Stocks in China have just taken a beating, one of the largest declines in recent memory; exactly as this author predicted at the first of 2018. Is it over or is there more to come and China and the U.S. have begun the “Trump Tariff War”.
Ad readers may recall or advice last December was “Take profits and seek selling opportunities”. We went out on a limb using our economic model to forecast to, “expect and overall down market well into March of 2018”.
All that has come to pass, so where now and what next?
Here is my prediction on that war; after posturing China and the U.S. will set down and long, drawn out, bargaining sessions and come up with new tariffs that will work for both countries.
Keep in mind President Trump is a practical businessman that made his fortune negotiating deals, bargaining. His best-selling book, “The Art of the Deal” says it all.
This is not the end of economic relations with the U.S., it is the start of a new era.
In this new era, you need to keep in mind stocks in China don’t always go down…they can rally…and that’s just what they are going to do now!
The above chart shows my cycle forecast for the Shanghai Index. The picture is clear; prices rally into late June.
Why will they rally? The next chart answers that questions as here I show the leading relationship between stocks in China and interest rates...the blue line. Rates have done a very good job of leading the way for stocks as a quick glance shows.
The forecast here is for a rally into at least June so cycles are in phase with interest rates. Let the good times roll.