Our trade deficit with China

It is about 400 billion a year in 2017. Are our products not competitive, or China has been setting up too many trade barriers? I believe both are true to some extent.

The figure is exaggerated a little. The raw materials are sent to China to assemble using lower-wage labor and sent them back to the US as finished products.

Using iPhone as an example, it is designed in US, assembled in China, using rare earth elements in China, using components from all over the world, and enjoyed by global consumers. The design cost should be deducted from the finished product when it is imported back to the US.

Our politicians suggest heavy tariffs on Chinese products. Most likely Chinese will fight back with same and it would lead to a trade war. Both sides will suffer. They will end and the politicians from both sides will declare victory. Seen this many times.

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The above is from my book "Profit from coming market crash" available from Amazon.com.


https://www.amazon.com/dp/B078NYR9DD

Weakening USD

The impact of the weakness of USD:

1.       More competitive to our export (good for US).

2.       Less profit when foreign profits converted to USD (good).

3.       Cheaper USD payments to our loans to foreigners (good).

4.       Less attractive to invest by foreigners (bad).

5.       Losing reserve currency status (really bad). I bet China is selling and cutting down buying our Treasury bills. They need to use the money for the “One Belt, One Road” projects. Most likely they will use Yuan to finance these projects.

  

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The above is from my book "Profit from coming market crash" available from Amazon.com.


https://www.amazon.com/dp/B078NYR9DD

Long-term market outlook

The market long-term outlook is not promising. Some of the following five factors may not be avoidable and I wish most of them will not happen in my life time.

1. Retirees are withdrawing their investments

It is not avoidable as the baby boomers (born after the WW2) have been retiring and the millennials with the college loans and a weak job market do not contribute enough to offset the withdrawals. This imbalance also affects every aspect of our economy such as the outpour of entitlements, housing…

2. Conflicts with China

We’re having trade wars with China that would lead to a military war triggered by China’s disputes on islets and the invasion (reunion depending on your view point) of Taiwan. I have written the article “Why a war with China?” However, the risk has been reduced recently. It is due to China’s military advances that are enough to defend her coast line. US would not win without a lot of damages. The balance of power would lead to peace.

3. Endless wars

These wars drain our resources which should be spent in our failing infrastructures. Our next generation(s) will pay for our debts. The politicians want to buy votes from voters who want to receive maximum benefits with minimum contributions. Debts will continue to increase.

4. Loss of reserve currency status

With mounting debts, the USD has been weakened. It is good for our export and repaying our debts. However, it is bad for foreigners to invest in US. It happened to the market collapse for the Brits.

There are evidences that China is cutting down the Treasury bills – they are #1 or #2 foreign countries in owning our Treasury bills. The “One Belt, One Road” projects could cost over 1 trillion. Guess what currency they use? China still has a long way to achieve the status due to her inadequate regulations and experiences.

5.  Natural disasters

There have been many recently. The major one could be the big earthquake in Pacific coast that has been long overdue.

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The above is from my book "Profit from coming market crash" available from Amazon.com.


https://www.amazon.com/dp/B078NYR9DD 

12 pm or 12 am

My discovery:12 noon is not 12 pm

The Chinese restaurant I went to says they open at 12 am. Are they wrong or the world is wrong?

The next hour from 11 am is 12 am, NOT 12 pm. The one who set it up did it totally wrong and no one complains until now. If I were born earlier, I would have corrected it.

Today

No financial  news worth discussing today.

* My grandchildren, both play hockey, were crazy about the first gold in 20 years.

* Boston broke the warm record at around 70. Good or bad? Today it drops back a lot. Similar to the volatility of the market.

* Why we need a AR 15? Support the students.

* My children have no student loans as I paid for them fully. Now I contribute monthly to one grand child and appreciated stocks for their college or buying a fancy car (if they do not go). College is one place to find a mate. We need to take kind our children for the higher education.

Another school shooting

It is NOT the last one - many more to come.

It has not even been discussed much in our last presidential election by either party. They must have received a lot of contributions to their campaigns from NRA and gun manufacturers. If you love your children more than your hobby, do not vote for politicians who do not talk about gun control.

Do something useful instead of saying condolences.We've prayed for thousands of years for world peace - God must leave us humans to fix our own problems.

We have more guns than citizens. It is not practical to have full gun controls overnight. However, there are many ways to limit the guns falling into the wrong hands such as criminals and mentally challenged. Semi automatic guns and the adapters should be banned if not already. Gun registrations should be reviewed thoroughly. Do we have a database for the mentally challenged? Enforce gun regulations especially in gun shows and take every hint seriously.

Cut down violence in video games. Teach the children not to bully.

Hope some day we can send our children to schools, attend a concert or a movie without worrying being shot at.

When should we return to the market

I was asked when should we come back from WSB yesterday. Here it is:

In my book such as "Profit from the coming crash", the market timing has exit and reentry points based on technical. One uses charts and the other one does not.For a ballpark number, it COULD be 45% loss from the peak.

The above is assuming we've a market crash. For corrections, it could be 15% (10% average but adjusted due to the recent huge gain) loss from the peak.

The trillion-dollar question is: Is it a crash or a fierce correction? Many factors have been described in the book. However, corrections are harder to detect. A book is just a book. It is based on historical data (2 last market crashes for me) and every market is different. If you're very conservative like me, you should take actions. I've been too conservative having a lot on CDs for a while and missed some of the recent gain. Again, depends on your risk tolerance.

For conservative investors, use 40% for crashes and 12% for corrections (or even lower so you do not miss the boat at the risk of coming too early). If you feel the crash will last for a year, buy some CDs that mature in 1 year - better than your broker's account collecting virtually no interest.

You are responsible for your actions, NOT me.