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Chinese ownership of U.S. Treasury bonds stood at
7.2% last October with total foreign ownership of Treasuries at 34.4%. "The
worst case would materialize if the largest holders decided to sell their
Treasury securities at the same time," writes Mike Patton at Forbes. Let’s talk about that. There are
several reasons that China might sell U.S. Treasuries; and make no mistake -
such an action could cause a big bond market correction, the likes of which we haven't seen
since 1994. [more...]
Global
equities saw their sharpest fall since the 2008 financial crisis on what's
being referred to as "Black Monday" - as an 8% rout in Chinese shares
sparked worldwide panic. This sudden market volatility comes as no surprise to
those who have read our latest book, DON'T
BANK ON IT! or any of our previous five books or ten white
papers on the subject in recent years. The U.S. stock market has been
"levitated" and "rigged" by the Fed's zero interest rate
policy (ZIRP) as "easy money enriched many stock market speculators in the
casino of Wall Street, which has gone up while the real business economy
wallowed or declined. The Fed has been a pusher, willing and able to give the
stock market its needed fix of easy money. [more...]
What's going on with China? For starters, China
devalued its currency recently. That alone should not cause a stock
market crash. But, for some investors, the devaluation signaled that
China's economic growth and economy might be slowing down. Because China
has such a large impact on the global economy, this action spurred fears that
the entire global economy might get hit and there might be a global economic
slowdown. The Shanghai Composite in China fell 8.5% on Monday - a
negative sign. That adds to concerns for investors. How does currency
devaluation impact other markets around the world? When China has to pay
more for goods and services, it has to cut back on goods and services; there is
less money in people's pockets, so-to-speak. If China, overall, buys less
actual goods and services, trade revenues to other countries will decline, thereby
impacting the global economy. [Go here for a complete analysis...]
China devalued the yuan this month - an action
which significantly affects worldwide companies that seek to sell their
products in China. A currency devaluation means that it will now be more
expensive for Chinese companies and citizens to purchase foreign goods. All
sudden economic and geopolitical changes cause stock market
volatility. It’s time to circle the wagons. My suggestion is
to move away from Dow-invested stock mutual funds, toward S&P 500 and
NASDAQ stock mutual funds. [more...]
Markets
reeled last week as China doubled down on its latest attack on America. Embroiled
in a currency war in effect that cost the U.S. GDP $430 billion in just the
last 12 months, China upped the ante and conducted their strongest attack on
America yet by breaking international law and performing the largest currency
devaluation in two decades – all in just two days. Economic reports for the
month of July 2015 revealed that China's exports were down by $10 billion. To counter that loss, China has illegally
interfered with foreign currency markets, artificially dumping the value of its
currency, (the Yuan). Already devalued
by nearly 40%, this latest currency manipulation make it nearly impossible for
American products to compete against artificially cheapened Chinese products. [more...]
Today
Social Security and its related benefit programs, Medicare and Medicaid, are
running short of money – and are in real trouble. Social Security Disability
Insurance (SSDI) is expected to run out of money in 2016. President Obama's administration relaxed its
qualifications, and SSDI beneficiaries increased by 50 percent, to more than 10
million. This is almost as many as have full-time jobs in all of manufacturing.
Social Security was supposed to keep Americans safe from old age poverty – but
Social Security, Medicaid and Medicare are rapidly running out of money. Its rising taxes on younger workers might
soon drive them into poverty and leave millions unable to retire. [more...]