“We went eyeball to eyeball and the other guy blinked” – JFK said about Nikita Peasantovich Shoe Bangarov after Stalin’s henchman in the Red Terror back down in the Cuban missile crisis. Trump has gone eyeball to eyeball with the bond market and Xi Jinping but only the Dragon Empire’s Emperor for Life has blinked while the bond vigilantes have gone berserk in the netherworld of MAGA. The sting of the century is pure Trumpian genius even though the US is the latest emerging market to experience a currency crisis with the American rupee down and 10 year Treasury note yield spike on steroids. My call? Long the buckeroo (USD) against the Chinese yuan at 7.35 for a 8.50-9 target.
China’s $18 trillion economy is saddled with a 350% debt to GDP ratio, a broken shadow banking/wealth management system, and property finance in a go-go market always ends in tears. Contagion in the money/bank funding markets of Hong Kong and the collapse of the biggest property bubble in human history ever since the RAF and the US AAF literally incinerated Hamburg, Berlin and Koln into rubble.
This is the start of Japan style two lost decades as the fiscal black hole, mass youth unemployment, 150 million empty unit ghost cities, a US embargo with 145% tariffs and bankrupt global South clients without access to IMF/World Bank/ADB funding. A great power should know when it is beaten and China has been beaten by American exceptionalism in technology, military prowess, space warfare, intelligence and raw ruthless, red blooded Presidential power.
I went to America at the age of 18 and America is an easy country to fall in love with for a teenager. We used to joke at Penn. that in the States the boys find a party but in China, the party finds the boys. China has lost World War III without a shot being fired because Xi, unlike the Trumpster and moi did not learn the basic lesson of the Godzilla movies – size matters!
The game of nations is suffused with sorrow and the plumbing of the US Treasury markets is now seriously poisoned. So the financial cancer released on Liberation Day by the Tariffwala from Queens means hundreds of millions of people will be unemployed as credit markets freeze up, financing rates triple for dollar pegged currencies, bonds turn into toilet paper and equity portfolios vaporize into the Andromeda galaxy. This has not happened yet but it will. I live and die in the twilight of the second derivative and was poo pooed last summer by some of my closest friends when I predicted a Lehman scale volcanic eruption in illiquid real estate at banking conferences. MENA ventures/unicorns? May your soul rest in peace.
Mirror, mirror on the wall, who is the fairest Mag-4 of them all? Meta, since it trades below a market multiple, digital advertising rev growth gets eviscerated in a global recession but Zuck is the ultimate magician and AI deployment on 3.4 billion people with its brands (Facebook, Instagram, WhatsApp, Messenger etc.) means that Zuckernomics can never be suckernomics, unlike off-plan speculation in pieces of paper by developers who would long have disappeared from the earth before the time came for deliverance D-Day circa 2028. This means the next 6-year bear market in real estate has already begun as the cost of risk and default ratios spike up like demented rockets.
Dr. Copper has a red mountain in Kolwezi in the heart of darkness, owned by a mining maestro named after a Napoleonic era battle. When copper becomes the most valuable deficit metal in the world, thanks to EV/AI. I know there is a 8-10X upside when the dust settles as it will in 2028.
The OPEC price war has now begun and a Saudi no show as swing producer coincides with a global credit Ice Age/demand implosion in Asia led by the PRC, courtesy of the Trump tariff tantrum. This happened in 1999 after the ghost of Jakarta started a price war as the Thai baht devalued while Indonesia had its worst year of living dangerously since 1965. Oil bottomed at $10 as the Suharto regime fell in Jakarta. In the 2008 price war, oil fell from 148 in July 2008 to 38 six months later. It was 115-28 in 2014-15. It was $20 spot and -$37 futures in the 2020 price war. The Street is short and all bets are off on oil.
Auric is kicking derriere at 3200 ounces while the Farm Belt is in deep depression. So grain is the next gold and my message to the beef eaters of India, grill baby grill, cause US sirloin steaks will fill the supermarket shelves of Bharat that is India. Holy cow under Modi, not when you have to plug a $50 billion trade surplus with Trumpistan. Short Mettel as Barbie made in the PRC is an un-American, red Chicom voodoo doll designed to spread evil CCP algorithms in the minds of little American girls. In any case, 145% tariffs on Barbie means no imports are possible.
Also published on Medium.
