China’s Economic Death is Greatly Exaggerated

Accuse your enemy of that which you are suffering. [The Rude Awakening] August 29, 2023 [WEBSITE]( | [UNSUBSCRIBE]( URGENT! Only 1 Day Left! Claim Your Seat to the Paradigm Shift Summit NOW Before Time Expires! [Click Here To Reserve Your Seat]( China’s Economic Death is Greatly Exaggerated - Is China’s economy hurting? Yes. - Are China’s demographics dire? Yes. - Is China’s economy about to crash and burn? Stop it. [We just had the biggest — and most drastic — operational change in our company’s history.]( I believe it will have profound effects on our editors and readers alike. I’m urging you to listen to a short memo from our VP of Publishing. He explains why, after 20 years, this decision was 100% necessary… […and why this “fix” could have a significant impact on your personal wealth.]( [Click Here To Learn More]( [Sean Ring] SEAN RING Good morning from a brisk autumnal Asti! I love this time of year as it quickly cools down after summer. It makes me want to study more. I feel like I’m going back to school, though I’m nearing 50. What's great about it is that cool air stimulates the intellect and makes you want to analyze things. Luckily, my good friend, Hong Kong H, sent me [an amazing piece of research by Louis-Vincent Gave](. Gave is the head of Gavekal, an excellent analytics company. He opened this article beyond his paywall to show everyone that the death of China’s economy is greatly exaggerated. I will summarize his excellent research for you in this article and show you the Chinese economy is not in its death throes. But First, My Assumptions By printing this, I don’t mean to say China is problem-free. I believe we won’t know the extent to which the One Child Policy has damaged China for many years yet. I also believe quasi-famous demographers, who I won’t name, make wild claims to snag highly paid speeches. Their claims are “unfalsifiable,” meaning I can’t prove their models false, but they can’t prove them true, either. I also believe we don’t know how much Chinese Communist Party (CCP) control of companies damages their innovation. (They are inventing a lot of cool stuff lately.) We also don’t know precisely how the CCP intervenes in the Chinese markets. I wanted to get that out of the way before you think I’m cheering for the CCP. The Banks Gave writes, “At Gavekal, we look at bank shares as leading indicators of financial trouble. When we see bank shares break out to new lows, it is usually a signal that investors should head for the exit as quickly as possible.” Note the S&P Composite 1,500 banks’ performance before and after the Lehman collapse: [Rude] Now look at what Chinese bank shares are doing: [Rude] These charts are not the same. How about over the past year? [Rude] Yikes! The SPX banks’ performance is horrific. Chinese Equities Let’s look at the Shanghai Composite, China’s big stock index: [SJN] Ok, this isn’t the best-looking chart in the world. In fact, I remember moving to Hong Kong in 2015, right at the start of the insane 3,000-point move upward. After that, the deluge. The Chinese stock market still hasn’t recovered. But is this, in and of itself, heralding a massive crash? Nope. [New Biden Bucks Follow-Up Available Now]( Since posting the original Biden Bucks presentation online, millions of people have viewed it. Snopes and the Associated Press have even attempted to “fact check” and claim some warnings are false: Point being, the message has raised a storm and caused a lot of controversy. But in the time between the message and now, a lot of new developments have come to light. That’s why an update to the original prediction was just released… one which will likely be even more controversial. [>> Click here now to access the new 2023 Biden Bucks follow-up](. [Click Here To Learn More]( Commodities Here’s one place where I disagree with Monsieur Gave. He rightly asks, “If China is imploding, why isn’t this reflected in commodity prices?” Look at this chart: [Rude] Since the US Fed has printed so many dollars willy-nilly, the commodity price inflation may have overcome weaker Chinese demand. I can’t prove that’s the case right now; it’s just a first-glance thought. FX While the Chinese yuan is weaker against the US dollar, it’s performed well against its main competitors, the Japanese yen and the South Korean won. [Rude] I checked Gave on the JPY and KRW, and he’s correct. Since January 2012, the CNY is only slightly up against the KRW. But against the JPY, it’s up nearly 67%. [Rude] Chinese Consumption The Chinese consumer is keeping up. Gave notes that Macau’s tourism arrivals are nearly back to pre-pandemic levels. He also shows that car sales are relatively strong. Finally, Alibaba had its strongest first-quarter results on record. None of those facts suggest an imminent financial crisis or market meltdown. Chinese Bonds Vs. US Bonds Ok, fasten your seatbelt for this one: [Rude] Are Chinese bonds proving to be safer investments than US Treasury bonds? As we’ve seen 60/40 portfolios get crushed, we probably assumed everyone else’s bond markets must have also gone down the