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hardnox
Advisor

China remains key

http://www.nakedcapitalism.com/2017/05/great-china-crash-upon-us.html

 

China pulled the world out of the 2008-9 financial crisis with massive debt creation and continues to tick along smartly.

 

http://www.marketwatch.com/story/chart-shows-chinas-debt-bubble-bigger-than-subprime-bubble-2016-05-...

 

Lots of roadkill made up of people who have predicted a major economic reset for China. Could be that the hybrid command/capitalist system is superior but I'll go with history that says that there's always been a rough patch in the shift from an investment/export economy to one based on domestic demand.

 

The recently noticed weakness in commodities- particularly metals and energies, seems to be another one of those periodic events where credit tightens and their hedge funds and SIVs etc. get shucked off a bit.

 

Probably just that, but a real deal it is the most likely black swan that could land on the pond in the future.

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2 Replies
timetippingpt
Honored Advisor

Re: China remains key

It is not a black swan if it so easily predicted, and frankly, it is expected, based upon their ludicrous monetary/fiscal/debt  policy. Just a matter of "when" not "if". As a major exporter, ag will have to deal with it someday.

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hardnox
Advisor

Re: China remains key

As noted, only insofar as you take your eye off the ball because people have been crying wolf for years.

 

Don't know that it even enters into marketing considerations other than to keep in mind that there are above average fat tail risks.

 

Not certain that a Chinese financial crisis would even necessarily affect demand for grains and meats a great deal- they'll probably keep food security above all else.

 

More a matter of the backwash from another general commodity shakeout.

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