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China’s Economic Future: Speculation & Transparency Question

by with No Comment Economic CalendarEquitiesFeatured Highlights

China's Economic Future: Speculation & Transparency Question

China’s economy has been underperforming for a handful of years. Growth has not only stagnated but has experienced a downturn, deflation has been experienced. Strong leadership from Xi Jinping has led to a firm approach regarding the management of China’s political and economic affairs. Until this year, Xi’s grip on power had grown significantly since he took office as the President and General Secretary of the Chinese Communist Party in 2012, but his control appears to be waning. Yet even as lackluster Chinese economic data has persisted, the Shanghai Composite Index (SSE 000001) has mirrored many global equity indices and done remarkably well since April of this year.

The SSE is near 3,826 currently. In early April the SSE was around 3,080, and in the middle of September 2024 the Shanghai Composite Index was close to 2,700, which was clearly within sight of long-term lows. The current heights of the SSE have not been seen since August of 2015. Yes, the Shanghai Composite Index was over 5,000 in April of 2015 and also in 2007. The point being that highs being traversed have not been seen in a long time. But is the positive speculation in the SSE a sign that economic conditions and political considerations in China are positive? Where is the transparency?

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Shanghai Composite Index Five Year Chart as of 24th August 2025

China’s ability to create significant growth over the past four decades has transformed the nation into a global powerhouse economically and militarily. Yet, the past few years have begun to show cracks in the single handed approach to centralized decision making regarding the economy, government data presented has become suspicious. Rampant speculative forces in the SSE have been seen before. Is now the time to buy more Chinese equities or is it time to become cautious? Reliable statistics remain a troublesome aspect for investors.

China’s real estate market collapsed under the weight of too much building and speculative buying of apartments. Yes, inflated property and sudden deflation has been seen in capitalist countries in the past and will be witnessed again in the future. But the bubble in Chinese real estate and its crash also points out problems regarding a lack of transparency. While the Chinese government has tried to fix the fiscal problems caused by the real estate implosion, it has also created significant fractures within its banking system, which are confronting the Chinese government and public, and sometimes feels like a coverup trying to hide bad news. When will there be a recovery in the China real estate sector, is the worst of the crisis fixed?

Chinese political questions and some evidentiary circumstances point to intriguing considerations. There is evidence in China that a change of leadership is progressing. In the past couple of months small hints have been allowed to be published via China’s state media, the Xinhua News Agency. Rule changes have been made regarding decision making processes in the Chinese Communist Party, this was published by Xinhua in late June and republished by the South China Morning Post of Hong Kong in early July. While paraphrasing, both news entities expressed that rule changes meant Xi Jinping would officially have to delegate more decision making.

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USD/CNY One Year Chart as of 24th August 2025

Speculation is growing beyond a mere whisper that the Chinese military has become a wildcard and a source of power that is potentially ready to help remove Xi Jinping. The military apparently is not supporting Xi and wants a more collective approach to decision making via the Chinese government. Yes admittedly, this information can be described as being from news services and podcasts that do not favor the Chinese government, but they seem to be singing in unison. It appears that China’s People’s Liberation Army have decided it is time for a change and is ready to play a role in the selection of new Chinese leadership.

The 80th Anniversary Victory Day Parade in Beijing will be held on the 3rd of September, what role will Xi Jinping play in the show of military force? Will it become apparent that Xi is merely a figurehead until an official decision is made on how the Chinese Communist Party will be led? Importantly, the 15th Five Year Planning Conclave for the Chinese Communist Party will be held in October and this is where a leadership change could take place including the official removal of Xi Jinping.

There appears to be – yes, via the dissident information heard, two factions within the Chinese Communist Party vying for power – hardliners and reformers. The army still hasn’t made it clear if they are backing the hardliners or the reformers. What is evident however via many publications, is that China’s PLA has decided along with other important leadership circles in China’s Communist Party that Xi had too much control and they want a more collective leadership.

Regarding the Chinese economy which has undergone a period of stagnation and lackluster results the past handful of years under Xi’s strong centralized approach, something big is about to happen which will have ramifications for the next five years. Who will lead China? The hardliners who are true believers in ideological communism or reformers who want China to move towards more of a market economy? This is a huge question. This type of political infighting has been seen in China during the past four decades and played a role in key leadership changes. It is not a conspiracy plot which is being sounded, it is the possibility of a transfer of power which happens cyclically in many nations when changes are warranted.

