Will there be any negative fallout for our money and markets if China's Shanghai
composite continues to break down, our crystal ball says Yes.
A stock market panic in the Govt influenced Shanghai cross-contaminated other asset classes but specifically the banks; a master Power Grab solution was devised over several-months with the foundation that the CPC held about 23% of outstanding U.S. T-Notes.
Since the U.S. Fed launched QE in late 2010 the superior performance of the S/P versus the Shanghai has been astounding and not coincidental in our opinion.
Indirect consequences of hyper U.S. monetary policies are likely part of the reason why the Shanghai is on the verge of crashing to multi-year lows while the U.S. S/P is less than 4% from historic highs.
- U.S. S/P index in green versus China's Govt influenced Shanghai index in blue, a 5-year chart
- The 5-year Shanghai chart
We must pay attention to all U.S. paper assets, but especially the 10-year T-Note the morning after the Shanghai closes below 1,950, an important level of support after 2,000. We'll be monitoring for any signs of stress related to volume, price, and T-Note yield if the Shanghai starts breaking large round-numbers.
It's possible that no signs of stress appear until 1,900 or even 1,500. Yet our Capitalist Pig Bob is convinced the CPC is more than capable of throwing a U.S. Govt T-Note party on the shores of the East China Sea. This would work to cripple the economy while reasserting the CPC's stranglehold on the mainland's assets and people.
The Fed under Bernanke has manipulated interest rates and choked off any chance of organic price discovery via an Exchange; some U.S. Exchanges like the Philadelphia have worked efficiently since 1790.
The argument that Japan is performing QE many times more than the U.S. -on a relative basis- or that Europa's Mario Draghi is on board somehow justifies hyper to the nth degree monetary actions does not stand with any fiscal conservative.
The argument that Japan is performing QE many times more than the U.S. -on a relative basis- or that Europa's Mario Draghi is on board somehow justifies hyper to the nth degree monetary actions does not stand with any fiscal conservative.
In a paradoxical twist the communist Chinese Govt is credited with being the most effective Tea Party after they dumped U.S. T-Notes in a staged panic in a Power Grab of the largest 'private/free-market' businesses; this triggered cascading events, nearly dethroning U.S. reserve currency status while rendering the Fed obsolete.
Staring further into our crystal ball we see China blamed it on the Shanghai panic. But in 2023 a Chinese diplomat admitted that the Shanghai crash was an orchestrated event to get retribution for U.S. monetary policies that exacerbated unbearable food and real estate inflation. China was in the early stages of sculpting an economic and global political identity that the red and almighty Govt felt was getting out of their preferred control; the experiment created too many young billionaires who were becoming a real threat to the status quo.
Today's classic emblem of the Chinese communist party.
POTC-
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