Australian (ASX) Stock Market Forum

May DDD

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Full: https://www.foxbusiness.com/fox-new...against-dollar-investors-suspect-intervention

Cullen Roche on the Yen: https://disciplinefunds.com/2024/04/29/three-views-on-the-yen-collapse/

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LEI's have all been negative for months. All except the stock market.

I thought we would have a couple more up days...

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Wrong currently.

USD

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Killing all before it.

Mr fff:

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Oil News:

ExxonMobil and Chevron reported a combined net profit of $13.7 billion in their Q1 2024 earnings, $8.2 and $5.5 billion respectively, as oil majors saw squeezed natural gas prices and lower refinery margins, marginally offset by higher oil production.

- ExxonMobil’s Q1 results have disappointed the market, prompting the largest intraday decline since the announcement of its $60 billion Pioneer takeover, after lower-than-expected refining results.

- Chevron, on the other hand, posted better-than-anticipated results with adjusted Q1 profits of $2.93 per share, producing more than 2 million b/d of crude despite a stagnant Permian basin output.

- Overperforming their European peers, Exxon and Chevron manage to fight over the future of Guyana’s Stabroek block in a soon-to-start arbitration, following Chevron’s takeover of Hess Energy and its 30% stake in the project.

Market Movers

- Brazil’s national oil company Petrobras (NYSE:pBR) is looking for four drilling rigs to be used in onshore exploration wells planned for 2025, marking a U-turn from its previous divestment of onshore assets.

- US oil major Chevron (NYSE:CVX) signed a development deal with Namibia’s state-owned NAMCOR, taking a 80% working interest in the offshore block 82 in the Walvis Basin, seeking to join TotalEnergies and Shell in the country.

- US activist investor Elliott Management has reportedly bought a minority stake in Japanese trading house Sumitomo (TYO:8053) worth several hundred million dollars, joining Warren Buffett whose Berkshire Hathaway (NYSE:BRK) owns 9% by now.


Tuesday, April 30, 2024

The de-escalation of the Israel-Iran conflict and ongoing ceasefire talks in the Egyptian capital city of Cairo that could potentially halt hostilities in Gaza have lowered the geopolitical risk priced into oil prices, dragging Brent back to the $88 per barrel mark. Higher crude supply thanks to Mexico’s U-turn on its export cuts and hotter-than-expected US inflation data have added some bearish sentiment into the markets, with no real macroeconomic or geopolitical upside on the horizon now.

Houthis Strike Ships Again. Yemen’s Houthi militias have targeted four ships in a string of missile attacks this week, including the MSC Orion container ship partly owned by Israeli businessman Eyal Ofer, the Greek-operated Cyclades commercial tanker and two US destroyers passing through the Indian Ocean.

G7 Agrees on 2035 Deadline for Coal. Energy ministers from G7 countries reached an agreement to shut down their coal-fired power plants by 2035, with Germany and Japan expected to do most of the heavy lifting with coal currently accounting for more than 25% of their electricity generation.

Doubts Emerge on TMX May 1 Start. As shippers have expressed their concerns regarding the readiness of the TMX pipeline to start commercial operations on May 1, Canada’s CER said there are still six leave-to-open applications left to consider for pump stations and pipeline spreads.

Mexico Reverses Crude Export Cuts. Mexico’s state-controlled oil company Pemex has walked back its crude export cuts for May after both the Salina Cruz and Veracruz refineries suffered fires over the past two weeks, eliminating the necessity to lower May exports by the planned 330,000 b/d.

India Goes for Canadian Crude. Reliance Industries, India’s largest refiner, bought a VLCC cargo of Canadian crude from Shell (LON:SHEL) for July delivery, marking the first ever purchase of TMX volumes by an Indian buyer, with reports suggesting the price was set at a $6 per barrel discount to ICE Brent.

Saudi Arabia on the Hunt for Lithium. As Riyadh builds up its muscle in the metals industry, Saudi Arabia is looking to lock in supply deals to source lithium into its nascent EV battery industry, with media reports suggesting Chile might be the preferred country for future investments.

