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Sunday, March 3, 2024

Monday Market Mayhem – Bombs Fly, Markets Fly – Why Not?

America F*ck Yeah!  

From Ferguson to Fallujah, America has spent the weekend kicking ass and taking names with the National Guard rushing in to put down the 99% in Missouri while in Mosul, we're bombing the Middle East's 99% off the dams and picking off the stragglers with high-tech drones – F*ck Yeah!  

That, combined with what we can politely call a non-escalation of tensions in the Ukraine has sent the price of oil tumbling by 0.75 this morning, good for $750 per contract from our Friday short (and now we're long at $94 on /CLV4 for October) – F*ck Yeah!  Index futures were up slightly in Asia but gathered steam in Europe and markets there are coming out of lunch up over 1% – even as the cease-fire in Gaza is about to end.  

Meanwhile, over in Hong Kong, we got a powerful lesson in numbers as the 1.3Bn population of China is able to overwhelm that Island's 7M people (0.5% of China's population) at will and that will was exercised this weekend as China staged "Pro-Beijing" rallies that protested the "Occupy Central" rallies the bottom 99% of Hong Kong had been staging.   Can anti-democracy rallies be far behind?  

The anti-Occupy Central campaign's focus on the impact of civil disobedience has appealed to the pragmatism of many Hong Kong people. While many support democracy, they also just want to live their lives and go to work unimpeded.  "We can't be optimistic at all—the pro-Beijing camp will control the entire list of candidates," said Joseph Cheng, a political-science professor and convener of the Alliance for True Democracy, a coalition of democratic parties supporting Occupy Central.

In short, while China did promise to give Hong Kong the right to vote – they never said they wouldn't stuff the ballot boxes or put up candidates that were nothing more than two different flavors of the same puppets.  "If we are buying fruit, don't give us three rotten oranges to choose from," one of the activists said.  Oh wait, that might have been our own election coverage – it's so hard to keep these totalitarian regimes straight

Still it's VICTORY for the top 1% as the status quo is being enforced in all corners of the World and that is good for the markets, who love it when the people we put in power are able to use that power to throttle the competion – it's so much easier than when we have to run out and bribe a whole new set of people!  

When the top 1% and their Puppet Governments win, the markets are happy and this is also fantastic for our Stock of the Decade, TASR, who have been having a Hell of a week, popping $1 as the need for riot control gear grows in America and abroad every day.  In fact, just last Thursday we decided to sell 10 more of the 2016 $15 puts for $4.60 in our Income Portfolio (wheree we have a double position) and we re-picked our play in the Long-Term Portfolio in our Live Member Chat Room.  

That worked out very well as the stock gapped higher the next day.  Perhaps it was BECAUSE we made the call (since we are now so influential!) or perhaps it's just that other analysts are catching up to our take on TASR's growth potential given the escalation of civil unrest right here in our own country – something we have long considered inevitable as the wealth gap widens to levels not even matched in the Great Depression. 

FXI WEEKLYSpeaking of the Great Depression, our Chinese Masters may be great at oppressing the masses but, so far, they haven't been able to force them to buy houses – even with MASSIVE stiumulus measures that are being thrown at the tottering real estate market.  

Chinese Home Sales fell 28% in July as tight mortgage lending outweighed efforts by local governments to ease property curbs as prices and demand weakened.  Chinese cities began relaxing local property restrictions in June amid sluggish sales and as an oversupply in second- and third-tier cities drove prices lower. Thirty-six Chinese cities eased their policies as of the end of last week in an effort to re-inflate the bubble.  

According to Bloomberg, Home sales by area fell 9.4 percent in the January-to-July period from last year to 495.9 million square meters, the data showed. The value of property sales including office buildings and retail space declined by 8.2 percent to 3.63 trillion yuan from a year ago.  These figures, on their own could spell disaster but, AT THE SAME TIME, Chinese Banks' Loan-Loss Reserves have fallen to the the lowest levels in 3 years.  

We shorted India last week (EPI) and now FXI has got my mouth watering as a potentially good short.  I'd feel better about taking up a short on FXI at $45, not $42 but the Jan $42/38 bear put spread is just $1.80 on the $4 spread and that makes it very interesting as it pays 122% on a less than 10% decline in the Chinese markets – a nice way to hedge your bullish China bets!  



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