War Between the U.S. & China will Destroy World Economy

 War Between the U.S. & China will Destroy World Economy

US-China War would be like Disaster on Steroids for the World

Before we continue, we would like to state that we are do not view Are America and China Destined for War?individuals from China in a negative light. In fact, we have many good Chinese friends and associates. The same applies to any religion. For example, Islam has been the centre of many controversies, and yes there are many dangerous radical Muslims that we believe should be punished brutally with no questions asked for the atrocious offences they have committed.

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However, we do not view every Muslim through a negative lens as we have witnessed firsthand how many Muslims are against this form of Islam and we have also seen many Muslims helping non-Muslims. Bear in mind that we take the observers perspective and it’s based on observing the trend and not going with our personal feelings. Our views like anyone else’s are worthless for when you get personal you let emotions do the talking.

Thus what we are about to state is based on a potential trend change. This trend is not in place yet but it is gathering momentum, and we are extremely close to an inflexion point.   Until it does, what we are discussing below has to be viewed as a possibility and not a certainty. Please keep this firmly in mind before you proceed to read the rest of the material provided.

In the past, we continuously focussed on the economic growth of China and how it was destined to be a powerhouse. We never bothered to discuss the methods it chose to achieve its objectives as the trend was in its favour. In other words, if we decided to focus on this, it would allow our personal biases to get in the way, and that would cloud our vision. The result would be a faulty analysis of the situation.  Remember this no matter how much you want to fight it; you cannot fight a trend in motion. It is easier to stop a speeding train than a trend in motion.

Our Asian edge index has issued several minor negative divergence signals and could flash a major one shortly.  This index should have been trending upwards in conjunction with the Chinese markets, but it has not done so; several times it pulled back while the markets trended higher.

A Potential Trend Change is in the works; threat of Conflict with China increasing

We do not waste time focussing on an issue unless a trend change is in the works or close at hand. This is why you hardly heard any commentary from us until 2015 about the immigrant problem in Europe. The trend was not in favour of Europeans taking a stance. It is for the same reason we did not focus on why Gold should soar to the moon and have called out all those went out of their way after 2011 to state Gold was ready to surge to new highs.

If one examined just the fundamental data and technical data, there were an infinite number of reasons as to why Gold should have surged to new highs in 2012, 2013, etc.  All those reasons were not even worth the paper they were printed on and instead of surging to the moon, Gold dropped, and the Dollar took off as we predicted and the rest is history as they say.

The same holds true for China; we did not cover issues as to how China rose to power, which for the most part was based on the fact that it provided cheap labour and then stole reams of data and used that data to mass produce products at a discounted price. As it did not have to spend any money on research, it was able to produce top phones by combining features from Apple and Samsung and selling the phones for half the price.

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It did the same with its 4th generation planes which one can see are almost copycat versions of American fighter Jets and so on.  We did not focus on this because it was useless data then. Now we have a potential trend change and if the trend change occurs then Chinas economy might be in for a massive slow down. In general property prices in Asia have risen such that houses in America are cheap in comparison to buying a home in many of these countries. The Chinese real estate market is still trading at lofty levels and could face a massive correction if this trend comes to fruition. The speed at which this change is taking place is what makes us feel that there is a 90% chance that the trend will change.

Now please don’t come out and state the following “Oh but you guys US-China War would be like Disaster on Steroids for the World said China was a great long term play”, for we have always stated that any forecast we make is based on the trend.  We will never go against the trend, the only time we are willing to take a risk is when the trend is neutral, and there is a pretty decent chance of trend change taking place.

However, even then we will warn subscribers that this is a riskier trade, and we will only take a small position. Having said that,  China will remain a good play from a long-term perspective, but why focus on good only if we have the option to deal with better. We are not fortune tellers but trend players, and there is a vast difference between the two. One focuses on reality the other focuses on illusory forces.

Having said that,  China will remain a good play from a long-term perspective, but why focus on good only if we have the option to deal with better. We are not fortune tellers but trend players, and there is a vast difference between the two. One focuses on reality the other focuses on illusory forces.

How would a war between the US and China play out?

The Obama administration pushed Russia and China into each other’s arms.  While Russians do not trust Americans, they are just as wary of the Chinese. Russians in general only trust like minded minds and to understand a Russian you need to spend time with them. Some of the things they do appear to be based on twisted logic but that is a topic for another day. Russians have become extremely patriotic after Putin took over the reins of power and there are very few individuals in the world that can take on as much pain for prolonged period without breaking down.

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The perception (and remember the truth does not matter when it comes to perception. Truth and lies are all based on perceptions) in Russia is that Chinese products are inferior and that everything they make is copied from someone else. The fact that Nostradamus stated that China would take vast swaths of Russia also does not help. Presently there is a silent invasion taking place on the border of China and Russia; there are some towns in Russia that are predominantly Chinese, but this is a story for another day.

