Questions and thoughts on trade war

tariffs on 200b of China imports+retaliation in Aug/Sep
Fed raising in Sep + potential 4th thereafter
US elections hence more hawkish rhetorics on Nov 6

throw in a couple more right-wing swings in elections + rise in CPI and i think we have enough to send equities into tailspin in 2H18
real rates already +ve, which is a sharp change in paradigm among global CBs.

Personally i have raised, and will continue to raise cash+safe holdings. Risk/Reward not favorable by any measure.

time to test if the 10-11yr equity dump cycles materialises.

Marc Faber:

Trade war to accelerate decline of US empire as China & India dominance grows

https://www.rt.com/business/433854-trade...e-decline/

(22-07-2018, 05:00 AM)bmann025 Wrote: Marc Faber:

Trade war to accelerate decline of US empire as China & India dominance grows

https://www.rt.com/business/433854-trade...e-decline/

US might actually win this trade war as Chinese economy depends largely on exports to US. They can trade more with the rest of the world but if export orders plummet from trade war, the vicious cycle of deleveraging and recession/deflation could set in. China is still very dependent on exports and they are finding it really hard to transition to a consumer type economy. in addition, China is very leveraged and susceptible to crashes which has been demonstrated in recent years.

India may be showing strong GDP numbers but it is a mess after modi did the currency thing last year. And they cant even get simple things like energy infrastructure right..

Russian economy/trade to china is quite insignificant, they only have some technology to offer.

Europe is another mess. PIIGS nations still struggling to keep their banks afloat and Europeans themselves are one of the most protectionist, they have tariffs on China and other nations. Plus they have UK leaving them which will make a big dent.

this time marc faber really not very convincing...

The trade war fears are actually good to rein in asset prices in the short term.
Remember that many asset prices had a relentless climb due to the long periods of low interest rates.
Anything mildly profitable is better than cash yielding near 0 returns.
Low interest also encourages more borrowing and more bets into high yield/low quality assets.
So part of the bubble is being deflated with a healthy dose of trade war fears.

As for how far the trade wars will go, I guess I am not too worried, they will eventually find a middle ground.
In the meantime the local/US economic indicators are doing just fine.

What I am worried is the longer term where cheap money no longer exist and many businesses eventually need to start making money. Problem is that many are addicted to cheap money. And these are no small companies. The long period of cheap money and a quick rise in interest rates will manifest itself into rapid deleveraging and possibly a very fierce economic meltdown. It will eventually happen but chances are it wont happen anytime soon. If you listen to Larry Kudlow, Trump and his team will likely put the economy on steroids after the fears blow over. And however you look at it, chances are that Trump will secure a better deal for corporate american in countries which has large deficit, or had high tariffs on imports.

(22-07-2018, 10:32 PM)BlueKelah Wrote:

(22-07-2018, 05:00 AM)bmann025 Wrote: Marc Faber:

Trade war to accelerate decline of US empire as China & India dominance grows

https://www.rt.com/business/433854-trade...e-decline/

US might actually win this trade war as Chinese economy depends largely on exports to US. They can trade more with the rest of the world but if export orders plummet from trade war, the vicious cycle of deleveraging and recession/deflation could set in. China is still very dependent on exports and they are finding it really hard to transition to a consumer type economy. in addition, China is very leveraged and susceptible to crashes which has been demonstrated in recent years.

India may be showing strong GDP numbers but it is a mess after modi did the currency thing last year. And they cant even get simple things like energy infrastructure right..

Russian economy/trade to china  is quite insignificant, they only have some technology to offer.

Europe is another mess. PIIGS nations still struggling to keep their banks afloat and Europeans themselves are one of the most protectionist, they have tariffs on China and other nations. Plus they have UK leaving them which will make a big dent.

this time marc faber really not very convincing...

US is dependant on Chinese imports, while China can replace US imports. Agricultural products, cars, airplanes, oil can be purchased elsewhere.

The US can't replace Chinese imports. A very hard working, relatively low paid workforce is now and even more so in the future the scarcest resource on the planet. Due to the 1 child policy their percentage of global population is decreasing rapidly and same happening elsewhere in Thailand, Vietnam, Philippines etc., while populations in Europe and Japan - running the show in previous decades - are already in rapid decline.

US & global consumers were the main beneficials and many every day products would otherwise be unaffordable to them. Global players are dependant on Chinese labour and factories. If you want to remain a global player you have to let the Chinese work for you.

(23-07-2018, 05:50 AM)bmann025 Wrote:

(22-07-2018, 10:32 PM)BlueKelah Wrote:

(22-07-2018, 05:00 AM)bmann025 Wrote: Marc Faber:

Trade war to accelerate decline of US empire as China & India dominance grows

https://www.rt.com/business/433854-trade...e-decline/

US might actually win this trade war as Chinese economy depends largely on exports to US. They can trade more with the rest of the world but if export orders plummet from trade war, the vicious cycle of deleveraging and recession/deflation could set in. China is still very dependent on exports and they are finding it really hard to transition to a consumer type economy. in addition, China is very leveraged and susceptible to crashes which has been demonstrated in recent years.

