Why Stocks will Sell off

2019年9月9日

Market setup is repeating 2018 sell-off. Global uncertainty hasn't subsided and has gotten worse. Corporate earnings have declined, and Q3 results won't look good. Despite all uncertainty, Equities are still an all-time high

Stable fixed income is nonexistence
- Investors are putting more money in Risky assets that offer higher yields than bonds
- Overall, all assets classes even Gold has become a risky assets

The trade war is now a Cold War B/N the US and China
- The corporate investment landscape has changed and will not and can not go back to pre-trade war era
- Confidence in long term Chinese investment in the US has been damaged forever

The US company's dream of expansion in China is now a distant dream at best
- Trump can not undo what he has started because the strategic long term trust B/N the US and China has been broken
- Trump thinks he can rewind the clock at the time of his choosing next year close to 2020 election to bag a big victory
- What Trump hasn't considered is that the fracturing the business trust B/N the two nations have created a permanent damage

The market is in denial because investors haven't grasped the economic landscape has changed forever
- The new global economy of weak growth and decoupled investments is here to stay
- More countries are trying to boost the domestic economy

China has already started to boost its domestic economy to compensate for the reduction in exports to the US
- US tech companies are hedging their bets moving their supply chain to other Asian countries
- Even an unlikely trade deal won't change the shift of supply chain outside China because companies cant undo their current decision
- US companies will have to look for expansion outside China