My thesis idea is quite simple here and goes to the core of human emotion.
Without PANIC in the market, there will never be a genuine BOTTOM in place.
The market has gone thru a decade of stock appreciation, that ended this fall with the FANG Bubble of overvaluation . Important point. When prices exceed expected normal valuations, and keep rising that sets off the Parabolic structure on the chart. Its all good, until it isn't, and the break comes.
We are now rolling down the cliff of past overvaluation. The market will decide when enough discounting of the future is enough.
In the meantime, it is my belief that a MAJOR PRICE BOTTOM in the market will remain ELUSIVE until such time that a PANIC Bottom, even a crash of some recognizable sort occurs, even if..it is just intra-day, to CLEANSE the market of all the built up embedded excesses.
Once market participants, KNOW a PRICE BOTTOM is in... THEN and only THEN,.. CAN a Meaningful Retracement Advance Begin.
i see nothing elusive in tariffs, diplomatic tensions, raising FED rates, isolation and fear of globalisation...
realColtonX
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@LoLBeach, What does that mean, "elusive"? You see 'nothing elusive'? Elusive is how I characterize the meaning of your reply.
Tariffs could change any moment, as has been proven to be the case, especially if Trump starts to see it as a systemic risk to the number one thing as he sees as the measure of his performance: The stock market. Although he has said that "we can take some off the table," referring to the market being up so much since his >historic< election.
Diplomatic tensions. Is that anything new? Maybe I'm missing something?
Isolation and fear of globaliZation. The only country we are 'isolated' from is China, and that is temporary. GlobaliZation has been a disaster that the stock market never caught on to, but for the epic rise of the Chinese stock market, represented by Shanghai, which has outpaced our S&P by over 2X since January 1991, which is in the early 90's, both when I was born, and when this whole out-sourcing 'globaliZation' trip started. I wonder why the Chinese market has outperformed us on a basis which represents hundreds of billions, if not trillions of dollars. I think what you see right now is a slight awareness of this disparity, and equally slight chance of fixing that. And who in the world will benefit from that? Look at the S&P. It's very simple. So I reject the notion that fear of globaliZation is a necessarily bad thing, on an absolute basis, for the market. Where your argument works is tariffs and changing the status quo - but changing the status quo is almost ALWAYS a good thing. Losing $500 billion a year to china in trade deficit and other things (many other things), along with all that cannot possibly be accounted for (IP theft, forced IP transfer, for example) is absolutely no exception.
So, I ask you again, what are you talking about? I'd love to hear a response. Don't be elusive!
Please excuse any typos.
Colton Harris Moore
Orcas Island, Washington
CodedFlow
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@realColtonX, I will be unelusive only with the items i can :) 1. google diplomatic tensions US China / Canada china - true that the first are old - still, they get at new higher level 2. if point one makes sense for you then feel free to comment about tariffs and their randomness :) 3. FED already raised rates in the US and let in China are lower (is a fact not an opinion - google it) 4. to answer your main why, IMHO: they have more manpower than US - is a trade-off of capital & tech knowledge vs manpower - simple... and they seem to know how to use it... at least to a degree ... not sure though if they can sustain that... time will tell.
see the links attached to my analysis - which may have inspired in the first place our friend The Unwind:
no links here - just another view:
About lack of globalization: how do you think US products are selling in such large quantities?
I talk economics. I do not care about politics... only as a lifeline towards economics :)
@LoLBeach, Where I was coming from is that the points you hear about all day on TV are almost always not all that's going on, OR it is far less than that. In this situation, I think it's the latter. I think people overthink what's going on, and through that, it will take very little for the market to rebound. Longer term, I would see that the market is topping out, but merely on a cyclical basis vs because of trade, tariffs, rates, whatever.
Politics are inextricably linked to the market, for better or worse, so looking at politics is a must. Lest you know know a major influencer of sentiment, opinion, anticipation, and alas, direction. And like with everything, politics being no exception, the situation can change very quickly. I will be curious to know when Ms. Meng is released from Vancouver - but I would wager a bet that it will precede a trade deal with China. Nothing, and I mean NOTHING is coincidence. But despite that, it should not be overthought.
The Fed having already raised rates is not the question; The question is whether or not, and on what schedule, they will continue to raise rates - and more importantly, what we may see as drivers to their decision making???
The tariffs are anything but random. If they were random, then that would mean that we, as the USA, would not have a single thing other than war, to hit back against China, and the blatant, if not arrogant thefts and advantage-taking they have enjoyed and benefitted from for literal decades with no consequence. Tariffs are the best, if not the only thing we can do to possibly attempt to correct the wrongs that have gone on for so long that people have become used to them, and hence, see nothing wrong.
Which brings me to my last point: Why the US producers produce so much, but for Globalization. I concede that point, but only in a couple industries: Agraculture and Energy being perhaps the largest. There are hundreds, if not thousands of industries worldwide and within the USA. How many of them benefit from China? What's more, how many of them are dependent on China? I would also ask, how many of them sell the majority of their products into China? I would say very very few. I would also say that, of those industries in the USA, of all of the ones which sell into China or are dependent on China or whatever, compared to CHINA, China's companies and industries are FAR MORE dependent on the USA market than we are theirs'. THUS, tariffs for them to get into their number one or number two market, costing them with taxes and other restrictions, will hit them hard. We see that happening as we speak - and MAKE NO MISTAKE, the tariffs are doing exactly what they are designed to do. Anything but random. The domestic Chinese labor market, to your point, being hit probably the worst. While the American labor market continues higher. Interesting how that works. Obama, Trump, or outerspace aliens - doesn't matter.
The tariffs, a point a didn't make previously, is that the tariffs are used to bring China to the table to make a deal which is fair for both, and perhaps compensatory to the USA for trade deficits for decades. What else do we have to force China to come to the table? Diplomacy? Please.
CodedFlow
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@realColtonX, i could answer what i would do still very uncertain since i have very little information about what's going on at the top... and therefore i am at the bottom ... just picking pieces...
1. i would have attacked their strategy: Belt and Road (how not sure though or if enough dough available LoL) - Sun Tzu :)
2. i would have strengthened the cybersec to the teeth... creating more jobs (again, enough dough?)
3. i would have turned their guys who are stealing...
NOW:
if these points from above were not available... then why do we need such a straight confrontation which can end pretty bad for all... economically at least.