Chinese Stocks; Shanghai Composite Fulfilling Rebound into April 2019… What Next?
Chinese Stocks; Shanghai Composite Fulfilling Rebound into April 2019… What Next?
04/29/19 INSIIDE Track: “The first month of the Natural Year (March 20/21 – April 19/20) – or Month of Aggression – produced multiple demonstrations of ‘aggression’ – including another synagogue attack in the US – on the final day of Passover.
The culmination of the Month of Aggression brought a new wave of terror attacks – this time in Sri Lanka, specifically targeted at Christians in houses of worship. While those attacks were horrific, another series of events – spread out over the Month of Aggression – perpetuated the steady drumbeat of aggressive moves evolving over the past decade (leading into the 80-Year Cycle of War in 2021).
In late-March, the US conducted a successful test of its ‘Ground-based Midcourse Defense system’ – developed to defend against ICBM’s in a nod to China’s growing development of a wide variety of land-based missiles. China was quick to warn against this development and highlight its potential ramifications.
China culminated the Month of Aggression with a test of a new hypersonic, anti-ship missile that is targeted to destroy the missile defense systems of US warships. (Keep the South China Sea on your radar over the next 2 – 3 years. And, remember it was exactly a year ago when China initiated war games in the Taiwan Strait on the Date of Aggression 2018.)
In the midst of that month-long period, renewed and heightened focus was placed on the growing superiority of China’s offensive missile force (part of the Rocket Force ‘branch’ of their military initiated by Xi Jinping in 2015). While the accuracy and precision of those Chinese missiles is not certain, the sheer number of them is the greatest concern.
As the US has been banned from developing intermediate-range missiles – a result of the INF Treaty with Russia – China has been developing all classes and categories of missiles at breakneck speed. The result is a growing disparity (to China’s favor) between the US & China’s arsenal of offensive missiles.
That has not gone unrecognized. In Feb. 2019, President Trump announced a US withdrawal (Aug. 2019) from the INF Treaty, blaming Russia’s cheating on the treaty while also citing China’s ~1,000 missiles of the variety that the US is banned from developing. So, the rhetoric is heating up… and turned increasingly more aggressive (with corresponding actions and tests) over the past month.
This corroborates discussions of long-term conflict cycles related to China. 2019 is a complete 40-Year Cycle from the last time China fought a war (1979) when it attacked and invaded Vietnam – as punishment for Vietnam’s attack against Cambodia – while threating the USSR not to come to Vietnam’s aid.
China amassed troops along its northern border with the Soviet Union in a massive display of force aimed at deterring the USSR from becoming involved (even through the Soviet Union had just signed a 25-year defense pact with Vietnam). While the primary conflict was short-lived, the resulting China/Vietnam conflicts played out over the ensuing decade.
2019 – 2021 is the latest phase of the 40 Year Cycle that has impacted China and related conflicts, including the First Sino-Japanese War in the 1890’s and the ensuing Boxer Rebellion (1899 – 1901) – targeted at Western colonial powers in China.
40 years later, in 1937 – 1945, China was in the Second Sino-Japanese War – in which Western powers would again play a key role. After a string of Japanese victories, China halted further Japanese gains in 1939 when that war effectively reached a stalemate. The Japanese attack on Pearl Harbor, and resulting US entry into WWII in 1941, turned China’s fortunes around and led to her ultimate ‘victory’
1899 – 1901 was a direct conflict between China and the West – resulting in a low point for China in 1901. 1939 – 1941 was another time of great conflict, with China’s prognosis turning brighter in 1941. 1979 triggered another period of conflict, when China flexed her might against the USSR and saw her fortunes take a turn for the better from 1981 forward.
Could 2019 – 2021 see renewed conflict between China and her neighbors, China and Western powers, or both?
Watch the South China Sea (as well as the East China Sea and Taiwan Strait).
[That 40-Year Cycle dates back before the 1899 – 1901 Boxer Rebellion, incorporating the events of 1859 – 1861, when the Second Opium War – between China and Western powers – overlapped the major turning point of the Taiping Rebellion. Once again, it was the result of European aid that allowed the ruling Qing Dynasty to defeat the Taiping Rebellion. 40 years earlier, in 1819 – 1820, the first US military ship visited China.]
October 2019 is the 70th Anniversary of the People’s Republic of China. The 70-Year Cycle, as described numerous times before, is what I consider the Cycle of Kings & Cycle of Governments.
As China’s economy continues to struggle, and the effects of the US/China Trade War are felt, Xi Jinping is increasingly backed into a corner. What is always the ‘go-to’ response in times of domestic struggles and economic challenges? Divert focus to an external enemy. Rally the masses around a perceived threat from the outside.
On April 19, 2019, China’s Shanghai Composite stock index set its highest daily close – after recovering about 75% of its 2018 decline. It has since sold off. At the same time [reserved for subscribers]…”
The Shanghai Composite fulfilled upside objectives – in time and price – when it peaked on April 19 – the Date of Aggression. That ushers in the next phase of US/China economic cycles – a time that could/should trigger some selling in equities.
On a broader scale, China cycles continue to focus on a larger-magnitude paradigm shift projected to intensify in 2019 – 2021 – when economic and trade battles should continue. Military battles are also an increasing possibility as the world nears 2021. Watch mid-2019 – mid-2020!
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.