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Forget the Fed we need to be paying attention to the PBOC

May 21, 2015

With the Fed minutes out yesterday that only further confirmed that there will be no rate hike in June Chris Temple thinks we need to shift our focus to the PBOC. The PBOC is continuing/expanding its QE program… where does this leave China and how will it effect other markets?

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Discussion
30 Comments
      May 21, 2015 21:06 AM

      Nice to have some new…NEWS………..I like the numbers. Thanks

      May 21, 2015 21:36 AM

      Good post Agatha. Thanks!

    May 21, 2015 21:19 AM

    Chris the only one’s pushing a positive US economy is the Feds, they have backed themselves into a corner like a wedge on a chart sooner or later they can’t or can continue the positive spin, continue it and they must hike rates!

    The reason there was no big reaction off the minutes is because the feds have told the market its data dependent on any rate hikes so with no strong wording hawkish or dovish the markets focus back on economic data.

    Is it just me or is this rate hike situation completely nuts, emergency low interest rates have been in place for 5-6 years, so where’s the fire? The Dow is 180% higher off the 09 lows. All this fuss, all this delay on raising rates a mere 1/4% the feds should be completely ignored as then spin economic recovery yet they hold back a miniscule rate hike, what a bad joke

    Reminds me of Benny’s Green Shoots, remember that fed spin, seeing growth then boom, oh no growth lets add more QE

    May 21, 2015 21:24 AM

    Chris you speak of the “people” will eventually turn negative towards money printing, its not the “people” who have moved the Dow 180%+ off its 2009 lows, its the HFT systems and the hedgies, these guys are momentum traders not fundamentalists and added liquidity continues that trade.

    The Dow these past 6 years with 180%+ returns keeps any investor well ahead of any street level inflation

    May 21, 2015 21:55 AM

    Thanks Agatha.

    May 21, 2015 21:31 AM

    Some of you here will know of the advent of China opening up military bases outside its own borders. This is still a new trend and its in its infancy. There are plans for one in Namibia and a naval base is already under construction in the Indian Ocean island of Seychelles.

    The latest plan that is under negotiation (already inked?) is a strategically place base in Djibouti which overlooks the Bab Al-Mandeb Straits….the same straits that separate Yemen from the Horn of Africa and the same Straits through which pass the majority of cargo including liquid fuels from the Middle East and Asia onward to ports in Europe.

    This is a key pinchpoint for access to the Suez Canal for those not familiar with geography and so this is a very big story. Not just because the Chinese are seeking to extend their influence and position a naval base at such a critical place but because it possibly also speaks of their intentions to dominate Africa itself.

    Ordinarily the US and China would not both host bases within the same nation. That makes sense on a lot of levels. Most who read this would be shocked for example if China opened a base in Greece, Japan or Italy.

    However in this case the Djibouti government is playing to both superpowers by allowing both to coexist on its territory……And where Africa is concerned the US presence is very thin on the ground.

    But what does it really mean? I will leave that to the global strategists to work out.

    China negotiating Horn of Africa military base: Djibouti president — May 2015
    http://news.yahoo.com/china-negotiating-horn-africa-military-djibouti-president-071459015.html

      May 21, 2015 21:35 AM
        May 21, 2015 21:04 AM

        Thanks Gabriel. First I heard of it. This is getting interesting. I guess once there have been enough ghost cities and high speed rails built in the Chinese mainland the building will just have to continue elsewhere to keep demand up for all that steel, ores and cement that is currently falling in price. The Ozzies should be thrilled if it keeps the mines open.

      May 21, 2015 21:29 PM

      China open a base in Japan. China and Japan do not even like each other to put it mildly.

        May 21, 2015 21:50 PM

        You knew I was referring to what would never happen I presume.

          May 21, 2015 21:02 PM

          What I was getting at was that China and the US do not ever BOTH have military bases or naval facilities in the same countries just as Russia does not have a presence in any country where the US is already established. Since Africa has long been ignored by America it just makes sense that China would seek to establish itself here in those countries that do not already have any other presence. At one time, for example, Ethiopia was Communist and supported a strong Soviet presence but these days instead hosts an airport used by the US for regional terrorist tracking via drones. The Russians have long since left. Now to make it more interesting though, China currently has a massive investment thrust taking place in Ethiopia (which incidentally is next door to Djibouti) and is financing dam building, highways, a new railway to Djibouti and a multitude of other infrastructure builds. They also financed the headquarters of the African Union which is located in Addis Ababa. So the negotiations to establish a naval military facility in Djibouti where US troops are already stationed is interesting to say the least and has reportedly angered Washington who were a little dumbstruck that such a basic rule of regional influence in regards to who has bases where has been broken. It would be a little like Russia setting up camp next to Guantonamo Bay. What is clear to me is that the US just got the elbow in East Africa in the Superpower business. Kind of a “what are you going to do about it” gesture. And my conclusion is that China is effectively staking out the continent as its own.

          Just a theory of course.

    May 21, 2015 21:13 AM

    BUY REAL STAY REAL BY REAL BUY GOLD AND REAL THINKS !