Is a Trump-Putin Alliance against China Possible?

Is a Trump-Putin Alliance against China Possible?

Trump is cosying up to Russia for one reason only; Trump understands that if he is going to take on China, he needs an ally. Putin it appears might be willing to partner up with America for certain concessions and in the end, despite their differences; Russians have a lot in common with Americans.

For one, both Trump and Putin are interested in destroying terrorists, and both are against radical Muslims.  Trump also does not view NATO in a favourable light, and he has given Ukraine the Cold shoulder. He is also not interested in trying to be Head Honcho in the Middle East anymore.  There are many areas that Trump and Putin could work unite and work on.

Putin it appears might be willing to partner up with America for certain concessions and in the end, despite their differences; Russians have a lot in common with Americans. For one, both Trump and Putin are interested in destroying terrorists, and both are against radical Muslims.  Trump also does not view NATO in a favourable light, and he has given Ukraine the Cold shoulder. He is also not interested in trying to be Head Honcho in the Middle East anymore.  There are many areas that Trump and Putin could work unite and work on.

For one, both Trump and Putin are interested in destroying terrorists, and both are against radical Muslims.  Trump also does not view NATO in a favourable light, and he has given Ukraine the Cold shoulder. He is also not interested in trying to be Head Honcho in the Middle East anymore.  There are many areas that Trump and Putin could work unite and work on.

People will say but what of the massive deals China has signed with Russia. Think a little deeper and focus on the right premise. Who do you think is the master, the one who controls the asset or the one that has the money? Russia is blessed with a boatload of natural resources, and there will be resource war in the future. Russia is also a reliable partner when they sign a deal they live up to it even though they might have grievances with you in other areas.  Thus China needs Russia’s energy more than Russia needs China’s money. Never forget that Russians are advanced Chess players.

Putin is one of the most talented leaders regarding the broad range of skills he posses if not the most talented leader in the world today. Whether you like him or not is irrelevant. Therefore you need to understand the way the Russians think and work before you start to draw conclusions. If a Russian likes you (and it is not easy to get them to like you because like is based on a trust factor), they will fight to the death for you and vice versa. It is also very hard to tell how much you can push a Russian they do not display their limits openly, so it is easy for an outsider to misjudge as was the case with the Obama administration’s forage into Syria. However, when the Russian bear gets angry, it will hunt you down till it takes you out.

Russia is also a reliable partner when they sign a deal they live up to it even though they might have grievances with you in other areas.  Thus China needs Russia’s energy more than Russia needs China’s money. Never forget that Russians are advanced Chess players. Putin is one of the most talented leaders regarding the broad range of skills he posses if not the most talented leader in the world today. Whether you like him or not is irrelevant.

Therefore you need to understand the way the Russians think and work before you start to draw conclusions. If a Russian likes you (and it is not easy to get them to like you because like is based on a trust factor), they will fight to the death for you and vice versa. It is also very hard to tell how much you can push a Russian they do not display their limits openly, so it is easy for an outsider to misjudge as was the case with the Obama administration’s forage into Syria. However, when the Russian bear gets angry, it will hunt you down till it takes you out.

If a Russian likes you (and it is not easy to get them to like you because like is based on a trust factor), they will fight to the death for you and vice versa. It is also very hard to tell how much you can push a Russian they do not display their limits openly, so it is easy for an outsider to misjudge as was the case with the Obama administration’s forage into Syria. However, when the Russian bear gets angry, it will hunt you down till it takes you out.

Trump could offer to drop the sanctions against Russia which for the most part are politically based (as Putin mopped the floor with Obama) in return for Russia’s unofficial support. Trump understands that Putin will not take a public stance against China for America has tricked Russia many times. More importantly, there is no need for Russia to do so, Russia could still live to its agreements with China and indirectly help Trump in confronting China. I

In the long run, Russia understands that there will be a hot war with China for Russia captured land from China during the Russia-Sino war and it is inevitable for any nation that rises to superpower status to push for more. It is not a new phenomenon; the Brits did it and before that the French and so on. Within 8-12 years if China is not dealt with it will have the most formidable army and economy in the world?

The first part of the deal is Russia; then Trump will work with Japan and use the grievances Japan has with China and vice versa to build another containment force.  India will probably ask to Join this force if Russia and Japan are onboard. Other nations that will join quickly once an alliance between Russia and the US are formed are South Korea, Philippines, Taiwan, Singapore, etc..  Another wild card is Vietnam- they could allow America to build bases there.

Chinese Communist party states US-China War would be disaster for the world

Chinese Communist party states US-China War would be a disaster for the world; for whom exactly?