ExxonMobil Eyes Turkish LNG Opportunities. Turkey is negotiating with US oil major ExxonMobil (NYSE:XOM) to derisk its LNG supply from the usual sellers (Algeria, Qatar, US) and create a “new supply portfolio”, aiming for a 2.5 mtpa LNG term deal should they agree on commercial terms.

Fading Middle East Risks Lower Oil Appetite. Hedge funds and other money managers sold the equivalent of 95 million barrels in the six key crude options and futures in the week ending April 23, the largest weekly drop since October 2023 as lower Israel-Iran war risks led to weaker risk appetite.

Drought Risks Loom Large Over Copper. According to a PWC report, more than half of the world’s copper mines in Chile, Zambia and elsewhere are in areas exposed to drought risks over the next decades, stoking fears that climate-related disruptions could add to the already bullish case on copper prices.

Argentina Could be The Next Oil Frontier. A consortium led by Norway’s Equinor (NYSE:EQNR) will drill a deepwater exploration well off Argentina’s northern coast, with the Argerich wildcat becoming the first ever deepwater well in the country, potentially opening up an untapped frontier.

Southeast Asia Struggles with Scorching Heat. Record temperatures across Thailand, the Phillippines, Vietnam and other Southeast Asian countries have brought regional power grids to their limits, with PTT and PetroVietnam looking to procure prompt LNG cargoes to alleviate the pressure.

Australia Tightens Mining Investment Rules. In a thinly veiled rebuke to China, Australia’s government is set to tighten scrutiny of foreign investment into the mining and refining of critical minerals, having already blocked such a stake purchase into Northern Minerals last year.

Cocoa Prices Continue Their Wild Ride. The best-performing commodity of 2024 so far, cocoa futures saw their largest intraday drop in 65 years this week, dropping 17% on Monday to $8,930 per metric tonne, after ICE increased margin requirements for market participants.

CME also increased margin requirements on Gold & Silver.

The issue is the USD and possible intervention of the BoJ and Yen. Intervening in the Yen requires selling UST to obtain USD to sell to buy Yen. You would think it all comes out in the wash:

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The increase in the 10yr has not (still assuming the Yen/USD is a wash) allowed the USD to fall back. The USD is also up biggly. So whether or not there was an intervention, for the moment USD is bouncing back.

Which for the moment means EVERYTHING else down.

Now of course we have the Fed tomorrow.

jog on
duc
 
So a couple of charts from last night that I didn't post due to getting back from work so late:

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Mostly just a reminder that the FOMC report is due.

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And BTC is getting spanked today.

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All of which are saying: the economy is average to bad and that the market is significantly overvalued, due a correction. Have cash available to act appropriately when turbulence arrives.

pg. 2
 
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So we are just before the FOMC

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Down a little but sideways.

So for the last couple of days I haven't done a great deal. I've traded around the GDX position a little as the miners have been volatile. Today I added a few shares at $33.22. All other positions just are as they were.

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1-chart to rule them.

On the change of the month it takes a day or so to update the PP calculations. So atm the USD 'looks' to be at an inflection point, but it may not be technically.

The FOMC may actually show up in the USD as well as stocks. It may actually be the catalyst for the move, whatever that direction may be.

To me it looks rather bullish. Which means stonks lower.

I'm keeping my trading platform open. Normally I'd close it after adjusting any positions, stops any fiddling with the buy/sell buttons. Because I hold a number of ETFs, I might be quick enough to catch any outrageous moves. But I doubt it.

I'll be back post FOMC

jog on
duc
 
FOMC

The first move is usually the wrong move:

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So liquidity sucks. LOL. Reduce the QT.

Still no cuts to the FFR. USD will continue higher creating UST market turmoil.

I think Yellen at the QRA will definitely shift to issuance at the short end. She will collapse the market if she tries to go to the long end.

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BTC to $50,000?

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Probably some chop ahead before resuming that upward trend.

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BTC just has much higher vol.

I didn't get any trades off during the mayhem. These were all prior to FOMC

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jog on
duc
 
But not today:

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Because reducing QT is providing additional liquidity to the market.

Yellen will announce the QRA in the next 10 days. She will (and now can) issue at the short end because as the short maturities roll off the Fed balance sheet, Powell can buy the new issuance.

