2018-01-21

QE Is Over: More Breakdowns in Utilities, Real Estate, 30-Year Bond

The key to it all is interest rates. Here's the 30-year ETF TLT. There's a small H&S pattern that has formed. If it completes, the target is around $112. That will break the trendline that goes back to 2006. Utilities and real estate are forecasting a break here, but the 30-year yield has to break to set off the market fireworks.
However if you prefer the U.S. Treasury futures, the break has already occurred:
A completion of the pattern would take US to 141, below the 36-year supporting trendline.

A break looks like it would be a tradable short-term rally. Whether it would represent the end of the bond bull market or the last move designed to make sure the maximum number of investors are crushed by the next bear market, remains an open question. The developed world and China are bugs in search of a windshields when it comes to debt levels. A rise in interest rates could be the catalyst for the biggest economic crisis since the Great Depression. Barring that, the global economy looks closer to the end than the beginning of the growth cycle.

Bitcoin Running Into Trouble at 50pc Retrace

China Economic Indicator: Maotai Prices Soaring

Caijing: 茅台酒价格暴涨:市场上一瓶难求 或有公款消费影子
January 8, Guizhou Maotai issued a notice on the Moutai price adjustment to require all levels of Moutai subsidiaries, Maotai Group subsidiaries at all levels must be sold in accordance with the price of 1499 yuan / bottle 53 degrees 500ml Maotai liquor, and recommendations Discretionary reference to the seller, not stocking cover, not tied tying.

This is not the first time Maotai limit, the Internet can even find "Maotai limit order" entry. As early as the end of 2010, Maotai announced the price adjustment, had requested dealers selling ordinary Maotai price of not more than 959 yuan per bottle. The passage of time, Maotai limit "threshold" has soared. The last time was in April last year, when Guizhou Moutai Co., Ltd. ordered dealers across the country, 53 degrees 500ml Flying Maotai prices can not exceed 1299 yuan / bottle.

Chinese Commercial Daily reporter learned that, starting from the Spring Festival last year, high-end liquor has re-displayed gains. Maotai put the official retail price of 1299 yuan per bottle, but the market has emerged out of stock situation. Now, Maotai terminal retail price adjusted to 1499 yuan, although the price has increased, but to successfully buy is still not an easy task.
Maotai price gains have beaten the hottest real estate markets in China:
Some organizations statistics over the years Maotai price changes. Thirty years ago, the retail price was then checked by the state at 140 yuan / bottle. Twenty years ago, the retail price of Maotai 53 degrees at 200 yuan / bottle or so. After 2000, the ex-factory price increased at the same time, the market price also began to accelerate the climb, from 300,400,500 in 2011 up to a maximum of 2,000 yuan.

Since 2012, the liquor market has declined, while the retail price of Maotai once fell below 1,000 yuan. Then the market warming, Maotai prices back in the past two years to rise channel. Before last year's Mid-Autumn Festival, many consumers reflected that it was necessary to buy Maotai at a price of over 1,500 yuan and the maximum was 1,800 yuan. Even if all Moutai are sold at the latest price of $ 1,499, the price has risen by more than 70% from the trough two years ago.

Real estate prices often attract attention. According to the recently announced index of new commercial housing prices in the 70th City of December last year, the National Bureau of Statistics of China reported 51.8% of the increase in Xiamen compared with the same period of 2015, up 34.9%, 45.8% and 37.8% respectively over the same period of the previous year 45.7%. Xi'an prices, the last two years rose 21.3%. It can be said that in the past two years, the price increase of Maotai has "outperformed" the prices of major cities in China.

"Hot City" Home Prices Down YoY, No Widespread Easing Coming

A bit of contrast to the prior story about local governments trying to adjust policy in the face of a bursting bubble.

Caijing: 北京深圳等多城房价低于一年前水平 今年调控基调不变
Recently, the Department of Housing and reiterated, Nanjing, Chengdu and other places relaxed regulatory system misreading, our unwavering goal adhere to the regulation of real estate. This year will strictly implement control policies and measures to crack down on various illegal activities, resolutely curb speculative real estate, further implement the local main responsibility to ensure the stability of the real estate market.

While the tone of the continuation of the regulation, also continues to promote long-term mechanism. Jiang Daming, Minister of Land and Resources recently said that China will study the development of the ownership change, in line with the planning under conditions of non-real estate enterprises to obtain the right to use the land - residential land as a way to deepen the use of land for the construction and operation of rural collective construction of rental housing pilot, promote the establishment of multi-agent supply, hire purchase multiple channels simultaneously protect the housing system, the entire population and housing. The government will no longer be the sole provider of residential land.

Chinese Govt Hopes for Soft Landing After Housing Bubble

Local governments don't want a repeat of 2014.

Caijing: 解剖楼市调控松绑摆乌龙戏码:让泡沫渐进实现软着陆
To put it plainly, the local government can not stand the impact of the property market downturn on finance, taxation, fixed asset investment and the economy began tentatively to relax the policy, in a similar way to signal the release signal to the market deregulation policy and observe the market reaction and the upper layer. If the upper layer does not respond, then relaxed to achieve the purpose.

Another Breakout Chart: XME

Credit Bubble in U.S. Stocks

Two other charts showing an extremely highly valued market here: According To These 3 Measures The Stock Market Is Now Literally Off The Charts

2018-01-19

Here Comes the Russia Rope-A-Dope; Confidence in US Media Will Collapse

The rumors in DC are that the entire Russia investigation is a fabrication made possible by FBI and DoJ, and possibly Obama administration officials re-purposing laws designed for stopping foreign terrorists to spy on their American political enemies. With the full collusion of sympathetic media who refused to investigate and instead acted as propaganda mouthpieces for the regime. It will be the greatest scandal in American history by a long-shot if true. Officials at the highest levels of government effectively made a coup attempt. This is how Hollywood portrays the American government at its most villainous in movies.

ZH: "Explosive", "Shocking" And "Alarming" FISA Memo Set To Rock DC, "End Mueller Investigation"
A source close to the matter tells Fox News that "the memo details the Intelligence Committee's oversight work for the FBI and Justice, including the controversy over unmasking and FISA surveillance." An educated guess by anyone who's been paying attention for the last year leads to the obvious conclusion that the report reveals extensive abuse of power and highly illegal collusion between the Obama administration, the FBI, the DOJ and the Clinton Campaign against Donald Trump and his team during and after the 2016 presidential election.
If this is confirmed, confidence in the U.S. media will collapse because the remaining people who trust the media will turn on it. Democrat turnout in the mid-term election could collapse if its shown that members of the Democrat Party are the real villains. Republicans would likely gain a lot seats in the mid-term elections as Democrat turnout falls and voters look to clean out the "deep state." President Trump will consolidate power and push forward with trade protectionism among other policy goals.

More broadly, periods of negative social mood need a scapegoat. If there's a bear market in stocks this year or next, if the economy goes into recession, President Trump is most likely to take the blame. If this story breaks around the same time, then it could blow economic woes off the front page. Without this scandal Trump might be Hoover. With it, he could end up the most powerful president since FDR.