    May 21, 2015 21:11 PM

    Chris your SRPT stock since its early buy signal in Dec with todays sell signal has produced 34% gains until the early May buy signal off $13 to $24 giving anyone trading this company 134% gains using I chart indicator, perhaps you find it useful?

    http://stockcharts.com/h-sc/ui?s=SRPT&p=D&yr=0&mn=5&dy=10&id=p27579778364&listNum=1&a=409196219

      May 21, 2015 21:19 PM

      sorry the 34% gains is from buying and selling off the indicator since Dec, of course the indicator had buyers long early May at $13 giving one the full advantage of the big recent pop and has now signalled taking profits as it rolls over, chart explains in all

    May 21, 2015 21:14 PM

    Here is a great article from Avi Gilburt on why Peter Schiff is still wrong about gold.

    Why Peter Schiff is still wrong about gold
    http://www.marketwatch.com/story/why-peter-schiff-is-still-wrong-about-gold-for-now-2015-05-21

      May 21, 2015 21:00 PM

      Avi is spot on written like a true chart technician Peter Shitt is full of opinion and hot air, how about Peter getting anything right for awhile before anyone cares what he thinks as he is batting 0

    May 21, 2015 21:19 PM

    I think it’s funny when the US gets mad about China patrolling open water on the South CHINA Sea. After all it is the South CHINA Sea not the South United State Sea. Just saying. We are really going to get our panties in a bunch when they start cruising around the US.

      May 21, 2015 21:38 PM

      Seems the big trend lately is to build bases on open ocean islands. The uninhabited ones are all up for grans and the the South and East China Seas have plenty to choose from. It all has to do with the Law of the Seas and the 200 mile Economic Exclusion Zone that entitles the builder to control a massive swath of sea around its base. The Japanese are doing it busily to protect their claims and China is now in the game too. I would seriously NOT want to live on an Asian / Pacific Island these days since they look like they will all be militarized in the end.

        May 21, 2015 21:38 PM

        Asia is a beautiful place to live in so many ways its hard to describe and that’s why I bought my land there and built my stunning mansion.

        There is not a damn thing you could offer me to get me return that militarized over taxed over regulated hell hole known as the US.

        Sure the Chinese thugs are no nicer than the thugs from the US or the thugs from Russia and a hundred other a$$wipe thug nations that can’t be trusted. But its no where as bad as you make it out to be.

        Now if you want to talk about an utter straight up arm pit of the world to live in that China might want as its own someday that would be where you live my friend, Africa.

        Anyway Bird as I have said many times……..there is no panacea anywhere.

        V

    May 21, 2015 21:47 PM

    By the way, does anyone else here think that the Amtrak crash is telling us a massive railway infrastructure renewal program to rival the highway projects of the Great Depression is probably on its way?

    Like right about the time the economy implodes in a fireball of defaults and crashes in property, bonds and stocks? Just curious.

      May 21, 2015 21:03 PM

      Bird, you know you don’t believe the economy will crash, the bankers will rescue just before that frightful moment, like they did in 2008, n’est pas?

        May 21, 2015 21:43 PM

        You must think of me as quite an optimist! Kind of funny because I probably have the worst outlook of anyone you have ever met where the future of Toronto and Vancouver Real estate is ultimately heading. I mean, what a dog’s breakfast of speculative fever and greed that is going to catch almost everyone with their pants on fire. The amazing part though is how those two markets (amongst others in Canada) prove the old adage that markets can stay irrational for longer than most believe possible. There is just nothing normal about R/E in your neck of the woods though with so many thousands of new Condo projects still booked while the globe heads into a sovereign debt crisis and assets of all kinds bubble and perk. Prices have run so far ahead of inflation it is now getting to the point of stupidity and yet the buyers keep ponying up the downs for a shot at even bigger Greater Fools coming in to take it off their hands. It is just INSANE!!! But Canadians being such a nice bunch of innocent folks simply don’t believe the rest of the world is on a different rhythm and they are soon to be handed a platter of sh*t schnitzel for breakfast when Europe blows a fuse and the real action begins. All in good time, DT….all in good time. Hope you locked in low rates or are getting ready to sell at the top because I have a sneaking idea the top has almost arrived.

          May 21, 2015 21:31 PM

          Bird, I have never liked these ridiculous real estate prices and I have been telling people for a long time that it can only end very badly. Most people learn by feeling the pain and not by reasoning, such a shame. DT

            May 21, 2015 21:28 PM

            I will bet of all the people you talked to there was at most one or two who even showed the slightest interest. I had the same experience and the problem was that even though I was right (on a chart, technical, historical and trend basis) I was completely wrong based on bare-ass facts.

            Ten years later and prices are still rising. What can you do, man?

            I was saying “the sky is falling” even as almost everyone I knew was speculating like crazy on flips and Reno’s which I refused to participate in. And every time I spoke they would just point at the numbers and tell me I was wrong.

            And I was. So predicting real estate pricing is obviously not my bag. But in all those years the averages had diverged from base-line inflation trend so severely it is difficult to imagine a soft landing when it finally comes to an end.

            We shall see. I won’t make any timing predictions though. Better I stick to gold, silver and commodities where I have a decent hope of being right from time to time!

    May 21, 2015 21:06 PM
      May 21, 2015 21:11 PM

      HA HA HA ! Birdman !

        May 21, 2015 21:29 PM

        Seriously Franky, those guys are part of the 1%.

    May 22, 2015 22:09 AM

    Ukraine,Libya,Iraq and Afghanistan.Roll out the printing press and airlift the bullion ,priceless antiquities/artifacts and opium out.
    Strolling through the gold vaults or pondering one of her 6,600 million acres of land comes to mind.Perhaps the Roth,Rock and Queen E can invite the bikers over for a spot of tea?