Fed balance sheet unchanged.

This for equities is better than a reduction in the FFR. This is QE without calling it QE.

Where the trouble will spring up is at the long end. The ISDA is still on the table. Banks can gorge on the long end with no mark-to-market impediments to their balance sheets.

The 'tell' is:

Screen Shot 2024-05-02 at 7.08.05 AM.png

Fed FFR unchanged and gold higher?

Gold is higher because the Fed has gone QE. Inflationary.



jog on
duc
 
I have to open an international acc to trade LMT.

So obviously you are not ramping. Why do you take an investment interest in NYSE stocks.

I ask because I struggle to understand Oz stocks (although I understand the WW pressures) let alone international stocks.
 
I have to open an international acc to trade LMT.

So obviously you are not ramping. Why do you take an investment interest in NYSE stocks.

I ask because I struggle to understand Oz stocks (although I understand the WW pressures) let alone international stocks.

So I trade US stocks for the following reasons;

(i) Time zone let's me work a day job in NZ,
(ii) I like trading Options and US has deep Options markets (and a lot more products to trade generally)
(iii) I trade professionally for a US firm, so obviously it's the US,
(iv) I started with US stocks, just prefer the liquidity,
(v) I prefer having MM make the market rather than the Aus. system,
(vi) US stocks just seem so much more exciting,
(vii) To me, being able to trade profitably the US market just seemed more of an accomplishment than other markets.


There are probably a few other reasons that escape me atm.

jog on
duc
 
NZ are supposed to be having a brain drain. Why are you propping them up?
is that a worse drain than in Australia ?

i know several people that decided to retire early or moved to a career where they aren't university-trained for
 
So yesterday:

People will not look back on yesterday as being a day when the S&P 500 was up over 1% with less than an hour left in the session. Most people will just remember it as a day when the S&P 500 finished moderately lower (-0.34%), and for those more involved in the day-to-day moves, they’ll remember that the S&P 500 collapsed into the close falling over 1% in the final hour and more than 0.50% in the last ten minutes of trading! As we noted in the Closer last night, at one point yesterday, the S&P 500 had a 99% probability of finishing the day with a gain (based on historical price action). Choke job indeed!

What’s even crazier about yesterday’s tank into the close is that it was the second day in a row where it happened. Below we show the S&P 500’s intraday charts for Tuesday (4/30) and Wednesday (5/1). While the patterns heading into the last ten minutes of both days were almost the opposite, the last ten minutes were nearly identical; The S&P 500 dropped 0.59% in the final ten minutes on Tuesday and 0.60% on Wednesday. These late-day declines are uncommon enough on their own, but to occur on back-to-back days is extremely rare.

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The chart below shows streaks where the S&P 500 declined 0.50% or more in the final ten minutes of trading going back to 1985, and there have only been nine other periods where there were back-to-back occurrences (with two extending to an unheard-of third day). The most recent occurrence was in February 2018 during the Volmageddon meltdown. The next before that was in August 2015 when China devalued the yuan and before that August 2011 when the US lost its AAA credit rating from S&P. There were also a few occurrences during the Financial Crisis and also in October 1987 during the market crash. You probably get the point; these types of back-to-back declines normally occur during periods of intense market stress.

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Currently:

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AMZN:

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I remember back in the 1999 run up the analyst Henry Blodget (or something like that) put a $400 target on it. It reached that target in about 4 or 5 days from $200+. I use AMZN all of the time and have done certainly since the 1990's, yet, never bought the stock. Dumb.

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0DTE Options have huge volumes currently. Options to: GLD, SLV, UNG among some others.

Powell:

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So the QT slowdown is (undoubtably) for Yellen to be able to issue debt at the short end. Issuance at the long end would blow up the UST market.

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All calm in UST market currently after the news of MORE LIQUIDITY.

pg. 2
 
Mr fff,

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Easy and quick read: https://collabfund.com/blog/how-i-think-about-debt/

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Shale oil has kept oil prices lower over the past 10yrs. As production starts to fall, as it is, that effect will be lost, unless oil prices stay high. We can still BTD in oil.

