Dying To Be a Star. Sit Still.

Graphic, cover, Dying to be a StarGraphic, STOCKjAW banne, Quality View

AUGUST 24, 2019

Following

Friday this trade war’s about as much fun as a 15-watt light bulb. The pressure’s enough to pop about any bulb. The experience for investors is like either a slow motion explosion or high-speed rust. Yet another bomb hisses and blows every other day and absolutely no one has a program to check for the next.


Meanwhile the market’s a psychotic marvel with no map. The best are beaten with the rest. The simple hope of most–buy low sell high–reads like a joke sought by a fool written by a sadist. America’s been knifed in the neck for decades by China, and China wants it like that. Smart people say there will be no winner, while the losers are plain to see. Where we’re at now and what we’re doing about it, when China’s “Dying to be a Star.”

 

 

Graphic, metro shanghai
The Chinese populace are being taken for a ride. Shifting supply chains, slackening foreign direct investment(FDI), and tariffs, all mean trouble for Chinese jobs, prosperity, GDP, and social stability. But individual Chinese workers aren’t driving, only waiting to see what’s next…

Fun

comes in many forms and none look like now.  But let’s have some anyway.  It’s a choice, and if you’re not having any that may be a clue.  Analysts do it.  Have you noticed?  While supposedly displaying a grasp they say “The Wal-Marts and the Amazons….”  That right and that makes precisely as much sense as saying “the Hong Kongs and Chinas of the world.”

 

Each are singulars and that language is simple laziness on the part of people being paid for door delivery but providing only curb drop-off.  Do a spell check.  That was fun right?  Same thing with trade warring.  Trade wars are unique, not pressed out assembly line style.  And?

 

 

We’re sitting still.  The unpredictable also includes the unexpected good.  Markets will stabilize and that’s unpredictable too.  We intend to be there for that relief rally, and more.

 

Open disdain is fully appropriate when dealing with attempts to tell you the future.  Hooting and heckling are simply part of it.  Such prognosticating contains the exact truth you will encounter in advertisements saying “Save $1000.00 on a new…”  Spending is not saving, nor will it ever be.  They just want your money.  sound familiar? 

 

Saving is not spending and trade wars are unique to their participants, and they want our money.  Each is a reflection of the desires of the combatants, distorted by dread.  Such renders each unpredictable.

 

Investors are not combatants.  Investors are collateral damage.  When giants fight, furniture is broken.  Friday, August 23: DJIA -2.37%, NASDAQ -3.00%, S&P 500 -2.59%.  That’s one day.

 

 

China, Xi Jinping
Xi Jinping is not an “elected” official. His concerns extend much further than reelection. What keeps him up at night? “Creating 25 million jobs annually.” From where does his authority stem? Hard power comes from the communist apparatus, enforced by a system, backed by the PLA. Soft power stems from his selling the people on a more implicit vow to deliver China to it’s rightful existential destiny of global predominance. Ask him. He does interviews. Nice smile. That’s called PR.

Many

smart people will say that “no one wins a trade war.”  For them that functionally  translates into getting serious or ugly only fruitlessly rocks the boat.  The Economist is such an entity.  Regardless of their expertise they’ve made their belief crystalline; negotiate.  That’s it.  Never tariffs, regardless.  Yet, The Economist is as silent as the tomb concerning how one defines failure.  Thus failure ceases to functionally exist in their scheme.

 

Asia is not America, nor is it a singularity.  Think Japan.  Prior to the phenomenal Japanese economic expansion “made in Japan” meant 3rd rate.  And then Japan learned how to copy and steal, American design and technology.  Then they focused their stunning brilliance on making it better.  Simultaneously the Japanese consumer was born and American business looked to trade in that new market.  The east/west trade conflict was born, along with the disparity of a more open American market with a very protectionist closed Japanese system.  That sounds familiar because it is familiar.  Think China now.

 

 

China

is not Japan.  It’s worse.  China’s 13x larger, has the internet as a mode of theft, and has been allowed for decades to openly steal through institutionalized means such as “forced technology transfer” and mandatory “Joint venture partnerships.”  America would have been better served by simply saying no to the latter two.  “Buy it, if you want it–we’ll finance.”

 

 

What are we doing about it, after Friday?  Sitting very still, and waiting.

 

Smart people will say that American technology in Chinese hands has much more quickly created cheaper consumer products worldwide.  Meanwhile the Chinese economy has exploded.  Hundreds of millions have moved out of grinding poverty.  The Chinese consumer was born, creating greater global stability and a vastly larger market for U.S. goods.

 

China’s vast market would be great for America if we could only reach it unfettered.  And for the investor?  Investing is one of few ways for people to create a better future.  Yet unfair trade is a choice we did not make, yet for which we now pay.  Although no amount of experience or expertise can predict the future, Friday’s turmoil is likely but the beginning.  Again, remember Japan, a yet more closed economy trade talk could not crack.

 

Jackson Hole, Grand Tetons
Hardly seems fair that the fed is allowed to conduct its’dithering in the Grand Tetons.

The

global economy is perceptively slowing.  The collective fed dithers in Jackson Hole disagreement, while Powell attempts to discern economic metabolism by academic modeling and satellite.  Real companies have frozen cap-ex due to the resultant persistent uncertainty.  Pundits clamor in recession talk which increasingly unnerves the consumer, the 71% of the economy yet working.

 

Crafty commentary has stated that this trade war has been badly handled.  Trump should have gotten Europe on board, rather than highlighting it’s dereliction concerning NATO spending.  Unite and approach the WTO.  A united front could have been better, but the WTO is invisible to China.  Besides, that’s the past.

 

What’s not over is China’s need to create 25 million jobs a year if it hopes to maintain social stability.  Hong Kong is a taste of failure.  However, even the impatience of Hong Kong or the Chinese consumer will wait, when the state and the PLA tell them to.  Only the optimistic and the new will suggest that Tiananmen Square is only history and the People’s Liberation Army won’t bring Hong Kong under foot.

 

 

tiananmen-square-654627_1920
There are those who will say Tiananmen Square marked a turning point in China. That was Mao and now is now. Besides, China is now capitalist. More keen observers realize that top-down power remains the way. Capitalist economic activity has not changed the power structure, simply the means of paying for it.

The

international ignominy of slaughter in Tiananmen Square will prove no deterrent to much the same in Hong Kong, if only more stealthy.  Nor will tariffs prove a deterrent to China’s drive to fulfill what it holds most dear, its’ divined ascension to its’ vision of greatness. 

 

“Gentrification” is an American concept employed to negatively cast the transformation caused by money in motion.  In this understanding money is a weapon of displacement.  To the extent that’s true China represents by far the largest example of gentrification in history.  Others will refer to the same process as the creation of a middle class.  Either way, China wants more, and the trade war is parked on that road.  The U.S. election is fifteen months away.  What is 15 months, in light of a people who view their development over millennia?   We are waiting.  Not selling. 

 

The Investing Journey

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2 thoughts on “Dying To Be a Star. Sit Still.

  1. Brilliant, Powerful, and Timely
    Jim Cramer states there is always a bull market somewhere.
    On Friday 8/23, as the market crashed, (AEM) Agnico Eagle Mines ended up 4.16%, far better than hiding in dividend players, 10 year notes or sitting still – in my humble opinion.

    Like

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