China

August 17, 2015

My Post August 2….” Black Dragons aren’t dangerous …right ? ”  The answer is they are not dangerous unless the Dragon is really a Black Swan masquerading as a Dragon.  If last week was any indication,  I can swear my hand was pecked  to the tune of about $5,000.  Keep an eye on that Dragon because if China goes, a lot of market value is going with it.

So,  with October just over the horizon and the overall market treading water for the past seven months, with SPY support at $204 and $ 198, I’m continuing to keep a low profile with slim positions across the board and a ready reserve of dollars  to  deploy.  Although I am a bull, I must enter the market at prices that allow me to consider myself sitting pretty.

I don’t have any Chinese investments, nor emerging market Asia investments because of the impact China can have on these economies. China is too opaque for my money.  They , Germany and Japan are attempting to gain an advantage over us by creating or allowing currency disequilibrium to make our exports more expensive to them and their exports to us priced just right.  I can accept this from Germany and Japan because they are attempting to reignite their economies and we see this as ultimately beneficial for our exports.

But, China is a different story.  Their currency manipulation seems more a crisis reaction to mismanagement.  I find it more than a coincidence that Macao is such a prominent site for gambling.  The Chinese love games of chance and it wouldn’t surprise me that their stock market and real estate market is grounded on a bedrock of speculation well beyond our present perception.  This could be the Black Swan for this bull market.

Prediction;  Interest rates will not be increased tomorrow.  The possibility of  additional negative news of an emergency  in China could make the dollar even stronger, trigger a big cap sell off and lead directly to a USA recession.

Richard Maurice Gore

 

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