Or can we?

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The last chart above, links the new reality: Oil/Gold.



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Now the BoJ would not intervene in the currency market without warning the Fed and or Treasury that it was going to do so. To intervene on a significant scale, BoJ would likely need to cash some UST to sell USD or have a Swap line activated.

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UST market is fine, could be a swap line.

But for how long?

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All the powers that be, need a lower USD.

Powell could not lower the FFR, which (in theory) would weaken the USD as the market would cite his caving into inflation.

Next week's QRA will be very interesting and is likely to be a market moving event. Who had even heard of the QRA 6mths ago?

jog on
duc
 
and here is me thinking i am not doing so well , sure i have got some hoops from the other end of the court , but over all my jump shots look like about a 40% scoring rate and after real inflation that doesn't look so impressive
 
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Oil News:

Friday, April 3rd 2024

The disappointment of the money markets with yet another hotter-than-expected set of US inflation data, aggravated by higher crude inventories and slackening geopolitical risk, has triggered a notable drop in oil prices, with both WTI and Brent shedding more than $5 per barrel since last week. Falling middle distillate and gasoline cracks have not boosted the sentiment either, so only a high-impact supply disruption could break the current bearish streak.

Exxon-Pioneer Deal Approved as FTC Bans Former CEO. The US Federal Trade Commission issued a consent order that hinted at the greenlighting of the $59.5 billion ExxonMobil-Pioneer deal, provided former CEO Scott Sheffield doesn’t join Exxon’s board over his alleged “collusion” with OPEC.

ADNOC Boosts Crude Production Capacity. The national oil company of the United Arab Emirates, ADNOC, announced that it had increased its crude production capacity to 4.85 million b/d, 200,000 b/d higher than previously, getting one step closer to its 2027 target of 5 million b/d.

TMX Starts Commercial Operations. After 12 years of waiting, Canada’s $23 billion Trans Mountain Expansion pipeline started operations this week, with the first-ever cargo to load at the Westridge Terminal in two weeks and deliver a Western Access Blend cargo to China.

Russia’s Gazprom Posts Hefty Loss in 2023. Russia’s state-controlled pipeline gas monopoly Gazprom (MCX:GAZP) posted its first annual loss since 1999 as gas shipments to Europe dwindled, burning though $6.9 billion, whilst the gas giant builds a new major pipeline to China.

Anglo American Worth Than BHP’s First Offer. A new report published by researchers at CreditSights indicates just the copper assets alone of global miner Anglo American (LON:AAL) are worth at least $35 billion, almost the size of BHP’s initial offer, suggesting an improved bid is necessary.

EPA Rules Threaten US Power Grid Reliability. Peabody Energy (NYSE:BTU), the US’ largest producer of coal, warned that the EPA has overstepped its authority with its target of cutting GHG emissions from coal by 90% by 2039, shortly after some power plants mulled a federal lawsuit.

Venezuela Exports Crack Under Pressure. Venezuela’s oil exports plunged a whopping 38% month-over-month to 545,000 b/d as demand subsided for the country’s heavy barrels on the heels of US sanctions, prompting at least six VLCCs to leave Venezuela empty in recent weeks.

US Senate Bans Russian Uranium Imports. The US Senate unanimously passed a bill banning the imports of Russian uranium, sending spot U308 uranium prices to $92 per pound again, also unlocking $2.7 billion in government support for domestic uranium mining in the United States.

Exxon to Take FID on Mozambique LNG by Year-End. US oil major ExxonMobil (NYSE:XOM) is reportedly looking to take a final investment decision over the delayed Rovuma LNG project by the end of this year, seeing the project’s capacity upgraded to 18 million tonnes per year.

Shell Brushes Off NYSE Relisting. Shell’s (LON:SHEL) chief executive Wael Sawan brushed off the issue of relisting the company at the New York Stock Exchange, saying that the company is not actively looking into it despite Shell shares trading below “fair market value” right now.

Afghanistan Wants to Become an Oil Marketplace. The Taliban in Afghanistan have been working with neighboring countries of Turkmenistan and Kazakhstan to create a regional trading hub that would link Russian crude oil flows to buyers in India and Pakistan via an onshore pipeline.