The above illustrates how America has surrounded China with bases; it is estimated that 400 bases in the Pacific region could be called into action if needed. While China is strong, it is still no match for the US, and if Trump forms an alliance with Russia, then China will lose a war if it starts one. Getting Japan aboard is easy but getting Russia to join is not going to be such an easy task.

The key to all of this is Russia and Putin know this, but at the same time, he also understands that if China becomes too strong, Russia will fade into the cobwebs of time and that is not something he wants for Russia. Thus while he will negotiate for a great deal, he also has a lot to gain from containing China. We are not talking about destroying China but containing it.  Moreover, as we stated from a trend perspective, this will be good for the local population as it will push the government to be nicer to it all its citizens and not just a select few.

Just to be clear whether China is contained or not is of really no importance from an observer’s perspective for either way there will be a trend in motion that we can use to our advantage. What we are now talking about is the potential for a new trend based on the perceptions of the current administration, the Russians and the Japanese governments.

Trump could sweeten the deal by offering to get out of Russia’s backyard and allow them to be the top dog in that area. Russia has no desire to attack other nations, they just want to be in charge of their backyard, and the same applies to every nation.  This would allow Russia to expand its circle of influence. At present Russia’s influence over the World is a slither of what the USSR commanded, while China’s has risen from 1% to over 30% and Russia’s has dropped from a high of nearly 40% when it was known as the USSR to below 2%.

Putin and Russians, in general, would love to have some role in the world and Russians are very proud, so this provides Trump with a chance to offer Putin the opportunity to show the World that Russia is still a power to be reckoned with. Trump is a business man, and there is a good chance he could offer a deal that’s too good for Putin to resist.

Trump is dead serious about engaging China, and the US has a huge number of bases in Asia that were silently being built to address the China threat.  If the US hopes to maintain the US dollar as the World’s reserve currency and their superpower status, they have about twelve years to stop China; after that, it is game over.

Now let’s talk about perceptions; whether they are true or not matters not for these are the general opinions individuals from any nations have about China.

China rise has come at Europe and America’s Expense

China has risen to power by taking Jobs from the US and the West, by stealing top notch technology without spending a cent in research and then creating products and selling them to the world. Russia also hacks the US but when was the last time you saw Russia selling mass made products with data they stole. China has been able to rise at such a rapid pace because it mostly took what it needed, mass produced it and then sold it to the rest of the world for a huge discount. It was a win-win situation.  Trump has been attacking China from the get-go, he has been more or less silent on Russia.

We have a massive chess game in progress right now, and Trump needs Russia to win this game. The smart route for China to take would be to back down on a military basis and use these resources to improve the local economy thereby making them less dependent on the world. However, the military brass has become too used to dealing with a weak West and a weak America. Instead of backing down they are more likely to rise to the challenge and plough, even more, money into the military war machine. This will be their Achilles heel; China is not in a position to challenge America in a hot War at least not yet.  There is another option for China; we will discuss it at the very end.

Trump has been attacking China from the get-go, he has been more or less silent on Russia.  We have a massive chess game in progress right now, and Trump needs Russia to win this game. The smart route for China to take would be to back down on a military basis and use these resources to improve the local economy thereby making them less dependent on the world.

However, the military brass has become too used to dealing with a weak West and a weak America. Instead of backing down they are more likely to rise to the challenge and plough, even more, money into the military war machine. This will be their Achilles heel; China is not in a position to challenge America in a hot War at least not yet.  There is another option for China; we will discuss it at the very end.

The coming US and China war lead by Trump

If Trump starts to impose tariffs on goods made in China and goes after China for intellectual property infringements, then we can safely assume that a trend change is underway. In fact depending on how Trump reacts it will give us a clue as to whether this leads to a hot war or not.  Trump has chosen players that match his personality General Mad Dog Mattis is not someone who is willing to bend backwards, and Trump selected him for this reason.

If China decides to pull any stunts that it did while Obama was in power, like the seizing of an American submarine, the response will be brutal.  On that note we expect American nationalism to surge; Americans will start to become more and more nationalistic. They will be ready and willing to make sacrifices to put America first something that will shock many of those in mainstream media.  This will give Trump unprecedented powers. He will use the pulpit to direct attacks at any politician that does comply.  You are going to witness something you have never seen in your life before. Hard talk is going to replace diplomacy on a worldwide basis.

If Putin and Trump can form an alliance, then Russia and America will gain at China’s expense. Up until now, China was gaining at everyone else’s expense.   At this point, the trend is dangerously close to turning bullish on Russia, and we can state that there is a now a 95% chance that the trend will become positive for Russia. We expect Trump to scale Back NATO’s presence in Europe, he will allow Russia to be the master of their backyard, and most likely he will drop the sanctions against Russia or significantly reduce them to them to the point that they are almost useless.

