@lochaz-index Which EMs are you looking at?

@lochaz-index.Good stuff.I normally look at and trade stocks like Chinese companies like Alibaba,Baidu,JD on the NYSE where the can be accessed as American Depositary Receipts (ADR) Certificates.They tend to be volatile which is good for short term trades.I also check up on the broader iShares China Large-Cap ETF but never traded it.Though as you stated there are serious problems of transparency (China is opaque and particularly notorious for cooking books) with China and Trump has on several occasions threatened to delist Chinese companies from the NYSE as part of the trade tussle.Look at how the West is handling the Chinese telcom giant Huawei when Canada arrested Huawei's CFO at the instruction of the US.Also China is A MASSIVE LEVERAGED TICKING TIME DEBT BOMB.Some investors call China "Red Ponzi".The sheer scale of money printing by the People's Bank of China (PBOC) to fund white elephants like ghost cities where upto 65 million apartments in these deserted cities are unoccupied plus many other dubious ventures is nuts.Its estimated China's debt to GDP is a crazy 300%.China is just a massive bubble waiting to burst and the damage will be horrendous.Ok,US on the aggregate is an even bigger bubble than China and its a shame that the world's two largest economies are also the world's most over leveraged and indebted nations.Also,if as Western nations start pulling out their manufacturing capacity from China due to Covid-19 and the trade war as they have threatened,China's status as the world's factory may decline but that's decades away.The big question for this 21st century is whether China will rise up and become the dominant power surpassing the USA or will the communist state implode under the weight of excessive debt and money printing and autocratic rule.Will the Communist Party continue holding on or be overthrown?Beijing already has the largest PPP GDP in the world surpassing the USA in this metric in 2014 but for nominal GDP the United States still comes on top but its estimated China may overtake the US in nominal GDP also by 2024 (something I doubt as Chinese overleveraged economy may burst before then)





Best way to trade EMs is by looking at the broader market ETFs like iShares China Large-Cap ETF,iShares MSCI India ETF or the broadest iShares MSCI Emerging Markets ETF.Picking individual stocks in these countries is notoriously difficult.If you have the stomach for it,Russia maybe a good EM investment option.Unlike the US,Europe,Japan and China that have debt to GDP ratios of over 100% (and for Japan and China its over 250%),Russia's debt to GDP is about 17-22% and Russian central bank is very disciplined and does not recklessely print money like other major powers but of course Russia's suffers from problems of being opaque,over-reliant on oil and gas exports whose prices can colllapse as it is currently,relatively autocratic rule from Putin and Western sanctions worsen the problem.Apart from commodity rich Russia,other commodity rich EMs like Brazil look interesting but corruption in Brazil is rampant.Commodity centric EMs have been suffering from strong USD and general massive decline of commodity prices in recent years but that may change in the near future.Argentina is a disaster of routinely hyper-inflating their currency every few years so a definite no no.Turkey's lira currency is also a mess.

Possibly long term EMs offer an opportunity as they have been so beaten down by massive inflows into US assets and US dollar and EM currencies are relatively weak to the USD but possibly in the future this may change.

Check out legendary investor Jim Rogers.He loves venturing into beaten down EMs like China,Russia,Eastern Europe (he even wants to sample Zimbabwe ) buying these markets when they are hated and hoping for multi-baggers in future.He has done this before.Though he is a multi-millionaire and has the patience to hold onto risky EMs for many years and can take losses ascribed from the risk investing in opaque states.

Also check out billionaire hedge fund manager Kyle Bass.He is fanatically anti-Chinese and loudly exposes the ticking time autocratic debt bomb of China

Moreover,China does not a fully free floating and fully convertible currency.The PBoC keeps a tight check on the yuan's value having a loose peg to the USD at 7 Renminbi to a dollar.Washington has always accused Beijing of cheapening its currency to cheapen its exports and at one point the Trump US Treasury labelled China a currency manipulator (like as if no government and central bank manipulates its currency).China's shock and unexpected yuan devaluation of its currency in late 2015 and early 2016 caused jitters in global markets and tanking US equities in that period.Also China has strict capital controls.For cash transactions up to the limit of $10,000 US, you will need a special permit that provides you with permission to bring in or take out the money from the country. A bank issues this permit.If your transaction involves more than $10,000 US, you will need to obtain a special warrant from the State Administration of Foreign Exchange.This forces citizens to move their wealth out of China via other avenues like cryptos and purchase bubble assets like Canadian or Australian real estate.Considering China's tight control of its currency,capital outflows and not having an open account,its practically impossible for the yuan to displace the USD as the world's reserve currency.King Dollar despite the ludicrous multi-trillion money printing schemes by the Fed will continue its reign in the foreseeable future.