Cyprus Rejects Chevron’s Gas Plan. The launch of Chevron’s (NYSE:CVX) Cyprus offshore gas fields ran into another delay as the Cypriot government rejected the US major’s plan to develop the 3.5 TCf Aphrodite field discovered in 2011, giving it six months to meet its requirements.

Baltimore Bridge Repair to Cost $2 Billion. The Maryland Department of Transportation said the state expects the rebuild of the Francis Scott Key Bridge, wrecked after the Dali cargo ship crashed into it on March 26, to cost $1.7-1.9 billion, with completion anticipated by fall 2028.

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Hopped over its declining 20 day MA confounding the technicals.

Heed Druckenmiller's comment from last night: liquidity rules the day. We have the Fed now providing added liquidity via a curtailing of QT going forward in June.

Inflation is clearly out of control.

So the Fed could not be seen to be even thinking about lowering the FFR. The market needs stimulus. These valuations will not sustain themselves. So the stimulus (liquidity) has come via curtailing QT, rolling off short term short end UST and buying newly issued short end UST, allowing the Treasury to keep funding the ever expanding interest payments on UST, which will swallow everything at this rate.

Every 100 days the debt expands by $1T. Without the Fed cutting the FFR back to ZIRP or NIRP, the debt will sink the ship.

Meanwhile equity markets are discounting almost nothing. LOL.

So tonight:

Watch Live Tonight: The Great Gold Vs Crypto Debate​

picture-5.jpg
BY TYLER DURDEN
SATURDAY, MAY 04, 2024 - 05:05 AM
Proponents of gold and bitcoin often hail from the same ideological background: Austrian economists, dollar bears, Libertarians tired of State manipulation of fiat currencies and, generally, the anti-Fed crowd. Yet shared principles have not eased the age-old rivalry between the two assets.
Relative to Bitcoin, gold lost considerable value last year, only to rebound somewhat in the last month amid a flood of Chinese institutional and retail buying. However, as Benjamin Graham said: “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” So we are more interested in the fundamentals:
  • Does Bitcoin’s instant transferability and infinite portability make it the superior asset/security? Or is it a worthless string of numbers with infinite substitutes?
  • Will gold’s thousand-year history as the preferred monetary commodity continue in the digital age? Or does its reliance on third-party custodians (at least at scale), and significant bulk, make it inferior to BTC

We’ll answer these questions, and more, tonight, at 7pm ET, when ZeroHedge is partnering with Crypto Banter to bring together top macroeconomic minds to debate.

In the anti-crypto corner is the man whose name is synonymous with “gold”, infamous crypto bear Peter Schiff. Alongside Schiff will be “Dr. Doom”, renowned economist Nouriel Roubini.

Arguing in favor of crypto will be Anthony Scaramucci - wealth manager with over $10 billion in AUM - as well as day-one crypto veteran Erik Voorhees, founder of ShapeShift and torch-bearer for the asset class’s libertarian roots.
Media-ZH_sponsor.jpg
The debate will be moderated by Ran Neuner, founder and host of Crypto Banter, one of the largest digital asset news channels on YouTube.

To my mind Mr Schiff just does not present the pro-gold argument coherently at all, which is a shame.

With the current state of affairs, gold will turn into possibly the last wealth preservation tool available. The equity markets (I hope) will survive, but the volatility when it arrives will be mind numbing and sustained.

jog on
duc
 
So last week's predicted outcomes based on the technicals:

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And the actual outcome:

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Not terribly convincing. Call it about a 50% hit rate.

XLE being the biggest flop.

So now looking at multiple time frames:

The chart the firm uses:

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The blue box that indicates where the analysis took place.

My charts with different time frames:

Daily

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Weekly

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Monthly

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Yearly

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Which is why I now take positions lasting 12mths to 18mths.

You eliminate some of the noise. The data with the noise removed tends (not always) to generate an actionable signal.

I try to align (as much as you can) with the yearly chart and largley ignore everything below the monthly.

These 2 longer term charts remain (long term) bullish, but expecting a bit of weakness, consolidation.