China’s Shanghai Index has done well recently. Perhaps this is a correlation reflecting optimism being sparked globally in equities in recent months. Or is it also possible that some folks in the know are betting on the reformists to take control of the Chinese government? Tariff concerns have seemingly been brushed to the side in China and something bigger is certainly at play. President Donald Trump is not the story here. Investors participating in China need to pay attention to the political changes that seem to be brewing. While speculation has certainly brought the Shanghai Composite Index to long-term highs, transparency from China is a concern economically and politically and there will be an impact if changes to leadership occur.

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Interest Rate Cuts and Cautious USD Centric Gusts in Forex

by with No Comment AssetsBehavioral SentimentFeatured Highlights

Interest Rate Cuts and Cautious USD Centric Gusts in Forex

U.K inflation data this morning came in well below estimates, which almost assures the Bank of England will cut their Official Bank Rate on the 7th of November by at least 0.25 basis points. Tomorrow the European Central Bank will announce its Main Refinancing Rate and it is widely anticipated a 0.25 cut will be made official.

The downturns in the EUR/USD and GBP/USD are easy to see via three month technical charts, but both pairs remain above lows seen over the mid-term. However, the choppy and consistent selling in both currency pairs the past few weeks have likely caused pain for any day trader who has remained stubbornly bullish.

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EUR/USD Three Month Chart as of 16th October 2024

Questions surrounding the Federal Reserve remain murky and this is creating USD strength and cautious selling in other currencies. After a rather dovish sounding round of rhetoric from Jerome Powell and a 0.50% basis point decrease in mid-September, financial institutions clearly have become more guarded about the ability of the Fed to remain aggressively dovish. Will the Fed will cut by another 0.25 on the 7th of November and then say they believe they are done being dovish until additional data backs up their stance? Is there a capability the Fed will still cut the Federal Funds Rate by 0.50 over the next handful of month as once envisioned?

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GBP/USD Three Month Chart as of 16th October 2024

However, there is a chance the Fed will not cut in November and some analysts have banged their drums regarding this idea. But the Producer Price Index results last Friday did show that inflation remains under control. So I hold to the notion the Fed will cut by another 0.25 in November. Let’s see.

On Thursday the 10th of October the U.S Consumer Price Index statistics were slightly hotter than hoped for and this certainly caused some of the USD centric storms now thrashing financial institutions and day traders. It should also be mentioned that on the 4th of October the Non-Farm Employment Change numbers came in better than expected. But revisions lower in the jobs data the past handful of months needs to be remembered, and, yes, there will be another jobs report on the 1st of November. Which will be followed on the 5th by this little thing known as the U.S Presidential Election. So caution will be a solid instrument for day traders and possibly financial institutions over the next three weeks. The stronger move by the USD since the end of September has caught many folks off guard.

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Gold Three Month Chart as of 16 October 2024

Gold is trading near record high levels this morning, but intriguingly WTI Crude Oil has calmed down and is challenging near-term lows. U.S Treasury yields have come down slightly to start this week. The point being that while Forex and gold have seen volatility because of interest rates uncertainty, risk taking actually appears rather solid. Yesterday did see selling in U.S equity indices, but there is no denying U.S stocks remain within sight of ultra-highs. And I might be about to sound contradictory soon, and my own personal bias needs to be carefully given consideration by myself and you the reader. Because while I feel rather comfortable about the higher values in the major U.S indices, I do not feel the same way about Chinese equities currently.

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Shanghai Composite Index (SSE) Three Month Chart as of 16th October 2024

The Shanghai Composite Index has traded a little lower again, but this follows a massive swing upwards after Chinese stimulus intervention. But the U.S equity indices and the Chinese markets are not correlated. Perhaps mentioning the Shanghai Composite Index here is wrong, but the stimulus the Chinese government provided may prove to be window dressing on a storefront that suffers from poor economic infrastructure. Day traders in Asia and elsewhere who are betting on upside in Chinese equities need to be very careful, in fact they should be quite suspicious. Economic data from China to start this week has remained lackluster. On Friday GDP, Industrial Production, Retail Sales and New Home Prices data will come from China.

Major currencies which did very well against the USD since July have struggled the past few weeks as clouds have emerged regarding U.S interest rate outlooks. However, at some point day traders and financial institutions may believe the USD has sold off too much during this wave of caution. The JPY, GBP, and EUR have all lost value during this time. As always day traders need to remember they will find it hard to pick the correct time a strong reversal starts to take place. And it should be remembered because of the risk events lined up Forex volatility may rage a while longer. Certainly the outcome of the U.S election will be a factor in the days ahead and may create sideways trading outcomes in many assets until a winner is known.

