Betting On The End of Globalization: "Because There Is No Alternative"

EU disintegration and global trade wars are the hot investment themes for 2017. We also learned this week that the Fed is planning to speed up rate hikes in response to Trump's fiscal policy which happens to be deflationary instead of inflationary, as we learned from this week's jobs report and factory orders...

In summary, the Fed and Trump will coordinate to implode the economy...

Yesterday, noted technician Tom DeMark reaffirmed that the Dow likely won't hit 20,000, despite coming within a micro point yesterday. Back in November he also targeted a 2275 high on the S&P - yesterday's close was 2277, meaning .0008 accuracy if yesterday's high holds...

Meanwhile in "TINA" land, the concept of the entire world rushing into U.S. assets at the end of the global cycle is nothing new whatsoever, however, it just happens to be occurring at an all time high in the S&P:

$USD:

The Russell/Dow ratio is further confirmation, lining up well with U.S. one year yields rolling over:

This is a close-up view of U.S. short-term rates with EM Currency (black)

aka. Fed Policy by Police Squad:

The initial financial impact to bonds was inflationary, now comes the economic repercussions which are deflationary...

Long bond yields versus stocks. The catalyst behind the 'TINA' trade is rolling over...

The U.S. is caught in the globalized poverty trap:

Some perspective on U.S. bond yields and deflationary reversion. Shown with Northern Trust bank:

Bonds with USDJPY carry trade...

The Fed is removing liquidity at the end of the cycle...because EVERYONE thinks that Trump's planned tax cut is inflationary...

Money flow (blue line):

Meanwhile in the other silently imploding economy, China's FX reserves were announced overnight as having dropped -$2 billion per trading day in December ($41 billion for the month). Now approaching the critical $3 trillion level of reserves:

The biggest problem for China is that they are attempting to ease monetary conditions while at the same time stem capital outflows. A strategy that is known as "impossible".

Here we see the spread between the U.S. 10 year yield and the Chinese 10 year, also shown with the Yuan/USD:

In the last few days, China orchestrated the strongest revaluation of the Yuan in history, which can be seen above, and by sheer "coincidence" followed a drop in the yield differential. This revaluation is what monkey hammered Bitcoin (red):

Nevertheless, a bet on the status quo is a bet on the impossible, but don't take my word for it:

"China should stop its heavy intervention in the yuan exchange rate and allow a one-off devaluation of the yuan, according to the finance professor at the prestigious Tsinghua University and author of China’s Guaranteed Bubble."

“The yuan has lost more than 10 per cent [against the dollar] from its peak, but China’s foreign exchange reserves have lost almost 25 per cent,” Zhu said. “What can China do if the reserves keep shrinking ... if its reserves can’t meet current account payment requirements?”

Betting on the impossible
Why? Because 0% is not an option and monetizing poverty is the entire theme of Globalization...