US/China Trade War Escalating; Cycles in Economy, Yuan & Shanghai Composite Focus on Late-2018 for Next Shift.
US/China Trade War Escalating; Cycles in Economy, Yuan & Shanghai Composite Focus on Late-2018 for Next Shift.
06/28/18 INSIIDE Track – “If nothing more, the 2010’s have highlighted a pivotal and momentous period in the ongoing East vs West battle. This struggle involves Europe (with Russia still struggling to maintain influence in the East) and the globe (with China continuing to rise to global power and influence as the US struggles to maintain its hegemony).
The difference is in how each player conducts their participation in this struggle. As I have enumerated many times before, China (and to a slightly lesser extent, Russia) have been preparing deliberately and methodically – beginning in 2013/2014 (BRIIC’s New Development Bank and Asian Infrastructure Investment Bank followed by several other key moves and ventures).
In contrast, at least since early-2017, the US has approached this competition from the exact opposite angle. One glaring paradox, in that approach, could ultimately be costly.
The Art of the Bluff
Let’s imagine two poker players sitting down for a few rounds of Texas Hold ‘em (or any other variation of poker). Before doing that, one player has done his (or her) homework and meticulously studied the other. In contrast, the other one says he doesn’t need to prep and he will go on his gut
Let’s imagine the one that shuns preparation wrote a book a few years ago and titled it ’The Art of the Bluff’. In that book, he revealed every tactic he uses for bluffing and even many of his own ’tells’. Basically, he made himself an open book.
If his opponent had any savvy, he would sit down and let the ’good gut’ player win a few hands and raise his confidence. That would also give the savvy player a chance to compare what he had read to what is unfolding in real time. Savvy would take his initial lumps, sometimes protesting and sometimes just quietly accepting defeat.
Savvy knows that the opening hands are just the beginning. He also knows he can use these opening hands to better position Good Gut for the real battles ahead. Each time Good Gut wins a hand, he would gloat and announce his victory, quickly scribbling the score on poster board and holding it aloft while simultaneously ‘clucking’ about it.
Each time, those ’clucks’ would reveal another ’tell’ and set Savvy up for ultimate victory. When the time is right, and only when the time is right (when Savvy has all his ducks in a row and Good Gut is at his most vulnerable financial and psychological state), would Savvy utilize all the tools at his disposal.
The Art of War
Savvy might also be a life-long student of Sun Tzu – a military strategist and philosopher – and The Art of War, his acclaimed book. If there were a concise way to sum up that philosophy, and the key to victory, it would be ’Know Your Opponent’. The following are just a few of Sun Tzu’s principles:
If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant.
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
Treat your men as you would your own beloved sons. And they will follow you into the deepest valley.
Be extremely subtle even to the point of formlessness. Be extremely mysterious even to the point of soundlessness. Thereby you can be the director of the opponent’s fate.
2019 – 2021
Let’s put aside this mythical poker game for a minute and get back to the topic at hand. A fierce struggle is going on for global leadership. Each key player has a different approach to what they believe will assure ultimate victory.
At least two of those leaders have pretty much assured themselves of a lengthy tenure governing their nations. They are both in the East. Most of the others, in the West, face uncertain futures and could be voted out of office within a few years.
So, which ones can afford to be patient and conduct their strategy methodically?
And which ones act with more haste and desperation – setting themselves up for ultimate defeat (even if preliminary battles are won)?
When Angela Merkel first prepared to meet President Trump, it was explained that she read his books, watched his interviews and studied his character as much as possible… to use to her benefit. Is it possible that Vladimir Putin and Xi Jinping have done the same?
If so, who is in the most advantageous position when this competition is viewed from a longer-term perspective? And who might just be waiting for the right opportunity to go ‘all in’?
Flashing Warning Signs
In recent weeks, it has been reported that Chinese fishing boats – as well as ‘land’-based sources – have been temporarily blinding US pilots with lasers, over the South China Sea. That region continues to be one of China’s primary foci, an area through which massive amounts of global commerce travel each day. China has the long view.
This laser flashing has also been occurring on the coast of East Africa – where China just completed a naval facility in Djibouti, a few miles from an existing US facility. They continue to compete.
War Cycles in 2021
As I have pointed out throughout the 2010’s, long-term War Cycles focus on 2021 (at least from the West’s perspective) – the latest phase of an 80-Year Cycle of War that dates back for centuries.
Major wars rarely begin out of nowhere. And rarely without a steady, often extended, escalation of tensions before reaching a breaking point. And they often surround some form of territorial dispute.
China, the US & the South China Sea fit into these criteria – with War Cycles continuing to focus on 2021 for the ultimate ‘flashpoint’. From the looks and sound of it, dozens of preliminary flash points – in Africa & the South China Sea – are now occurring.
Late-2018/early-2019 completes a major 40-Year Cycle from the start of China’s economic & geopolitical rise to power. Late-2018 – 2021 times a repeated 40-Year Cycle of China-involved wars. Late-2018 also ushers in a potentially momentous time in East vs. West competition. Could late-2018 usher in an intensification of these battles? ”
Late-2018 remains in focus as a pivotal time for Chinese equities, the Chinese currency (Yuan) and China/US relations, when decisive shifts are anticipated. China cycles continue to focus on a larger-magnitude paradigm shift projected to take hold in 2018 – 2021.
That follows the culmination (and transition) of longer-term cycles that reached a crescendo in 2013 – 2017 and ushered in this period of major transition. As stressed before, it portends intensifying economic and trade battles as this cycle plays out. Military battles are also an increasing possibility as we near 2021. Watch mid-2019 – mid-2020!
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.