tubes. But that’s simply not the case. Someone somewhere is thrilled to put their money in the hands of the Chinese government. And why wouldn’t they be? From Gave: Staying on the US treasury market, it is also odd how Chinese government bonds have outperformed US treasuries so massively over the past few years. Having gone through a fair number of emerging market crises, I can say with my hand on my heart that I have never before seen the government bonds of an emerging market in crisis outperform US treasuries. Yet since the start of Covid, long-dated Chinese government bonds have outperformed long-dated US treasuries by 35.3%. That’s just staggering. Gave sums it up this way: - There is a sizable problem in the Chinese real estate sector, and companies are going bust. - Amazingly, however, Chinese banks seem to be weathering the storm, at least for now. - The Chinese consumer continues to consume, even if not with the same gusto as in the years before Covid. - Chinese equities have been disappointing, but Chinese equity markets are not in the kind of full-blown meltdown one might expect, given the apocalyptic tone of reporting in the financial media. - Commodity markets do not seem all that bothered by the implosion in Chinese real estate. - Government bond yields in China remain stable and have not broken down to new lows. - US treasuries continue to melt down, even as returns on Chinese government bonds remain steady. - The Chinese high-yield corporate debt market remains completely dislocated. So Why the Alarm Bells? The apocryphal quote “Accuse your enemies of that which you are doing” comes to mind here. We know the US economy is in trouble, and the Media Industrial Complex has been mobilized to play that down in favor of a Chinese economic catastrophe. But the numbers just don’t bear out. I’m not saying the Chinese economy is perfect, and neither is Monsieur Gave, but it’s certainly not going to fall apart tomorrow. Wrap Up Gave writes this towards the end of this paper: This brings me to what should be the big story of the summer: the meltdown in US treasuries. Here is the biggest market in the world, the bedrock of the global financial system, falling by close to double digits in a month. And perhaps most amazing, this meltdown is occurring on limited news. There have been no Federal Reserve policy changes, no hawkish speeches from Jerome Powell. Basically, long-dated US treasuries just fell -9% on no news. This should be the news. Instead, the news is all about China’s financial meltdown. My initial reaction to this odd combination of terrible Chinese news with rising US treasury yields was to think: “This is odd. Why are US treasury yields rising when the Chinese news is so bad?” Then it struck me that perhaps I had things the wrong way around and that I ought to be asking: “Is the Chinese news so bad precisely because US treasuries are melting down?” Now that’s a good question. Have a great day. All the best, [Sean Ring] Sean Ring Editor, Rude Awakening X (formerly Twitter): [@seaniechaos]( P.S. Just to remind you, [you can read Gave’s original research here](. It’s absolutely worth your time. In Case You Missed It… Tucker to Interview Putin? [Sean Ring] SEAN RING Good morning from a brisk Asti! I’m back in Italy now, and it’s much colder than when I left. Currently, it’s 61F (18C) and only getting to 63F (19C). We had crazy rain last night, and the storm isn’t done with us yet. That’s a far cry from the over-90s weather we had this weekend. But I love Northern European weather in the south. Now that I’m back from holiday, alcohol-free, and in back-to-school mode, there are so many things I want to write about. From China’s alleged economic implosion to my crazy vacation to Belgian beers and ales to the BRICS summit, I’m chock-a-block with ideas. But, of course, X.com (formerly Twitter) had to intervene and put everything I wanted to write on the back burner. Because this news is bigger than any other. Tucker Carlson has asked for permission to interview Russian President Vladimir Putin. Cui bono? “Cui bono?” is Latin for “Who benefits?” It’s one of the first questions cops ask when a crime is committed. And it’s the first question most people asked when Nordstream blew up. That’s why pointing the finger at the US was so easy. But just because one benefits doesn’t mean one committed the crime. For instance, let’s say a disgruntled worker murdered his boss. Then, the boss’s daughter inherited millions. The boss’s daughter obviously isn’t guilty of a crime, though she benefited. I ask who benefits here because laying out the playing field and how this might play out is essential. It’s not an exhaustive list. The Beneficiaries: - Tucker: Watching Tucker dunk on the Legacy Media is a treat. If he lands this interview and completes it, he’ll cement his place as the most influential newsman of his day. - Putin: The Russian president will finally have a fair and unfettered chance to state his case. If Americans see Putin isn’t the raving lunatic Nuland, Blinken, and Sullivan make him out to be, funding for the war will dry up faster than the rain puddles in