{"id":138311,"date":"2018-12-03T12:45:16","date_gmt":"2018-12-03T17:45:16","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=138311"},"modified":"2018-12-04T10:09:22","modified_gmt":"2018-12-04T15:09:22","slug":"part-ii-global-economic-perceptions-are-shifting","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2018\/12\/part-ii-global-economic-perceptions-are-shifting\/","title":{"rendered":"PART II \u2013 Global Economic Perceptions Are Shifting"},"content":{"rendered":"
December 3, 2018<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

This is Part 2 – Read Part 1 here:<\/strong> Global Economic Perceptions Are Shifting \u2013 PART I<\/b><\/a><\/p>\n

The continued efforts of our research team to identify and quantify the possibility that the capital shift which has taken place over the past 18+ months may be shifting to other assets is in the interest of all global investors.\u00a0 Is there a new, more opportunistic investment that will take away from the capital that has been rushing into the US equity markets over the past 2+ years or is the capital shift towards the US equity markets still intact?\u00a0 These are the questions before us and these are the questions that will determine if the US equity markets continue to rally or continue to top out.<\/p>\n

In part one of this research article, we began to explore the aspects of our research that we believe are key to understanding the future of the global capital shift phenomenon. In short, the capital shift is the movement of investment capital from one asset to another asset (from country to country, from one form to another or from one asset class to another) in an attempt to seek out and secure the best, safest and most secure ROI on the planet.\u00a0 We believe this process has been a driving force behind much of the global markets success or malaise over the past 4+ years (actually starting near 2013 when wealth in China and capital controls forced investors to seek outside investment sources).<\/p>\n

Additionally, in part one of this research article, we highlighted the traditional range channels of the US equity market and how these ranges have played an important role in identifying price support.\u00a0 Currently, the US market is sitting at the middle support level of historical ranges after retracing from recent highs.\u00a0 This is far from the \u201ccrash moment\u201d that many are predicting.\u00a0 The reality is that this is more of a reversion to support in a strongly upward sloping price channel.<\/p>\n

Let\u2019s start out by asking the question \u201cwhat will happen to Asia\/China over the next 2+ years and what will happen with the capital from Asian investors?\u201d\u00a0 Should we believe that China\/Asia capital markets are healthy and robust for sufficient ROI in current form or are these investors seeking outside sources for healthier and safer ROI solutions for their capital?\u00a0 And what should we expect over the next 18~24+ months beginning in early 2019?<\/p>

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Our Custom China\/Asia Index has clearly shown that prices have reflected a downward trend since the top in early 2018.\u00a0 This price decline has already breached the 50% Fibonacci retracement level and appear to be attempting a deeper price move lower.\u00a0 We believe the banking\/credit\/expansion issues in Asia\/China are related to this capital contraction and won\u2019t abate until the majority of these issues are resolved.\u00a0 In other words, there is far too much uncertainty in this area of the investment world to support a change in investor sentiment.\u00a0 Yes, everyone wants to see Asia\/China settle these economic issues and become poised for a stronger growth model going forward, but everyone is also waiting for the next shoe to drop to detail these expectations.\u00a0 Housing, Trade, Credit Markets, Banking, Global Objectives, Regional Issues, Manufacturing??\u00a0 Pick one and wait a few months for some news.\u00a0 At this point, there is so much news originating from China\/Asia that is pointing to a broad market correction that we are simply waiting for the next news item to hit.<\/p>\n

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The One Belt, One Road project is another concerning aspect to what China\/Asia is capable of achieving.\u00a0 This project is incredibly diverse \u2013 spanning dozens of nations\/countries.\u00a0 The reality of this project is that uncertainty abounds from all angles when one considers the routs this project is taking and the global uncertainties that originate from many of the areas on these routes.\u00a0 Tehran, Kenya, Pakistan, Sri Lanka, Kuala Lumpur, Jakarta??\u00a0 Sure, the land and sea transport solutions offer a very interesting and dynamic shift for economic growth, but this is all based on the assumption that wars, graft, politics and local\/regional tensions don\u2019t flame up to halt or block any of these routes and the future success of this project.<\/p>\n

Already, Malaysia has terminated multiple projects related to the One Belt, One Road objective because of corruption and fraud against the Malaysian people.\u00a0 We are reading news stories of Pakistan and other nations questioning the deals made with China in support of this project.\u00a0 In our opinion, the land routes are much more fragile than the sea routes.\u00a0 Ships can change course and head to another port if needed.\u00a0 Train tracks are not easily relocated and shifted around to address regional issues.<\/p>\n

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Additionally, the global commodities pricing index (from Bloomberg) is suggesting that global commodities have reached a peak and are declining.\u00a0 This puts pricing pressures on larger global projects like the One Belt, One Road project because profits from mining or manufacturing raw commodities and secondary commodity products are dramatically decreased.\u00a0 This would also suggest that suppliers and manufacturers may be experiencing an economic stall in terms of growth expectations over the next few years.\u00a0 If the commodities futures prices are declining, then global investors are not seeing any aspect of the global markets that would relate to higher demand, manufacturing or increased general consumption\/use of global commodities.<\/p>\n

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Watch Crude Oil for signs of life in the economy.\u00a0 The price of Oil is often a very good gauge of economic activity and expectations in terms of freight, shipping, consumer activities and more.\u00a0 Oil has seen a very dramatic selloff over the past 2 months and is nearing levels that should be concerning for producers.\u00a0 Oil price levels below $40 ppb could be a game changer for much of the Arab world.<\/p>\n

Our conclusion is that until global investors see the true opportunity for Asia\/China and see real strength in the global commodities markets, risks continue to outweigh opportunities in much of Asia\/China.\u00a0 Therefore, we believe the capital shift phenomenon originating from this region will continue to source more suitable returns in other global investments.\u00a0 Should the commodity index break down or the Chinese\/Asian markets collapse further, we believe the push for outside safety will increase.\u00a0 This may be likely near the start of 2019.<\/p>\n

Want to know what our predictive modeling systems are suggesting will happen in 2019 and beyond?\u00a0 Are you searching for a dedicated team of researchers that can help you understand where opportunities are and how to find great trades?\u00a0 Take a minute to visit\u00a0TheTechnicalTraders.com<\/u><\/a><\/strong> to learn how we can assist you and help you find greater success.\u00a0 Want to see how we\u2019ve been calling the markets, visit www.TheTechnicalTraders.com\/FreeResearch\/<\/strong><\/a> to review all of our public research posts.\u00a0 2019 and 2020 are setting up to be incredible opportunities for investors \u2013 get ready for some incredible success with these bigger price swings playing out.<\/p>\n

Chris Vermeulen<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com This is Part 2 – Read Part 1 here: Global Economic Perceptions Are Shifting \u2013 PART I The continued efforts of our research team to identify and quantify the possibility that the capital shift which has taken place over the past 18+ months may be shifting to other assets is in the interest […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-138311","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/138311","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=138311"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/138311\/revisions"}],"predecessor-version":[{"id":138370,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/138311\/revisions\/138370"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=138311"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=138311"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=138311"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}