China Is The New Subprime

The "Lehman Brothers" of this era is China and Emerging Markets. However, some people are too busy basking in the glory of Pyrrhic trade war victories to take notice...

I just read this opinion piece (below) saying that China's imminent collapse is great news for Trump, because "we won" the trade war. I suggest that nothing could be further from the truth, which is how this circus operates - as far from the inconvenient truth as they can get. That said, I have to give these economic Darwinists full credit for taking self-destruction all the way to full burial. We'll make note that the system "worked"...

"Analysts Are Looking At A Cascade Crisis In China"... And That's Great News For Trump"

"Great news, we're decoupled. From reality"

Losing is the new "winning":

How did the U.S. right-wing switch from being devout Free Traders to zero sum Mercantilists literally overnight? From Comparative Advantage to Competitive Advantage. I'm not even talking about Trump, I'm talking about Larry Kudlow and the other Goldman Sachs Supply Siders in Trump's cabinet. Their "malleability" aka. lack of conviction is staggering. Which is all well and good except they seem to be under the delusion that the world itself changed overnight as well. Which is the height of fantasy. It was literally only 2015 when China's minor devaluation imploded global markets. 

Now China stands at the precipice of a full blown meltdown, and that will be good for global markets? What crack are they smoking?

Yesterday I showed the correlation between U.S. housing and Emerging Markets:

But the overlap gets far worse, because the U.S. Materials sector is imploding as well. In no way immune from a global growth slowdown.

Then there are these cross-listed Chinese internet stocks that are littered throughout U.S. momentum ETFs

Correlation to the S&P fell for a time in the summer, but now it's rising quickly again, during this selloff. Deja vu of February:

Then there is the entire Energy sector now exposed to China:

"The US can withstand declining energy exports to China far longer than Xi can withstand real growth tumbling"

While we're on the topic of "Aw fuck, not this again"

Here is Citigroup coming off of its earnings beat last week:

"A China in crisis plays well for Trump, demonstrating the success of his economic campaigns"


Indeed.

Our leaders are fucking dunces

"This is the tightest McJobs market we've ever seen. When labor participation goes to 0%, we'll have zero unemployment"