Southeast Asia. - Peace lovers the world over: Those who want an end to this war without any further escalation (that is, the break-up of Russia) will be thrilled for the other side to get heard. There’s a far greater chance of this war stopping once the talking starts. - The New Media: X.com and other alternative news sources crush the Legacy Media. The Losers: - The Deep State: They’re already losing badly. Between the arson dressed up as climate change failures, no one believing the COVID propaganda, and the US taxpayer tiring of funding the Ukrainians, the Deep State is on the back foot. If Tucker talks to Putin, this could be the last straw. - The Legacy Media: If Tucker can interview Putin on X.com, what’s the point of Fox News, CNN, or MSNBC? - Warmongers: Nuland, Sullivan, Blinken, the Kagans, and the rest of the Neocon Lunatics may finally be put to bed. - The US Diplomatic Corps: Massive egg on their faces if Tucker’s interview leads to a rethink. - Faux peace lovers who yearn for Russia’s destruction: Welp, there will be no Russia break-up for them. Seriously, lunatics like this exist inside of NATO and the EU: [SJN] Credit: [@GunterFehlinger]( There are considerable risks to letting Carlson interview Putin, especially if you’re a warmongering neocon. That’s because neocons don’t do diplomacy. [The #1 Crypto SECRET No One’s Telling You]( This ordinary package hides a surprising crypto secret… [Rude]( [CLICK HERE to See What’s In the Box]( It’s a little-known device with the power to deliver you FREE crypto income… Every day, with ZERO work! In fact, Stacy H. reportedly made a staggering $10,000 in just ONE YEAR thanks to this device! [Click here now]( to discover what it is, and how YOU can get your hands on one yourself. [Click Here To Learn More]( The Lost Art of Diplomacy Over the last few decades, American diplomacy has become almost an oxymoron. But it wasn’t always that way. From [Foreign Policy]( U.S. leaders had excelled in the diplomacy surrounding the end of the Cold War. President George H.W. Bush and Secretary of State James Baker built enduring relationships with diverse leaders across the Soviet bloc and the Middle East. They negotiated compromises that gave other leaders what they needed in return for endorsement of key U.S. aims: nuclear arms control, reunification of Germany, and the reversal of Iraq’s occupation of Kuwait. Bush and Baker were less successful in negotiating a peace agreement between Israel and its neighbors, but they made progress there, too. Baker was the great U.S. diplomat of the late 20th century, as seen by Burns, who served on the State Department’s Policy Planning Staff and frequently traveled with the secretary: “His skills, weight within the administration, relationships with all the key players in the region, and proven ability to deliver could not be easily replicated. He seemed like the right peacemaker at the right time.” Bush and Baker’s international achievements left a void as their successors undervalued the diplomacy they had carefully crafted to reach those results. A unipolar post-Cold War hegemon, the United States possessed unmatched military and economic power, and its ideological righteousness seemed unassailable. Who needed difficult, slow diplomatic compromises when U.S. leaders could get what they wanted largely through pressure and force? Did the unipolar moment destroy the American diplomatic corps? It sure seems like it. Why talk when you can drone? Why negotiate when your defense contractors get rich, and your GDP grows? Remember, defense spending is a part of government spending. The higher the government spending, the higher the GDP. It can be argued the USG doesn’t do diplomacy because it wants war. Remember what Mao said: “Political power grows out of the barrel of a gun.” I’d love to be wrong about that, but look at the aerospace and defense sector performance versus the S&P 500 since September 10, 2001: [SJN] The SPX is up 303.25%. But it underperformed the aerospace and defense sector by over 50%. Lockheed Martin returned nearly 2,000%. Northrop Grumman is up almost 1,700%. General Dynamics is up over 800%, and Boeing is up nearly 700%. Diplomacy takes time and costs money. With this kind of money on the line, I hope Tucker flies commercial to Moscow. Private planes are too easy to “disappear.” Just ask Yevgeny Prigozhin, the former Wagner CEO. Wrap Up I hope this interview happens. If Tucker can get straight answers from Putin, the American taxpayer may finally find courage and say, “Enough is enough.” Then, perhaps, the Democrats can return to doing what they usually do: spend all those taxpayer dollars inside the United States and rebuild the third-world infrastructure. Have a great week ahead! All the best, [Sean Ring] Sean Ring Editor, Rude Awakening Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your Rude Awakening e-mail subscription and associated external offers sent from Rude Awakening, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@rudeawakening.info. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. 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