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USD/JPY Three Month Chart as of 16th October 2024

But the global markets will remain open and trade. While shouts of danger should be listened to and given heed, tomorrow’s ECB meeting and outcome will be a good start to the parade. If the ECB plays the expected song and cuts the Main Refinancing Rate by 0.25 this will prove interesting, because financial institutions have already priced in the rate cut in most cases and they will wonder if their outlooks regarding the Fed and BoE are correct. The U.S will release data tomorrow with Retail Sales and weekly Unemployment Claims. On Friday housing sector results will come from the U.S also. These reports will provide USD impetus into the markets as the near-term is considered and wagered upon.

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AMT Top Ten Miscellaneous Interpretations on the 13th of Oct

by with No Comment Central BanksCryptocurrenciesFeatured Highlights

AMT Top Ten Miscellaneous Interpretations on the 13th of Oct

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10. Language: The French word histoirie includes both history and story via its English interpretation. The French usage conveys the acknowledgement that history is often subjective and a story written with an opinion which may or may not be the correct narrative.

9. Subway Series: New York baseball fans will be in an uproar this coming week as the Mets play the Los Angeles Dodgers, and the Yankees face the Cleveland Guardians. The potential of a crosstown World Series will have NYC holding its collective breath. New York fans shouldn’t celebrate too soon, because the Dodgers are dangerous and the Guardians will be competitive.

8. Free Press: CBS News in the U.S has been widely condemned this past week. Video released shows ’60 Minutes’ explicitly edited an interview with Kamala Harris. Also, a recorded and ‘leaked’ staff meeting from CBS management has come to light in which Tony Dokoupil, a news anchor, is reprimanded for asking critical questions to writer Ta-Nehisi Coates.

7. Barometers: Gold went into this weekend near 2,656.00, WTI Crude Oil closed around 75.45 on Friday, and U.S Treasury yields increased this week and are now challenging values last seen in the third week of August. Intriguingly, the major U.S equity indices continue to flirt with highs. Broad market results appear to be walking a tightrope as financial institutions seem to be waiting for November and U.S election outcomes. However, long-term investors who are diversified maybe cynical of this thought, and believe buy and hold remains the best policy.

6. Buy or Sell: Negativity surrounding Boeing via workers who are on strike, layoffs, a potential corporate bonds downgrade, production delays, and court decisions are still shadowing. In December of 2023, Boeing was near 265.00 USD per share value. Prices were near 158.00 this time last year, and as of this weekend Boeing is close to 151.00. The bad news surrounding Boeing has been a thorn in the side of investors. Boeing is a major corporation in the U.S and relied upon militarily and for global public aviation. What is the downside potential for Boeing the next year compared to upside capabilities long-term?

5. Crypto: The SEC has filed charges against Cumberland DRW LLC, claiming the crypto exchange has been acting as an unregistered dealer. https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26151 It appears the SEC is growing more aggressive via confrontations with U.S based cryptocurrency exchanges. The U.S election result will play a role in the future leadership and direction of the SEC, and could have an affect on cryptocurrency values. BTC/USD is near 62,700.00, ETH/USD around 2,465.00, BNB/USD about 575.00 at the time of this writing.

4. Tranquility: Stronger USD centric price action continues to create some downwards motion for other major currencies, but price velocity was not as violent last week compared to previous days since the end of September. Fragile sentiment in financial institutions is still stirring. The ECB rate decision this week will come Thursday and a 0.25 basis point cut is expected. Traders need to remember that a change to the European Central Bank’s Main Refinancing Rate has likely been priced into the EUR/USD. What needs to be heard now is ECB rhetoric and that is likely to remain guarded. Price velocity in Forex remains a danger for retail traders this coming week.

3. U.S Election: There are only three weeks left until the U.S vote. Day traders need to understand financial institutions will grow more cautious as the election approaches. Speculators may want to try and wager on the outcome of the election, but unless a definitive result is predictable beforehand, it will be hard to take advantage of political winds which are swirling. It will be nearly impossible for day traders to hold onto a position over the next few weeks unless they have deep pockets, use no leverage, and have the patience of a saint.

2. Make or Break: China will release important economic data this week. Trade Balance and Foreign Direct Investment numbers are tentatively scheduled to be released on Monday, along with New Loans reporting. This coming Friday New Homes Sales, GDP, and Retail Sales figures will be released. China is trying to stimulate the economy with billions of cash, but critics suggests this will not work. The Shanghai Composite Index is near the 3,217 mark, on the 30th of September the SSE was near 3,675. Before the China stimulus was released the Shanghai Composite was near 2,755. Bullish SSE momentum has run into headwinds since the beginning of October, China may be pressured to try and create more stimulus, but will it produce a lasting positive result? Traders caught up in the buying frenzy in late September are likely getting more nervous about declines. The USD/CNY is near 7.066. Chinese economic data should be monitored this week.

