Out of BARGAINING Chips: China vs. U.S.A. – GAME On!

Playtime is over.

These are real money, real governments, and real consequences.

Donald Rumsfeld said it once, and my partner uses this phrase often as well: “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”

Rumsfeld knew back then what we know now: when you embark on a new adventure (like a war with Iraq), there are many things you cannot factor in.

These are the reasons most human beings stick with a routine. It’s called the “comfort zone,” and we all love it, no matter how much we are fans of surprises as well.

Making tough decisions is a gift, then, a skill, even an art since they require the individual to not only have confidence in themselves and in a higher force, but because it involves RISK.

We’ve come a long way since old man Rumsfeld called the shots in Washington, but we are still in Iraq, paying for his judgement mistakes.

Donald Trump was a real estate developer, back then and well before that, who took major risks in the NYC market, and it paid off big-time. He then lost it all, only to make it back again. His life is the definition of excessive confidence, trial and error, and risk-taking.

He was confident enough to run for president when it was considered a lame joke.

He won.

The unknown unknowns, which the establishment didn’t foresee as they counted the days until Hillary’s victory, were that there is a great disgust with politicians in America and the willingness of vegetarians to try meat has brought them a juicy man in office (a willingness of voters to go with the wild card).

Now, what’s next is the main course – the filet mignon.

Courtesy: U.S. Global Investors

Yet, as you can see, the economy has reached such a well-developed stage that even record numbers coming out of the statisticians aren’t enough anymore. The market expected more, so the Surprise Index has fallen below zero.

Ray Dalio has officially called this the beginning of the war with China. He has turned bearish, but I remind you that the U.S. is booming, tightening, and just raising tariffs, which means that commodity prices could be heading much higher.

This comes at a point where the USD is overbought, commodities are at generational lows, and China is advancing their One Road, One Belt initiative.

To me, the next 6 months will determine how the next 5 years will be like.

We are in uncharted territory – there’s never been a more strenuous period since 2008.

It’s a pressure cooker, but I remind you that either we see a great new era opening up or this goes sour.

The cards are on the table – now we will see who is bluffing.

Best Regards,

Tom Beck
Research Partner, PortfolioWealthGlobal.com

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