Short Term Trading Week Starting: 14 Jan, page-167

Hi radx

The main game [imo] at the moment is the geopolitical contest between China and the US.... I think the economics of it all will take a back seat until that is resolved [after all one only has to consider how the 'extend and pretend' has gone on since the GFC to marvel how long the road is for Govt's to 'kick the can']. I think it is valid to consider the trade war as actually a proxy war between the US and China. The assumption is China would like to end the trade war.... but?.... what if they actually don't?? What if they are prepared/intend to prolong it as long as possible?

I can imagine several reasons why they might be so inclined.... Better to face down a president like Trump than someone probably far more competent after the next election... the trade war provides excellent cover for China to establish alternative economic relationships... the US debt problem is accelerating which strengthens China in relative terms... the isolationist policy of Trump is undermining US prestige which aids China's expansionist agenda... the US has already lost some market share in China, that will only continue to worsen as things drag on, so when the truce is finally called the US will be far more a price taker than maker when it tries to reestablish lost markets...

The above is only analyzing the opposite case... might be entirely fanciful. But it is worth questioning the prevailing assumptions about what is likely...

I vaguely remember debate about Amazon and the fact it was such a loss maker for so many years [similar discussion about Netflix these days].... I wonder if China's huge debt might not be viewed in the same way? Is it an unserviceable debt burden they are creating or is it a long term investment with a pay-off factored in 20 years from now?