1. Interest Rates: The Federal Reserve via the CPI and PPI inflation reports still appears able to cut another 0.25 basis point from the Federal Funds Rate on the 7th of November. While the Consumer Price Index data showed a slight tick up in a few categories, Friday’s Producer Price Index met expectations via the core monthly report and the broad monthly outcome came in less than anticipated. The November interest rate decision is important regarding consistency per the Fed’s messaging the past two months, and mid-term behavioral sentiment outlook among financial institutions. U.S Retail Sales and Housing numbers will be published this week.

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Choppy Forex Conditions and the Trading Week Ahead

by with No Comment AMT MarketsBehavioral SentimentFeatured Highlights

Choppy Forex Conditions and the Trading Week Ahead

Forex traders may be feeling a bit perplexed if they have blindly been looking for a weaker USD the past two weeks. While outlook for a bearish USD over the mid-term remains a theme from many analysts, day traders need to accept that intra-day results often create price fluctuations which make wagering on short and near-term perspectives dangerous. Trading conditions have been turbulent the past week and early this morning.

While analysis of monetary policies and economic data are vital, it is also important to remember there is a significant difference between the desires and needs of businesses functioning in global commerce, and the trading perspectives of speculators who are hoping to ride on the back of ‘insights’ provided by experts. It should also be considered that coming out of the holiday season many global corporations are now repositioning for 2024, and the financial institutions that work for these companies are also trying to get these outlooks aligned.

The USD has become stronger over the past day against many major currencies, but looking for a 100% reason to explain why this happened is likely misguided. Most U.S financial institutions were closed yesterday for the MLK holiday observance. While inflation data from the U.S Producer Price Index was weaker than anticipated last Friday and caused a brief spurt of USD bearishness, the greenback is lingering within the stronger realms of its near-term values against many currencies.

The idea that recent USD bullishness may simply be a sign that financial institutions believed the greenback had been oversold over the past couple of months may be correct, but this also opens the door for the potential of a reversal to develop and more USD selling as sentiment and economic data try to dance in a unified manner.

The week ahead may still prove to be choppy, but there are interesting bits of evidence that risk appetite lingers within the stomachs of many large investors. The slight rise in U.S Treasury yields recently may be worrying to some, but it should be acknowledged that the climb higher has been achieved while yields remain near mid-term lows. The same can be said for U.S equity indices which provided choppy conditions last week but certainly remain in highly valued realms.

Patience is a needed tool when trading, speculators looking for instantaneous results often lose money because they are being too aggressive. Risk taking tactics always have to be given importance.

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Gold Three Month Chart as of 16th January 2024

Gold remains rather comfortable above the 2000.00 USD level. As of this writing the spot price for the precious metal is near 2050.00 USD. This is fascinating because it underscores the notion that long-term gold buyers appear to believe the USD will remain within weaker territory. But again, short-term and mid-term outlooks for speculative wagers are two very different things.

Tuesday, 16th of January, Canada Consumer Price Index – the inflation numbers from the ‘North’ are expected to be lower than last month’s results.

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Shanghai Composite Index Five Year Chart as of 16th January 2024

Wednesday, 17th of January, China Industrial Production and GDP – recent economic reports regarding the deflationary troubles the nation is facing have been loud. The industrial and growth numbers should be monitored. The Shanghai Composite Index (SSE) is trading near values last seen in May of 2020, this is not a good signal.

Wednesday, 17th of January, U.S Retail Sales – the consumer data will have an affect on sentiment in the broad markets. The results are anticipated to match the Core Retail Sales gains from last month, and the broad number is expected to be slightly higher. Traders should be alert in case a surprise outcome occurs. If the statistics are close to the estimates, this could create some calm in Forex and perhaps set the table for USD weakness to be seen for a moment.

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USD/JPY Three Month Chart as of 16th January 2024

Thursday, 18th of January, Japan Revised Industrial Production – while the report is not viewed as a major piece of financial impetus in the speculative world, the USD/JPY has been rather dangerous for short-term traders caught on the wrong side of recent bullishness. If the number comes in at minus -0.9% as expected, it will then likely take USD centric bearish sentiment to cause a reversal lower. The past two weeks in the USD/JPY have been difficult for traders looking for downside momentum. A stronger than expected industrial number from Japan would likely help USD/JPY bearish outlooks.

Friday, 19th of January, U.K Retail Sales – the British consumer spending numbers are expected to come in weaker. The GBP/USD is currently trading near early January values as choppy short-term conditions persists.