Global Economic Time is stabilizing: buy the G3 plus Greater China

WHAT ARE YOUR TOP 3 INVESTMENT IDEAS?

 -  Keep buying the U.S. market:

 i. America’s Economic Time® is profits-friendly, what with an excess demand for goods making itself apparent.

 ii. Improving earnings outlook on account of that excess demand for goods

 -  Buy the Chinese market

  i. The government is keen to create an excess SUPPLY of money, heralding an improvement in China’s Economic Time®

 -  Buy the Hong Kong market

   i. We are the water skier off the back of the Chinese speed boat

   ii. Besides, I detect signs of stabilization here

1. The residential property market is stirring
2. That property market always has been the harbinger of the direction of our consumption and thus stock market
3. restaurants are a little fuller nowadays

MARKET OUTLOOK FOR 2H; HOW TO MANAGE VOLATILITY; KEY RISKS/CONCERNS

-   Market outlook

 i. Good Economic Time® for the USA, China and HK

 ii. You may as well keep buying Europe and Japan: both countries’ Central Banks simply HAVE to keep easing, thereby creating an excess supply of money in each market.

-   How to manage volatility

 i. Chose instruments, sectors and stocks with traditionally low volatility

ii.  Allocate  to instruments, sectors and stocks that are NOT/ are inversely correlated with each other

-   Key risks/concerns

i. A blow-up in the debt/ credit markets, e.g.  in these markets

1. Bundled student loans
2. Bundled car loans

ii. That the markets keep interpreting the flatter yield curve incorrectly: it is NOT heralding slower growth, as the yield curve’s flatness is artificial and not real

1. It is government buying that is flattening the yield curve

iii. Low-probability Fed rate hike at November 1st – 2nd meeting

1. This would surprise the market (see point 3 below)

 iv. That the Bank of Japan or the European Central Bank stop easing monetarily, thereby sowing the seeds for a change in Economic Time® to an excess demand for money

 v. That Trump wins the November election

 vi.That La Nina, the weather phenomenon, strikes Asia with a vengeance, thereby propelling food prices

   vii. Some left-field terrorist/ military mess

1. Assassination
2. Attack
3. Military fight that has not been foreseen already (e.g. America’s involvement in Libya getting out of control)

FED POLICY; HOW MANY RATE HIKES THIS YEAR, IF ANY?

-       As we have maintained consistently: the White House must be telling the Fed to lay off any rate hikes until Clinton has been elected this November

-       Thus, expect an inconsequential rate hike this December

JAPAN OUTLOOK; ABENOMICS, YEN TREND ETC.

-       ABENOMICS:

 i. The Economist just ran its worst-ever article actually praising Abenomics, but

1. Monetary policy has not got Japan out of its no-growth groove,
2. Nor has fiscal policy
3. And there have been no meaning structural reforms, e.g. of the labour market

-       YEN:

 i. Until the Fed hikes rates this December, i.e. once Hillary has won in November, expect the yen just to stay range-bound with a slight strengthening bias

ii. Once Hilary has won and the Fed hikes rates this December, expect the yen to skid

-    JAPANESE GOVERNMENT BONDS

 i. Expect the Ministry of Finance to issue bonds maturing in 50 years – at a very low yield

GOLD RALLY AND OUTLOOK

-       NOT quite sure what fundamental changes have been driving the gold rally, expect perhaps that the dollar has resumed strengthening: this makes the dollar price of gold relatively cheaper for non-dollar buyers

-       Gold is an INSURANCE POLICY, hot an investment

-       The more that geopolitical tensions rise in the Muddle East and in the East China Sea (see new Japanese female, hawkish defense minister Inada!), the stronger the market subconscious will want geopolitical l insurance. Step in gold.

CHINA ECONOMY AND RISKS

-       Economic Time® is improving: massively stronger lending figures – up by RMB one BILLION per last month’s announcement – suggest the creation of an excess supply of money (from a current excess DEMAND for money).

-       Global economy has stabilized, so China is stabilizingà more stable copper price

-       RISKS

  i. Basically of political nature

1. Is Xi making perhaps too many enemies with his
   1. (one sided?) anti-graft campaign?
   2. Military consolidation
   3. Is Xi creating enemies because of his iron-fisted political rule?
   4. how about his work on the 87-million-strong China Youth League?