As you know by now China is having potentially a cascading failure in their property market. China has many cities the size of New York City without people living there. It is quite the epic Ponzi scheme. Evergrande has been selling houses "it will make in a few years", pulling in cash now and essentially creating the worlds largest Ponzi scheme. US investors unfortunately put money into China, including Ever Grande. UBS is the number two foreign bond holder of Evergrande.
If China doesn't simply give Evergrande 300 Billion, and the other companies right behind it money, then the financial bomb will go off. It may be China's plan for this to play out this way, as a way to weaken the west. So I am not so sure if they will stop it.
And lastly, even *IF* they do a stick save, I assume we have seen the switch flipped from risk on to risk off. So any counter rally maybe the last time to get out of longs for potentially a decade.
The US economy is not nearly as strong as before January 2020, yet the market is much higher. The US has replaced this economic downside with free money. The USA has debt ceiling limit in October-November that must be raised, otherwise for the first time in US history America will default on its debt.
If one Democrat votes against raising the debt ceiling, and not a single Republican votes to raise it, the US will default. A default on the world reserve currency will be also a first. Technically AAA assets, a US bond becomes a much lower quality. If banks around the world reflects this reality it would be a cascading disaster.
But fear not! I am confident the world banks will treat US treasuries that are in default, as not in default.
Between now and January, I am inclined to think the top is in, and USA will see at minimum a 5 year deflationary backwind. However, if USA can get Republicans to back free money for everyone, then it will halt the deflationary forces.
If Bitcoin can get as low as $20k a coin, it will be the buy of a lifetime, I will put material assets into it. Bitcoin may not break $30K, and become the new 'safety play'. I can't say what the bottom is, but it changes nothing with my view $100K to 1M a coin ahead.
Gold I assume will get routed, as China is a big gold holder, and there will be forced selling. I also have a hard time seeing gold ever recovering to the point its attractive, as Bitcoin is the new alternate play. With that said, if Gold one day is 'insanely cheap', its a good way to diversify.
I am in bonds, but I will dump without notice. For its a race between deflation and eventual US potentially defaulting. Cash is king right now.
A decent "short" ETF is DOG & SRTY, and long bonds is TLT.
Good luck!