Yes true,mass money printing by first world central banks are there to offset the massive capital destruction of the deleveraging cycle.Trillions of currency have been lost in the deflationary cycle that central banks are desperately trying to plug in by printing their trillions but the catch is the newly printed trillions also result in trillions of new debt being created.In the current debt based fiat monetary system money is created from debt and almost all the money the Fed has created is debt owed back to them.Fed is buying US treasuries and corporate bonds and is expected to be paid back with interest.For treasuries,the US government will pay back the Fed from taxpayer remittances so the populace is on hook to repay these Fed loans.Trillions have already been added onto the US national debt which the current and future generations have to cough up via taxation


Also,the current deleveraging is from a mega bubble and the Fed is just reinflating the bubble afresh with new a debt binge.The deleveraging from bubble excesses should be allowed to naturally play out.Its painful but its akin to a drug addict being weaned off heroin.The US economy and financial markets should be weaned off monetary heroin of Fed cheap money yet the Fed is just pumping new currency dope and inevitably the dose will be lethal.So the money printing has long term damage of massive unpayable debt and inflation plus loss of purchasing power of the USD.

Well as I expected the NASDAQ has hit new all time highs today.Chances are high that the other broader indices ie S&P 500 and Dow Jones may join the party.Stocks rallied over the euphoria of US creating record 2.5 million jobs in May up from the disaster record 20.5 million jobs lost.Well as the lockdowns were getting eased it was obvious that some would return to work and thus the record job numbers.



As the Nairobi bourse is languishing at its March lows,US stocks rallying to all time highs.Expect the pump job to continue for the short term though market is grossly overextended and a correction maybe imminent.Long term the market may drop precipitously as possible Covid-19 second wave plus mass bankruptcies sweep the United States.

I have kept saying this market will be going higher for the last few weeks due to the Fed pump and its been easy money going long especially the tech stocks.Riding this fake Fed pump bubble in the last few weeks has been AWESOME

The rally, as expected of a second wave rally, is based on hope and will soon be fully retraced.

Remember I forecasted the rally? See my previous posts where I called for DOW to rise to 26,000. The FED is not in control of the market.
The hopes that are fuelling the market are vaporising quite fast.

The rally was forecast on May 14 when the DOW was still at 23,000.

link to post

Just to make a point once again. The so quoted hope-filled rally is complete at 27,000. The next major move is DOWN. It will be sharp. It will be painful. It will catch you off-guard. Yet Elliott is shouting a warning right now!

Trump is saying it can only continue with the upward journey!!!!

Its also possible that the Dow may not hit 20,000 and below in the next reversal.The Fed is now highly alert to any market disruptions and has stated numerous times its ready to provide unlimited QE money printing to support markets and even when the bankruptcy and second covid-19 wave hits,markets may retrace but not to the disastrous speed and levels of March 2020 as now the Fed will act extremely fast and reflate the asset bubbles.Time and again I have underestimated the Fed money pump.I knew the Fed would pump trillions and push the market from its March lows but never did I think we would be hitting all highs.Just continues to show the Fed's massive firepower.For as long as the USD remains the reserve currency and is perceived to be stronger than other major currencies like Euro,Yen,Pound,Yuan where these other central banks are printing even more relative to GDP than the Fed,the US central bank can keep printing even more trillions with no immediate consequences to the USD.Well it remains to be seen how this will play out in the next few months.Dow may punch below 20,000 once again but also the Fed may save the market again and hit all time highs.I dont know which outcome will result and frankly dont care and will just trade the market conditions that I see on a day to day basis

Invevitably,money printing has diminishing returns.At some point in the future,the market will be aghast over the sheer scale of fiat currency being created and massive inflation,devaluation and large loss of purchasing power reality will sink in and there will me a mad rush out of these fiat currencies.Fed money printing will become meaningless.They can inflate the Dow to 50,000 but these nominal gains in the market will be viewed as worthless as there will be no real gains less massive inflation.This inflection point where fiat money printing to pump up assets is useless will inevitably be reached perhaps a few years from now.Nobody can predict when this inflection point will be attained but it obvious we shall get there and its at this point where central banks will have no control over markets.This is the final end game of the sovereign debt and fiat currency crisis and collapse.All fiat currencies from Ancient Greece to Weinmar Germany 1923 hyperinflation hit this disastrous outcome.All fiat currencies collapse and revert to their intrinsic value of zero and the current debt based fiat monetary system will be no different

Trump is proved wrong. The venerable FED is proved wrong. Fundamentals as popularly practised is proved wrong.

Only Elliott Waves can anticipate these turns.



Expect further downside to the DJIA.