Analog Update

Analog Update

The SPX has rallied to 1,680 today, reaching our upside price target objective, which was the 61.8% retracement level formed b/t the 8/5 highs and 8/28 lows, respectively. Though it has crept above this level somewhat, this isn’t all that…...

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China Update

China Update

Last night Chinese Premier┬áLi Keqiang made some comments re: future GDP growth, suggesting the country will seek to maintain a level of at least 7%. This was one of the more unequivocal and clear statements anybody in a position of…...

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SSEC Has Been a Major Under-Performer vs. the SPX, Will it Persist?

SSEC Has Been a Major Under-Performer vs. the SPX, Will it Persist?

In the scatter-plot below I show the 2 Yr RoC for the SSEC (X-axis) vs. the 2 Yr RoC for the SPX (Y-axis). As of this morning they are -30% and +25%, respectively, with major SSEC under-performance occurring over the…...

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Is Barron's Call for a Credit Crisis in China Correct?

Is Barron’s Call for a Credit Crisis in China Correct?

Two weeks ago Barron’s made what appeared to be a bold call for a credit crisis in China. They all but suggested that the probability of a Depression-style event was either rising or imminent. But, similar to their call to…...

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Will Emerging Market Underperformance Ever Cease?

Will Emerging Market Underperformance Ever Cease?

I’ve been very mute on the topic of EMs for most of the site’s history. The only topic of conversation that has been seen on these pages has revolved around the idea that the decade long bull market in commodities…...

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The Conundrum that is Gold (To Bubble or Not to Bubble?)

The Conundrum that is Gold (To Bubble or Not to Bubble?)

Let’s continue to beat a dead horse. Is gold a bubble? If so, did the bubble run end in September 2011 when gold peaked around ~$1,900? We know that thus far, if gold was a bubble and the run ended…...

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The SSEC Likely Continues Lower Though Its Irrelevancy Continues to Grow

The SSEC Likely Continues Lower Though Its Irrelevancy Continues to Grow

We’ve been of the opinion that if the SSEC were to continue lower, it would not necessarily be indicative of an imminent global slow-down/recession/equity collapse. That thesis is largely derived from the chart below, which plots the path the SSEC…

SSEC Finds itself at Another Important Support Zone as FXI Faces Resistance

SSEC Finds itself at Another Important Support Zone as FXI Faces Resistance

All the way back on August 27th we noted the SSEC was in the process of breaking below long-term support dating back to 1994. At the time, we noted that while such a break was unlikely to be an incremental…

Continue to Believe that China Can Remain a Source of Out-Performance

Historically we’ve focused this thesis on the idea that such out-performance would come via the SPX. That said, with a little bit more digging, the ratio charts below also suggest that the SSEC can out-perform the companies that have historically…...

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Defining Alpha, FXI Has Out-Performed the SPX by 700+ bps Since We Suggested as Much a Month Ago

On September 7th we had a post┬ádetailing our thoughts on FXI and our belief that domestically listed Chinese equities were about to begin a period of out-performance vs. the SPX. In that post we specifically noted the following: “A long…...

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