Today King World News spoke with the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds in the world and he discussed gold, China, stocks, and warned Bitcoin buyers.
December 8 (King World News) – Michael Belkin: “Global financial markets are caught up in a late-year roach motel. Part of the global euphoria came from Chinese domestic purchases of Hong Kong Stocks through a link between Hong Kong and Chinese stock exchanges. Following the recent Communist Party Congress, Chinese authorities clamped down on those Chinese outflows that had a 60-fold increase since 2014…
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After the Chinese clampdown, the FXI Hong Kong China stock etf suddenly fell by about 10%. China stocks are the biggest weighting in the EEM emerging market etf which has also slumped in the past two weeks. The emerging market bubble is starting to deflate on the removal of Chinese bubble outflows. EM euphoria has been one major component of the global speculative bubble.
Could Not Sell $10 Of Bitcoin Into Rising Market
Bitcoin is obviously another. Bitcoin futures start trading next week on the CBOE and at the CME the following week. There has been no practical way to short Bitcoin until now. The new futures will bring sellers into the market. Bitcoin is obviously a huge bubble that has siphoned interest away from gold assets. Bitcoin has zero intrinsic value, which is perfect for the current speculative bubble mentality. Individuals are buying Bitcoin simply because it is going up. When it starts going down they may find themselves locked in a roach motel. A Yahoo Finance story by Rick Newman today said he had trouble trying to sell $10 worth of Bitcoin into a rising market. He got a SELL FAILED message. If you have problems selling $10 worth of Bitcoin into a rising market, imagine trying to sell $1 million into a falling market.
Gold Will Get A Boost
Gold has been getting whacked while US stocks have been rising, the VIX has been falling and Bitcoin has been bubbling. That makes sense because gold assets are negatively correlated to rising stock prices. But the stock market bubble roach motel door is closing. FANG stocks (GB, AMZN, NFLX, GOOG) that are the biggest holdings of hedge funds are not leading the market higher anymore. The Nasdaq has not been able to get above its high of Nov 28th from 9 trading sessions ago. Hedge funds and momentum funds would love to ramp FANG stocks up into year-end to pad their bonuses. But it looks like a classic imbalance where everyone is already long. I’m expecting a selloff of Chinese and Hong Kong stocks, emerging markets and FANG stocks. That should lead to a spike in stock market volatility and a rise in the VIX, VXX, etc. Remember, gold assets are negatively correlated to the stock market and should get a boost when the global stock bubble bursts.
As for Bitcoin and FANG? You can check in but you can’t check out. Roach Motels.”
***KWN has now released the fascinating audio interview with Egon von Greyerz, who gives his 2018 predictions and a few surprises as well and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: MAJOR ALERT: One Of The Greats In The Business Just Issued This Dire Warning About Bitcoin CLICK HERE.
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