Some important
figures as of 28 Dec 2019 for analysing the big picture of the market:
Gold is at
1515.65,
US 10-yr treasury yield at 1.877% and
USD/CNY at 6.9958.
My
interpretation:
With Europe’s
and Japan’s interest rates at an even lower level, US is not likely to be in a
position to try to increase interest rates in the foreseeable future to create
for themselves problems in presidential election year in 2020 unless there are
compelling reasons like unbridled high inflation.
Some big boys
must have slowly amassed some gold to balance their portfolio as S&P 500
hits all-time high.
Although the US
10-year treasury yield is still far from the 3% threshold that will trigger
panic selling in the stock market, we just cannot throw caution to the wind
that there will not be any black swan event as big scale as the Lehman Brothers
collapse.
The US
government today owes the world about US$24 trillion through treasury bonds and
Trump knows very well that if he can cut the interest rates by 1 percent, the
US will save about US$240 billion a year, which is at least double the tariffs
they could squeeze from China through the US-China trade war. Trump is a
businessperson and he sure knows about the advantage of maintaining a low
interest-rate climate. The next US president may not know or believe in this.
The US economy will do better with Trump as the US president.
The threat of
China market going down further and the overhang for the HK stock market have
subsided greatly with the strengthening of CNY against USD.
Figures are
pliable. They can be the bellwether of the market provided one knows how to interpret
them correctly.