India may be showing strong GDP numbers but it is a mess after modi did the currency thing last year. And they cant even get simple things like energy infrastructure right..

Russian economy/trade to china  is quite insignificant, they only have some technology to offer.

Europe is another mess. PIIGS nations still struggling to keep their banks afloat and Europeans themselves are one of the most protectionist, they have tariffs on China and other nations. Plus they have UK leaving them which will make a big dent.

this time marc faber really not very convincing...  chartered tour SUN MOON LAKE

US is dependant on Chinese imports, while China can replace US imports. Agricultural products, cars, airplanes, oil can be purchased elsewhere.

The US can't replace Chinese imports. A very hard working, relatively low paid workforce is now and even more so in the future the scarcest resource on the planet. Due to the 1 child policy their percentage of global population is decreasing rapidly and same happening elsewhere in Thailand, Vietnam, Philippines etc., while populations in Europe and Japan - running the show in previous decades - are already in rapid decline.

US & global consumers were the main beneficials and many every day products would otherwise be unaffordable to them. Global players are dependant on Chinese labour and factories. If you want to remain a global player you have to let the Chinese work for you.

i believe china will be more stronger.

From trade war now to currency war. And Fed chair Powell now in crosshair. Trade war is inflationary so Powell will have to hike rates which will likely strengthen the USD on a real term basis in order not to be behind the curve. But USD is now too strong according to Econ guru Trump.

The incoherent piecemeal antangonist policy will have payback day. I'm not sure if the current admin will be the one clearing up the crap but US decades old credibility is credibly destroyed. US hegemony is no more. Not sure are they going down the long decline path like Great Britain in the last century but looks more and more like 911 was the peak of Pax Americana.

(13-07-2018, 01:47 PM)specuvestor Wrote: Short term wise market is saying US is more resilient because it is knowledge based economy. Goods flow doesn't impact it as much as China

But end of day protectionism doesnt work over long term. The higher input cost will have implication to inflation and interest rate as efficiency goes down and friction increases

North Korea used to have higher GDP than South Korea. Myanmar was the richest SEA country post WW2. China had the largest economy in the world until they concluded theres nothing outside to see after Cheng Ho. China economy skyrocketed partially because of Deng opening and plugging into WTO

Open trade is not a theory it is reality. But it has to be measured and applicable to different stages of economic life of a country because it affects lives. You cant expect total free trade for a 3rd world country vs 1st cause the latter will crush the former simply from efficiency and capital. That's why it's "unfair" to some. But it's never meant to be fair. It should be equitable. Fair is simplistic understanding that my son has one ice cream and I have one though I weigh twice as much. It's heuristic easy but makes no sense

Using US designs and Intellectual properties to write about the decline of US, isn't that ironic?

Starting from->
Qwerty keyboard that you penned the reply was invented by Christopher Latham Sholes, an american.
HDDs, SSDs, Memories and Processors are largely invented by US.
Linux, Windows, Android or IOS to run your web browser are largely US IPs.
Web browsers -> Safari, Chrome, IE, firefox? US too
Internet protocol, the conduit to send out your reply is a US invention.
and, www.valuebuddies.com is hosted by Choopa, LLC which i think is a US based company.

Our high tech life is revolved around US technologies more than ever. I do not need google, facebook, watsapp 20 years ago. But I think I will use them for the next 20 years.
Even china IT infrastructures are run on US technologies which they are unable to duplicate.

In short. US and China will be best brothers forever no matter they like it or not they can't do without one another. Long run they must shake hands and work together. This trade war is a test only to stress test their economy. One got technology to substantiate printing of money another got resources to maintain the value of money.

Sent from my CLT-L29 using Tapatalk

(23-07-2018, 03:17 PM)yeokiwi Wrote: Using US designs and Intellectual properties to write about the decline of US, isn't that ironic?

Starting from->
Qwerty keyboard that you penned the reply was invented by Christopher Latham Sholes, an american.
HDDs, SSDs, Memories and Processors are largely invented by US.
Linux, Windows, Android or IOS to run your web browser are largely US IPs.
Web browsers -> Safari, Chrome, IE, firefox? US too
Internet protocol, the conduit to send out your reply is a US invention.
and, www.valuebuddies.com is hosted by Choopa, LLC which i think is a US based company.

Our high tech life is revolved around US technologies more than ever. I do not need google, facebook, watsapp 20 years ago. But I think I will use them for the next 20 years.
Even china IT infrastructures are run on US technologies which they are unable to duplicate.

Hi Yeo

By this logic what about alphabet and geometry and binary system and gunpowder etc? How far you wanna go on the basics that permits all these to happen. Relatively US is a new kid on the block which I've no doubt done well, but that does not mean it is a guaranteed constant, as history has shown repeatedly. A lot of these founders don't have english sounding last names; and that is actually the strength of America.

I'm not anti-America neither anti-singapore when I say I'm not sure we will still be a financial center 50 years from now. John Pierpont Morgan had to pay homage to London back then, and now London might be sidelined with Brexit. Just what I'm observing geopolitically happening in last 2 decades and seeing a trend... not just what happened last 2 years