Idea on Macro: - China's Credit Impulse has turned negative. - Credit impulse is the change in new credit issued as a % of GDP. - China's Government Bonds 10 YR Yield are correlated with China's Credit Cycle. - The Credit Cycle taking a downturn signals deflation. Bond prices will rise as borrowers (issuers) will expect to pay back the principal at a loss, and interest rates will fall to incentivize borrowing. During deflation, default risk increases. - There is news of China "cracking down" on the market... Warning signs: https://www.bloomberg.com/news/articles/2021-05-23/first-warning-sign-in-the-global-commodity-boom-flashes-in-china Commodities: https://www.reuters.com/world/china/chinas-industrial-commodities-slide-after-beijing-warns-market-crackdown-2021-05-20/ Cryptocurrencies: https://www.reuters.com/world/china/crypto-miners-halt-china-business-after-beijings-crackdown-bitcoin-dives-2021-05-24/ - However, these are simply headlines. What is occurring is a downturn in the China Credit Cycle, and deflation in their economy. - The US markets too follow the China Credit Cycle. After the 2008 bailouts, the US markets followed the credit impulse back to recovery. - Now China's Credit Cycle has begun a downturn. US markets have deviated so far from this traditional relationship - creating a global asset inflationary bubble, that there is only one thing left it can do, according to reflexivity... return to the mean. - Once the deflationary shock takes place, there are several ways out. WWII followed the Great Depression, with defense spending and inflation. - A wild thought, but perhaps with the UAP disclosures, the US is toying with an idea for future defense spending... https://www.cnn.com/2021/05/17/politics/ufo-pentagon-explainer/index.html GLHF - DPT