Macro Digest: Chinese Technology stocks breaks down.....bad omen ? Meanwhile TSLA bond collaps the beginning of the end?

 

Four charts to illustrate the "pain" of the market:

 

The macro backdrop story is this:

 

The CREDIT CAKE – the credit impulse + nominal debt issuance is collapsing – since the GFC the world monetary growth (main debt) has risen more than nominal growth ie: World Monetary Growth / World Nominal Growth > 1 (8-10%/4-6%) – now however world monetary growth is 2-2.5% against 5-6% world growth meaning significantly below 1!!!! We have, Chris Dembik, specially, again-and-again documented the collapse in the credit impulse (the change of change in credit) which leads world by 9-12 monthøs-

 

Furthermore Federal Reserve insists on "normalization" of policy rates which means rest-of-world, (read: Emerging Markets) is getting less credit at a much higher prices, meanwhile in the US – this liquidity short-fall is neutralized by tax reform, which has meant US companies has taken money home increasing the liquidity for on-shore US markets, add to this the most aggressive buy-back, dividend and M&A in history to the tune of 1.200 billions-ish and you have reason US market has been and could outperform short-term………

 

Now…..

 

IS contagion happening? Too early to tell, but with today's likely announce of additional 200 billion worth of tariffs and the market break-down shown below, the risk is rising..

 

Action….

 

We are still net looking to buy Emerging Market risk, but post-today's announcement. Failure to take out recent EM lows will make us dip our toes – failure and we will wait..

 

Next two days of trading is critical for overall RISK On / Risk Off – we will keep you posted…

 

 

Comment: Tencent is the most widely owned stocks and the biggest weight in Emerging Market funds globally… Trend been down since March but now it's broken recent low plus low-end of channel….

 

 

 

Comment: Alibaba Earnings were ok – but stock just broke lower – Omen of bad things to come?

 

 

 

In US Social Media + TSLA having a tough time – TSLA Junk Bond now trading @ 8% and default risk is rising fast….. Elon Musk personal life is increasingly becoming a risk to the company itself….. Musk + Trump show is not pretty and I don't see any good exits/solutions for either of them..

 

 

 

 

Finally, India and its currency is spinning out of control – the high energy prices is increasing its deficit & FX

 

 

 

This email may contain confidential and/or privileged information. If you are not the intended recipient - or have received this email by mistake - please notify the sender immediately and destroy the email. Any unauthorised copying, disclosure and/or distribution of the contents and/or attachments in this email is strictly prohibited.

Email transmission security and error-free delivery cannot be guaranteed as information could be intercepted, corrupted, destroyed, delayed, incomplete and/or contain malware (virus). The sender of this email, therefore, does not accept liability for any errors and/or omissions in the contents of this message, which may arise as a result of email transmission.