As the trade war between the US and China heats up, don’t believe that China will dump all of its US dollars.
China Needs US Dollars
May 20 (King World News) – Peter Boockvar: To the chatter about the Chinese selling US Treasuries, they’ve been reducing their holdings for years as they are recycling thru less dollars that are coming in but the PBOC still needs as many dollars as it can get its hands on as long as much of the worlds Chinese transactions take place in dollars. Thus, don’t believe the threats about Chinese selling (see chart below).
Reality Check: China Needs US Dollars For Transactions
About The Stock Market
…everyone puts pencil to paper, I mean finger to computer, to try to guesstimate the economic and earnings impact. After doing so, what multiple should we pay for it? Should we pay 17x for 2019 S&P 500 earnings that will have difficulty withstanding a ratcheting up of tensions between the world’s two most important economies? Seems like a stretch…
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Maybe the response is, well interest rates are low and thus we deserve a higher multiple but interest rates are low because earnings and economic growth are slowing. The trade off. Keep in mind that with the S&P 500 at around 2800, every one multiple turn is therefore 280 S&P points. Yes, getting the EPS figure right helps but determining what that right multiple should be is pretty difficult.
***KWN has now released the powerful audio interview with Andrew Maguire discussing the gold and silver takedown and what to expect next and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: Greyerz – Frightening Changes Are Coming For The World And The Global Financial System CLICK HERE TO READ.