For the past 20 years, the HSI has consistently bounced off of the top and bottom of these trend lines, and by some coincidence every top marks some worldwide recession while every bottom indicates... well, a bottom. However, recently the HSI has broken through this decades old trend, and while it certainly could bounce, if history is any indication that would mean the S&P is at its bottom too, or at least near it. So, 3 possibilities:
1. The HSI rebounds, bringing global markets with it into the next bull run (not)
2. The HSI somehow rebounds and has no effect on the rest of the world, China magically just disconnects from everywhere else AND has a bull run (China is known for its past isolationism but nowadays their entire economy is based off of selling other countries cheap labor)
3. Chinas economy crumbles just like everywhere else
I mean really, which one of these is most likely? China is undergoing a massive debt crisis, foreign companies are pulling out of China after the covid supply chain debacle, a myriad of internal issues, and in no way is the rest of the world ready for a rebound either. I don't know about the long term, but for the next year or so it isn't looking too good. I can't list all of their problems and short/long term strategies here so do your own research.
Position: long dated puts on FXI because it's easier to trade on mainstream brokerages
1. The HSI rebounds, bringing global markets with it into the next bull run (not)
2. The HSI somehow rebounds and has no effect on the rest of the world, China magically just disconnects from everywhere else AND has a bull run (China is known for its past isolationism but nowadays their entire economy is based off of selling other countries cheap labor)
3. Chinas economy crumbles just like everywhere else
I mean really, which one of these is most likely? China is undergoing a massive debt crisis, foreign companies are pulling out of China after the covid supply chain debacle, a myriad of internal issues, and in no way is the rest of the world ready for a rebound either. I don't know about the long term, but for the next year or so it isn't looking too good. I can't list all of their problems and short/long term strategies here so do your own research.
Position: long dated puts on FXI because it's easier to trade on mainstream brokerages
Comment:
and of course the very next day xi announces QE