Last, pay attention to the fundamentals. The fundamentals are extremely bullish moving forward based on the information, analysis, etc that gets posted up day to day.

jog on
duc
 
Next week:

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To me XLE is a buy. A BTD for sure. There may yet be a slight further bit of weakness, however, the fundamentals are just so bullish that I am more than happy to sit through a bit of a drawdown.

Also XLV looks ready to trade higher. Healthcare tends to be a defensive sector. So again, I'd be more bullish here than indicated by the pure technicals.

XLI I'm bullish on.

XLF also in my book looks ready to move higher. I hate the fundamentals on this one however. This is a pinch your nose and buy.

I hold all of the above ETF's.



Pizza.

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From Doomberg:



To cope with international science and technology competition, achieve a high level of self-reliance and self-improvement, we urgently need to strengthen basic research and solve key technology problems from the source.” – Xi Jinping

Stop us if you’ve heard this one before…

The Chinese Communist Party (CCP) decides to develop a homegrown version of a strategically important industry currently dominated by Western companies. Upstart Chinese firms nobody has ever heard of begin appearing at industry conferences, and these new attendees spend extensive time asking questions, taking pictures of prototypes and poster boards, and developing relationships with Western suppliers keen to penetrate the vast Chinese market.

Months later, these same Chinese companies (and a few more out-of-nowhere entrants) release primitive products that seek to compete domestically at the low end of the industry. Market leaders chuckle at the sophistication level of these new players, comfortably resting on their technologically superior laurels. Nobody makes money in China, they figure, so there’s probably not much to worry about—although, some of the designs do look suspiciously close to technology that had been firmly shielded by patents and as trade secrets…or so they thought.

es%2F4b191ec3-9d3a-4a34-a75c-dff2a63e9668_1200x800.jpg

Show and steal | Axton Global
Lured by the prospect of filling factories and beating Wall Street expectations, more Western suppliers get in on the action, competing to win orders in the world’s ultimate growth market. As a condition of securing Chinese business, joint ventures with state-owned enterprises (SOEs) are set up, technology is shared, and factories are built locally. Within months, virtually all industry leaders conform to the rules of the game. Wall Street demands growth above all else, and the fear of missing out is strong.

Suddenly, yet another unheard-of company is launched out of China, but this one is shockingly different. This SOE combines the best of the incumbent technology, and its products are demonstrably superior to what the West can offer. This phenom company begins rolling up market share in China, forcing international competitors to scramble. Then the exports begin. The value proposition on offer is hard to believe: the products are excellent, the price is a fraction of what was previously thought to be impossibly cheap, and supply appears to be practically infinite. Unable to compete and with precious little domestic support, waves of Western companies go out of business. In a flash, the CCP now monopolizes the industry.

No matter how many times the same pattern plays out, the West always seems blind to the game China is playing, with one recent exception: semiconductors. China is making the development of a domestic semiconductor supply chain a matter of urgent national importance. The US and its allies are running in the same race while doing everything in their power to prevent China from succeeding. Much ink has been spilled on the geopolitical tensions rising from these efforts.

The US might be “early to worry” in this instance, but will they succeed in preventing China from becoming the global leader in this technology? Count us among the doubtful. Let’s explore why.

The rest is behind a paywall. But you get the gist.

Look at the Chinese Tech chart CQQQ.

Now I hold FXI

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Wasn't aware of CQQQ. Too late to jump on that unless there is a pullback.

More to the point however, another area that China is seemingly going to outcompete the US companies on through both price and quality.

AAPL's phone sales were way down. AAPL has nothing to replace it with. Innovation at AAPL died with Steve Jobs.

China hollowed out the US industrial base, which is now commonly known as the 'Rust Belt'. They did it once and they can do it again to US Tech. This isn't a 'tomorrow' thing, but it should definitely be a concern.

So I have the QRA data. Just in the process of reading through it. Snippets will appear through next week. Suffice to say, it's worse than expected and explains the Fed's reduction of QT.

None of this IMO is being priced into the market currently. Mostly because there is simply so much BS being generated and there is no real journalism that checks on this and calls BS.

jog on
duc
 
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