The Truth about China and the First Trades of 2016

Markets have opened the New Year with a resounding thud! Pundits are attributing this to trouble coming out of China, whose currency is again being devalued by the authorities. That’s not quite true.

sandp-chartReaders will remember that U.S. stocks fell sharply last August when China unexpectedly began devaluing the yuan. 2016 has started off with another round of devaluations that sent Chinese stocks sharply lower – in fact, the Shanghai Index opened the year down 7%. This sent U.S. stocks down sharply on the first trading day of the year. After a brief reprieve on the second trading day, both markets headed lower again on Wednesday and Thursday as China leads the way down.

The truth is, China is just a symptom of a larger problem, one I’ve been talking about non-stop, and we’re starting to feel the full-blown disease.

The mainstream financial media is in denial about China’s economy. Talk about how China is going to grow at 6 or 7% is ridiculous. The country’s economy is probably shrinking.

Sooner or later markets get religion and sins get punished. That time is now. That means investors should get religion before they end up meeting the Devil in person.

Keep reading.

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Into the Valley of Death Rode the 600…

“Theirs not to reason why
Theirs but to do and die.
Into the Valley of Death
Rode the six hundred.”
~ Alfred Lord Tennyson, The Charge of the Light Brigade

In a fitting end to what was – at least for those investors who aren’t readers of Sure Money – a disastrous 2015, The Wall Street Journal ran two articles on its “Opinion” page on the last day of the year that epitomize everything that is wrong with financial journalism in the Age of Obama.

The first article, written by Burton G. Malkiel, author of the famous investment book A Random Walk Down Wall Street, is an example of the type of unimaginative consensus thinking that led investors to lose huge amounts of money last year investing in energy master limited partnerships, big bond funds, and other dangerous areas.

The second, written by former Vice Chairman of the ever-clueless Federal Reserve Alan Blinder, praised the recent, disastrous budget deal reached by Congress as an example of bipartisan consensus when it was really a cowardly sell-out to special interests and a spending orgy that hastens the nation’s pathway to bankruptcy.

In short, both articles were an insult to independent thinking that demonstrate how far the mighty Wall Street Journal has fallen under the ownership of Rupert Murdoch.

Here’s why these “experts” are so far off the mark…

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