Keep buying China/Hong Kong and America/the dollar; history stopped being a guide as of 2010. 

1. WHY THE CHINESE  FISCAL STIMULUS WILL WORK

a.  Keynes works in China because her population still is willing to build roads and dig ditches once the gov’t has introduced fiscal stimuli. Not so in our white collar, college-educated West!

b.  This subject of fiscal stimulus will be a hot topic at the forthcoming, annual Beidaihe beach party of China’s leadership. Given Xi’s powerful personality, one can be certain of more fiscal stimuli.

1. This is good for China’s growth and thus stock markets.

c.  Her Economic Time® is on the mend, so keep buying Chinese markets – something which we have been recommending our discretionary clients since this April. 

2.  WHY THE FED WON’T RAISE RATES IN SEPTEMBER

a.  In order to win elections, “it’s the economy, stupid” (Bill Clinton)

b.  In particular, it’s the economy of the past six months that decides voters’ preference.

1. With America’s Economic Clock® signaling “healthier”, the Democrats will do everything in order to get Hillary elected.

c.  Thus, they have nudged the Fed NOT to act until she has been elected this November.

3.  HOW DANGEROUS IT IS TO TALK OF STOCK AND BOND “OVER-VALUATIONS” IN THIS BRAVE NEW WORLD OF QUANTITATIVE EASING

a.  We all know that Central Banks have been disfiguring markets’ pricing mechanisms by way of Quantitative Easing since 2010 (which is when the Fed began QE)

b.  One result of such disfigurement is that bond prices are artificially high: Central Banks keep buying bonds!

1. Given such artificially high bond prices, we cannot compare these artificial bond prices to the realistic, i.e. market-driven bond prices of pre-2010.

c.  This means that today’s high bond – and stock prices reveal NOTHING of what “the market subconscious” actually thinks.

d.  Thus, you may as well keep buying bonds and stocks: we are in the brave new world of fake prices.  

4.  HOW MEANINGLESS CURRENT MARKET PASSIVITY IS

a.  Based on my point four just made: history no longer can be a guide!

b.  This means that using historical analogies upon which to base current market recommendations is flawed.

1. Put laconically: if you fight with swords, you will be shot.

c.  This means that comparing today’s market calmness with that of past such episodes is dangerously misleading: such pundits are using statistics as a drunk uses a lamppost: more for support than for illumination!

d.  Given that we are in the brave new world of market pricing, you may as well keep buying: the global Economic Time® is on the mend!