Cry Havoc, and slip loose the dogs of (trade) war!

In Subscribers only by Cam Hui

The WSJ reported that the Trump administration is considering a new tactic in managing its trade relationship with China. Here is the Bloomberg recap for those without a WSJ subscription: Under the plan, the commerce secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country, instead of singling out China, the newspaper reported. ...
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How Trump/Navarro could spark a market crash

In Free by Cam Hui

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model is an asset …

The bear case: How Trumponomics keeps me awake at night

In Free by Cam Hui

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model is an asset allocation model which …

Going on recession watch, but don’t panic!

In Free by Cam Hui

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model is an asset …

How China’s Great Ball of Money rolled into Canada

In Free by Cam Hui

I live in Vancouver on Canada’s west coast. This was the city I grew up in and where I chose to settle after I went into semi-retirement. It’s a great town, but property prices are sky high and have become unaffordable for many locals. Some real estate boosters will resort to the standard explanations such as “we’ve hosted the Winter …

How bad could a Chinese banking crisis get?

In Free by Cam Hui

In my last post (see The roadmap to a 2017 market top) I wrote that one possible bear market trigger would be a debt crisis in China. In response, an alert reader sent me this Bloomberg tweet and asked for my comment.     How bad could a China debt crisis get? In this post, I try to model the …

Is Chinese growth stalling?

In Free by Cam Hui

I have long had much respect for the folks at Lombard Street Research (LSR) for their unusual non-consensus calls. Back in the days of the Tech Bubble when everyone was focused on the likes of Cisco Systems, Lucent, Nokia and other technology darlings, they had said “watch China” as the next engine of growth. That turned out to be the …

How much “runway” does China have left?

In Free by Cam Hui

As we await China’s Q2 GDP report in the face of sharply lower trade figures, it’s useful to ponder once again the China tail-risk question. For years, analysts have been warning about impending doom in China because of the growing mountain of unsustainable debt (see Kyle Bass, Jim Chanos, Andy Xie and George Soros).   In the past, every time …

Should China emulate America? Or the other way around?

In Free by Cam Hui

For your weekend contemplation: This post isn’t about how the American and Chinese economies may converge, but about the potential development path of capital markets and regulatory regimes. CNBC recently reported that Charles Schwab and the Shanghai Advanced Institute of Finance conducted a survey of Chinese stock investors and found out the reason the Chinese all appeared to be punters …

What’s spooking the stock market?

In Free by Cam Hui

Mid-week market update: No, it isn’t just a more hawkish Federal Reserve that’s spooking the stock market. Stock prices were been falling before Fedspeak and the latest FOMC minutes sounded a more hawkish tone. The SPX staged a successful test of its 2040 neckline support of its head and shoulders pattern today. In fact, today`s action could be interpreted constructively as …

A better way to trade the China slowdown

In Free by Cam Hui

China has been undergoing a series of stop-start growth spurts mini-cycles, courtesy of credit driven stimulus programs (chart via RBS):     The size of the latest Q1 financing induced boom was extraordinary, as it hinted at panic by the authorities. For some perspective, credit expansion in Q1 2016 was somewhere between the GDP of Indonesia and Mexico:     …

Waiting for the storm to pass

In Free by Cam Hui

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The “Ultimate Market Timing Model” is a long-term market timing model based on research outlined in our post Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The Trend Model is an asset allocation …

More signs of unbalanced Chinese growth

In Free by Cam Hui

The latest Chinese GDP release came in right in line with expectations at 6.7%, but the growth came at a cost. I had written about this problem in my previous post, Big Trouble with 5-year China?). The Chinese authorities appear to be up to their old tricks again of using credit to drive growth, which is a worrisome sign. The markets …

Big Trouble with 5-year China?

In Free by Cam Hui

China’s latest five-year plan seems to be a big hit. What’s more, the most recent growth slowdown is abating, the stock market is recovering, but my indicators are suggesting that, despite all of the glowing rhetoric, the economy is taking a step back in its path towards re-balancing growth towards the household sector. Five-year plan accolades There was no shortage …

Worried about a China devaluation and currency war?

In Free by Cam Hui

I had been meaning to write about this earlier, but I didn`t find the time. Kyle Bass caused a stir last week with his letter to his investors when he wrote that China was on the verge of a major devaluation and financial blow-up (via Valuewalk): Our research suggests that China does not have the financial arsenal to continue on …

Why China won’t blow up the world (this year)

In Free by Cam Hui

I had a response to my last blog post in which I indicated that the contagion effects from a China slowdown had been contained (see Bottomed, but wait for a re-test of the lows). A reader pointed to comments by Worth Wray worried aloud about the possible catastrophic of a RMB devaluation. While I had initially dismissed Wray as a permabear, …

A modest proposal for the PBoC

In Free by Cam Hui

The specter of currency wars and competitive devaluation is in the air. Evan Soltas recently penned a post at FT Alphaville addressing the issue of how petrostates can solve their fiscal woes. The answer was either fiscal austerity or devaluation. The Telegraph reported that the World Bank was urging Saudi Arabia to use its currency reserves to defend the USD-riyal …

China turns Japanese?

In Free by Cam Hui

I haven’t written much about China lately, but I continue to get questions. So I thought that it was time to summarize my big picture thoughts on China here. Riding a motorcycle at 100mph without a helmet There is much to cover so I will just go through the highlights. There is no question that the risks are rising in …