He will also indirectly encourage European countries to follow their path as opposed to being forced into line by America. Many European countries were not happy that they were dragged into the sanction game.  He has already taken an opposing position to Brexit by stating that it is a positive development and that many other European nations will likely follow suit.  Here is the critical issue; Trump is the oldest president and probably the wealthiest president. He also seems to care for America (the keyword

He also seems to care for America (the keyword is “seems”)and some of his actions appear to confirm this. Perhaps in his old age, he might want to give something back; we do not know but whether he cares or not the perception is that he cares and as we have always stated before, perception is king; alter the perception, and you modify the game. He also has an excellent understanding of Psychology, and he has a sense of humour that despite being dark, seems to play favourably on a large number of people; this is a deadly combo of skills that can be used to rile up the crowd on very short notice. He is going to use the masses

Perhaps in his old age, he might want to give something back; we do not know but whether he cares or not the perception is that he cares and as we have always stated before, perception is king; alter the perception, and you modify the game. He also has an excellent understanding of Psychology, and he has a sense of humour that despite being dark, seems to play favourably on a large number of people; this is a deadly combo of skills that can be used to rile up the crowd on very short notice.

He is going to use the masses in a manner that no other president has ever done to bring changes that all other presidents could only dream off. What remains to be seen is if these changes will be for the good for the country or detrimental to America. As always time will tell; it is the only teacher that never dies and always kills all its students.

Once the trend changes the following effects will come into play (note the trend has not changed as of yet)

  • Russia will make for a great investment for the next four years and possibly eight years
  • The Bull Market in Europe and especially in America will continue its upward trend, though we expect at least one rather sharp correction ranging in 10%-15% ranges, and possibly as high as 20%.
  • China’s real estate market will crash and so will other places that have risen too fast such as Singapore, Philippines, etc. Only grade A stocks and ones that trade as ADR’s will do well in China, some examples are TCEHY and NTES. If the trend changes, we are more likely to focus on Russia than on China. We will wait for panic to set in as regardless of the outcome every massive crash eventually leads to a tremendous
  • There could be a hot war between China and USA if China decides to respond in the same manner it has done during Obama’s tenure, the results will not be favourable. China will lose the hot war. Oh and by the way no country will use Nukes because if they do its game over for everyone. So this hot war will be confined to naval battles, bombing missions and every form of military hardware minus nukes.
  • There will be at least one strong market correction which to most will appear to be a stock market crash; however, this stock market crash will prove to be a buying opportunity.

Strategies that China could Implement that would Prevent a Hot war with the US

One should never forget that the Chinese are great businessman, perhaps the best in the world. They understand the art of negotiating, and they could form a deal with Trump. One other definite advantage the Chinese have is patience; they do not think regarding today; they can sit and wait for the right opportunity to make a move. The problem is that China’s Government and Military brass might have become too spoiled as until now they could manipulate America and the West. Thus, for now, this is a low probability event, but we would not write it off.

In this scenario after initially putting up a tough fight, China will agree to certain key proposals that Trump puts forward that will level the playing field. China still has tremendous growth potential, and from an investment perspective, it will remain a great play for a long time. Every Bull market has to go through a phase that makes one almost feel like it has dropped dead from exhaustion. If we see China moving towards this direction, we will expand on this topic in future updates.

Deviating completely from the topic at hand, this is why we have stated in the past that Humans are the worst animals to roam this planet. We are the only ones that kill for the most stupid of reasons, and we use even dumber reasons to justify these stupid actions. If humans were just a bit smarter or we could collectively advance one level up regarding consciousness, it would be very easy for every nation to form an alliance and to work in such a way that they do not actively seek to destroy the other. Stupidity is what always leads to conflict. There is absolutely no reason why the world cannot coexist with a stronger China, but governments are even dumber than the people they seek to control.

If you recall we stated that weather patterns would continue to change, and violence would continue to rise worldwide. Over the years we have fine-tuned all our gauges and or indices, and almost all of them now have a psychological component built into them. As we stated in the not too distant past if we had to choose between using technical indicators and Mass Psychology we would throw everything out the window and stick with Mass Psychology. Emotions drive everything and psychology is the study of emotions, mass psychology is the study of mass emotions or the mass mindset.  If we had to summarise everything into just one word, we would use the word “polarised”. The world is going to be extremely polarised, and weather patterns are going to be extremely erratic.

Conclusion

Let’s hope clear minds prevail for war would be a total disaster to this Fragile world economy that is being held up by worthless paper (Fiat) and glue. Were it not for the hot money propping up the markets; the global economy would be in the toilet by now. However, all the hot money in the world will not be able to counter the after effects that would flood the global system if China and the US went to war.

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