Operating inside the banking system is now high risk for anyone because the regime is mentally unstable. T he current situation is akin to the Cultural Revolution in China. Even people who are favored by the regime today could become its targets tomorrow. 

The exit from the banking system will progress slowly, but it will accelerate destruction of the financial system. The next crisis could be a killshot for banks, either because the govt implements totalitarian control (with or without overt nationalization of assets) or the public retaliates by letting the banks collapse. The damage Trudeau inflicted on the banking system will hurt the government's repression campaign, which in turn accelerates the push for central bank digital currencies. These effects are going to spillover quickly. Everyone who pays attention knows "American" BigTech is already handmaiden for the authoritarian left. The time for a Parallel Economy is now. The Great Separation had begun.

The Cost of Lockdowns

Original source here. How many similar stories around the world? Tens of thousands? Hundrends of thousands?

Trudeau Accuses Freedom Convoy of Stealing Food From the Homeless and Racism

It's over. Yes, there's a lot of work to be done and it won't be easy, but this is a sign that it's all downhill from here, like after the Battle of Midway. He's not defending SARS2 lockdown policies and the rest, only making wild accusations. Whether he knows it yet or not, he's admitted he lost.

Testing the Rally

The pullback in the major indexes doesn't surprise me. The question is how long can the bounce last. It looks like USD is ready to rip higher. I'm chart agnostic on ZB, short-term it looks like a reversal pattern might be forming with massive support underneath. If I'm Powell, keeping ZB from breaking support is far more important than a few thousands points on the Nasdaq, moreover the cost of elevating ZB is probably those Nasdaq points. I also noticed Australian resource stocks were crushed overnight, some of the stocks I added slipped double-digits overnight. There is evidence that the bull that showed up yesterday was a diseased corpse of a bull catapulted in by the bearish forces laying seige to the market.

Crude Oil and Resource Currencies

The Speculative Investor looks at the Canadian dollar versus oil. The divergence with the Australian dollar is even more pronounced and looks similar to the prior Fed tightening periods.

USDAUD Breakout, USDCNY Bottom?

The outlook for commodities isn't too hot right now.

Major bottom or breakdown is coming in USDCNY. I lean towards a bottom. If yuan breaks out, something like the Japan 1985-1989 blow-off peak for China becomes possible.

Gracelife Church Goes Underground in Canada

Whatever the West is now, it is not Christian. The governments of Canada and the USA have become the enemy of the majority populations. Occupation governments tend not to last very long.

200 cops for a church!!!! pic.twitter.com/Go0pqbpiRa

— Real Canuck News 🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦🇨🇦 (@RealCanuckNews) April 11, 2021

The Path to USDJPY 175

USDJPY has moved out of a triangle pattern. If this move holds and establishes a bull trend, the next target is 125.

Upon reaching 125m USDJPY hits resistance. A break above that level would complete a well-formed inverse head-and-shoulders. That would have a target of 175.

A move of this magnitude would be ~60 percent advance in USD or ~40 percent devaluation of the yen.

Gold is confirming a "deflationary" interpretation here as it rallies along with USD, a break from it's very long-term correlation with JPY.

If gold moves through $1600 and DXY through 100 and both moves hold, the "fiat burns from the periphery to the core" scenario I've discussed here for many years is in play. The broad trade-weighted USD (currency weights: EUR 18.7 percent, CAD 18.5 percent, CNY 12.4 percent, MXN 11.3 percent, JPY 9.1 percent; total 70 percent) points to a 30 percent rally if its basing pattern completes with a bullish breakout.

Canadian Imperial Bank

Great topping pattern. If it doesn't retake the support line (zoomed in on third chart) then this will start accelerating to the downside.

Canadian Dollar vs Australian Dollar as US-China Trade War Proxy

The Canadian and Australian economies both have major resource components, but Canada is far more tied to the health of the U.S. economy, while Australia relies more on commodities exports to China. Both are believed to have housing bubbles and bears are circling. Looking at the currency cross, it appears the Canadian dollar is poised to break out of a basing pattern.

The Canadian dollar also appears in a potentially bullish formation versus Chinese yuan, while Australian dollar looks at risk of breaking down.