Promises Promises

Rotation: CHINA! Rotation: Growth. Bitcoin: Liquidity Off-Ramp.

»CLUB/EDGE client post Tuesday, December 9th.

Rotation: CHINA!

As posted Monday under #trading-room-notes (UPGRADE TO PRO) and as presented pre-market live (UPGRADE TO PRO):

Rotation: CHINA!
As discussed last week, and highlighted in this video: Will China Move Markets Next?

This morning we awoke to: CHINA UNLEASHES STIMULUS BLITZ - via Bloomberg
Key measures include:

• Reserve-repo, RRR cut

• Mortgage rate cut for existing loans

• Boost lending to consumers, corporates

• Funding for brokers to buy stocks

• Bank loans to support buybacks

Via CNBC (emphasis of bolding/italics and CAPS all mine):

• China’s leaders on Monday PLEDGE “more proactive” fiscal measures and “moderately” looser monetary policy NEXT YEAR to boost domestic consumption

• Later this week, the Beijing administration is reportedly EXPECTED TO REVIEW economic performance and policy implementation in the current year, while SETTING PRIORITIES for the following one.

• WHILE SPECIFICS WILL NOT BE RELEASED UNTIL MARCH, it is widely expected that Beijing will keep its next year’s GDP growth target at “around 5%” — the same level that was set for the current year — if not slightly lower.

What is clear is that China wants to boost consumption, but what is not clear is exactly what/how much FISCAL STIMULUS they will actually announce let alone implement. Geoffrey is still of the opinion they don't have to! They are doing much better than Western media and analysts can see. Regardless, I still see this political market posturing as a clear case of "promises promises". It keeps hope alive for traders hoping for reason to support a stock market bid in Chinese ADRs and for investors hoping for a resumption of buying in global commodities.

On the former, stimulus by China would definitely help stocks move higher - as discussed in early October when we caught the 2-week wave with precision and then I warned the announced stimulus would not be enough to propel stocks "over the wall".

Now, at what point could this turn:

Fool me once, shame on you. Fool me twice, shame on me.

As for commodities catching a bid, it is a bounce on the hope for stimulus on the hope that China, as largest marginal buyer of many commodities in the world, would hopefully be turning the corner to hopefully drive stronger economic growth in support of their hope to boost domestic consumption.

So far, sounds like a lot of promises. I hope it works out.

China Surrounds Taiwan & Nvidia

On the same day that China announced all these nice measures to encourage domestic consumption before Trump's tariffs which will hurt China's exporters, it was reported their militarily had 90 ships around Taiwan AND was investigating NVDA for anti-trust for monopolistic practices.

Curious timing. I hope it's nothing serious.
(pregnant pause)

I also think that the market is going to ignore everything short of a plague or war before getting marked up; meaning SMH 272.46 and NVDA 160 sometime in January.

Records Are Meant To Be Broken

I already warned last week about China’s Politburo Dec 10-11th. I also warned that the Chinese ADRs were setting up last week > 10W and ready to scoop higher. We just needed a trigger. So now they have to get/stay above "The Wall".

But…