I personally do not understand the particular drama behind the Asian selloff that has started this month.
Let’s get some things straight:
- China is not going to consume at a 7% rate anytime in the near future.
- We are in a commodities slump, world wide.
- We are in a world wide growth slowdown.
These three items have been this way for more than a year. We have no new fundamentals in January to lead to such catastrophic market events. I also do not blame this selloff on the Chinese Government or the people who run the financial system. The systems that are in place currently in China has worked. Mind you I am not saying this is perfect but it has worked.
When I look at this problem in the Asian markets, one has to ask, who is selling off, is it the individual investors or is this institutional investors. I do not believe that this issue is the individual investor. I would focus on the institutional investors because of the short selling which is usually an indicator that the institutions are the cause.
China is going to have to put restrictions on the institutions that are bombing the markets irrationally. The fundamentals have not changed in a year and with no new information, it is time for the Chinese Government to lay the law to the institutions. Further Market Controls is the only way for the Chinese Government to control a crash being created by institutional investors.
Now, for folks who follow the Wave Chronicle on financial news. This issue in China is not a signal to a greater issue. I have hinted for more than two months of another market crash condition and this week is not what I am looking at.
China, is not going to consume at a high rate anymore, that has to be accepted. Every time you fill up your car with cheap gas prices, that tells you that we are in a commodity slump. This is going to be a way of life for some time. This has existed for about a year, this is not news, this is not awe inspiring. If investors really believe this is news in 2016, they need to be out of the market. If institutions believe this is an issue, then traders and executives have to be fired.
The market falling apart this week is a joke, a manufactured event.
What I am concerned about is the following:
- Unemployment increase in the US first quarter of 2016.
- Mortgage / credit default in the first quarter of 2016.
- Lack of capital expenditure in 2016, all quarters.
- Lack of declared capital expenditure in 2017.
I believe that market conditions exist both for the good and the bad. If the US Government could put it’s act together and get more cash into the hands of the American people and not the top 1%, this slow down of the economy would come to an end.