John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Elroy who wrote (18551)

12/29/2016 12:06:14 PM

From: John Pitera

2 Recommendations

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roguedolphin
The Ox

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H1 is cleaning out his longs for the first time this year..... from my post to him....JP

so you are aggressively reallocating your holdings going into year end.... none of this whimpy.... rebalancing the portfolio by reducing equities by 4% and increasing bond exposure by 4%.

This could well be a very prescient time to be doing what you are doing...... all the leadership sectors in the US have gone cold .... and China may give us global contagion in January for the second straight year.

China1. Rising government and corporate rates.

2. Rising money market rates.

3. The renminbi is under pressure as we approach 7 to the dollar.

4. China’s PPI is leading producer prices around the world.

5. Fiscal stimulus.

• Beijing is borrowing to fund stimulus projects.

• Central government spending.
Central government spending continues to move aggressively higher as a % of GDP.......a
very unhealthy sign in the macro picture

• Private investment is falling as the government fills in the hole.

Source: Credit Suisse

Source: @TomOrlik

6. Capital outflows accelerated in 2016.

Look at that 1 $Trillion dollars of Chinese FX reserves that have been burned up through supporting the currency / and the even larger amount fleeing the country.

Chinese Government officials.... are now saying the growing at less than 6% is OK........ what is the actual number 2% ---- zero % an actual contraction....... Jim Chanos, Kyle Bass and several others have been wagering on China to implode since 2010..... the longer it takes something to happen the bigger and nastier it typically is.

And Trump is fighting the last war with him looking to tax and restrict trade with China..... that was the name of the game in 2000--- 2005 and 2007. it May just crater Global growth in 2017.

• F/X Reserves