The United States are growing faster than China

The world`s biggest economy is the United States followed by China, and sooner or later, China will replace the locomotive and be the biggest economy in the world. You can delay it, but it will happen in this century anyway.

They are both in conflict with each other with tariff tensions and a trade war. A strategy that is bad for both of them in the long run. The U.S is waiting for China to come to the table and make a fair deal. Today is the first day of talks to renegotiate the trade dispute between them. A deal that President Donald Trump repudiated.

Take a look at the chart above. Surprisingly, the U.S is more productive than China. Twice as much. The US economy advanced an annualized 3,4 percent on quarter in the third quarter of 2018 while the Chinese economy grew by “only” 1,6 percent quarter-on-quarter in the three months to September last year.

The Chinese economy is slowing and this has been going on for a while. But it`s not because of the trade war. China obviously have some problems and the China-U.S tension is one of them, but this is not the first time China and the U.S are in conflict with each other.

Deng Xiaoping and President Jimmy Carter signed a historic accord in 1979 and then reversed decades of China-U.S tension. Deng Xiaoping was a Chinese revolutionary and veteran of the Communist Party and he was eager to adopt capitalist methods and reforms in order to stimulate economic growth and restore confidence in the party.

Today, China has embraced capitalism but remains Leninist at heart. The founder of the Soviet Union, and his Bolshevik revolution, Vladimir Lenin changed China`s economic and political landscape.

Lenins Russian revolution in 1917 have a causal relationship with the birth of Chinas Communist Party in 1921 and the founding of the People`s Republic of China in 1949. As Mao Zedong once said: “The salvoes of the October revolution brought Marxism-Leninism to China.”

Lenin has played a much bigger role in China than Karl Marx and Friedrich Engels. The wholesale execution of enemies inspired Mao`brutal dictatorship and his launch of the Cultural Revolution under the theory of “continuous revolution under the dictatorship of the proletariat.”

Now, China has changed dramatically since Deng Xiaopings free-market reforms and Maos terrifying Leninist experiment in utopia. Now, China is the world`s second largest economy. 70 percent of the “socialist” economy is privately owned and nobody have more billionaires than China right now.

China is more a Leninist capitalist state than a Marxist socialist one. 800 million people in the middle class has jumped on the consumerism train in only a couple of decades under the stewardship of communist totalitarianism. Leninism`s lasting legacy.

On the other side, China has a debt crisis and a real estate bubble, so the question is; when will China collapse, and will it cause a global crisis? China is declining and it will continue to do so. Lending money to Kenya or Venezuela to name a few, are putting them all in a debt trap and it remain to see that Beijing can afford it. I`m in doubt.

Xi Jinping and his leaders know that they are in a very weak position, so they have to come to the table and make a deal with the U.S.

The stock market is in a correction territory at the moment. Investors have priced in two rate hikes this year and some U.S-China tension fear, but Trump reports “Big Progress” in trade talks with China were top trained negotiators came to the table earlier today.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

Advertisements

Leave a comment

Filed under Politics

If this a an average bear market we will se it bounce very soon

It has been a brutal stock sell off in December and so far in 2019, and MSM is telling you that we are officially in a bear market. It seems like the market is pricing in a recession, but it can be too early to say so.

The 10-year Treasury remain below 3 percent and the FED shouldn`t raise rates for the 10th time in 2019. If they push the hold button, I think the market will be happy and bullish again. Just look at the healthy job market and the strength of the U.S economy.

December 2018 was the worst December for the Dow since 1931, but if we avoid a recession I think investors are lucky to have a lot of cheap stocks. It is a China-U.S trade war, and the global economy is in a growth slowdown, but that doesn`t automatically mean recession.

We can see a support for the S&P 500 very soon, and this is also a point were investors pay for their insurance. And that is also a point were the bear market ends. Technical analysis tells us that if this is the right thing right now, a drop to around 2,300 points would likely spark a bounce from here.

Statistically, the average bear market stops right after, or right before it officially began. It remain to see that this is happening again. A closer look at the 48-month SMA, the market failed to bounce in August 2008 which led to the biggest drop since the Great Depression. The same happened in 2001.

Is this drop a new 2001 or 2008? If not, we can see a support just like it did in 1987, 1990 and 2016. The S&P 500 has lost 20,2 percent, and the Dow is down 19,4 percent, while Nasdaq is down 23,9 percent. The Russell 2000 is down 27,3 percent, so the coming days will be interesting. Anyway; this a great moment for day traders.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

Leave a comment

Filed under Stock market

The New Year stands before us like a chapter in a book

Leave a comment

Filed under Uncategorized

Happy New Year 2019

Leave a comment

Filed under Uncategorized

Make New Year`s Goals

 

Leave a comment

Filed under Uncategorized