China scrambles to boost its economy... Another interest rate cut... Sjuggerud's latest thoughts on China... Druckenmiller is bullish on China... The biggest anomaly in finance today... Steve's latest prediction...
The People's Bank of China (PBOC) is in an all-out currency war.
On Sunday, China's central bank cut the amount of cash that banks must hold on reserve. The PBOC cut the reserve requirement ratio for all banks by 100 basis points to 18.5%, effective April 20. Lower reserve requirements encourage banks to lend more money.
In November, China cut its benchmark interest rate. In February, the PBOC cut rates again. A central bank official said it was to fight "deflationary risk and the property market slowdown." Then, last month, the PBOC lowered the overnight lending rate it charges commercial lenders from 5% to 4.5%.
The message is clear: The world's fastest-growing economy is slowing down. A recent report published by Xinhua News Agency – the official news service of the PBOC – stated...
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As regular Digest readers know, True Wealth editor Steve Sjuggerud is bullish on Chinese stocks. I asked him for his thoughts on China's latest move. As he explained to me via e-mail...
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We wrote in detail on the bullish argument for China in the March 31 Digest. And Editor in Chief Brian Hunt recently wrote about the rally in Chinese stocks and Steve's bullish call in the April 7 Digest.
In short, Steve became bullish on China late last year because valuations were cheap and the government was dedicated to stimulating the economy and encouraging investors to buy stocks.
As you can see from the chart below, his thesis was right on...
True Wealth subscribers are up 83% on the Deutsche X-trackers Harvest China A-Shares Fund (ASHR), which Steve recommended in mid-September. But there are more gains to come...
Billionaire hedge-fund manager and trading legend Stanley Druckenmiller agrees. Druckenmiller worked for billionaire investor George Soros when they "broke the Bank of England" by shorting the British pound. And he went on to make billions of dollars himself in his hedge fund, Duquesne Capital.
Druckenmiller recently appeared on Bloomberg Television, where he talked about the boom in Chinese stocks...
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Steve wrote about how cheap H-shares are today versus their mainland China counterparts. In many cases, the same companies trade in both Shanghai and Hong Kong. But the shares of the exact same company are much cheaper in Hong Kong. In today's edition of our free e-letter DailyWealth, Steve called it "the biggest anomaly in finance today"...
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Steve recently made another major prediction about China. He believes China's stock market isn't the only asset that will soar in value.
For years, China has been working to diminish the global role of the U.S. dollar and make its own currency, the yuan (or "renminbi"), more powerful. He says we'll likely see an announcement this October from a powerful and secretive financial body that could drastically shift the global economic landscape. If you're on the right side of this shift, you could make a huge profit.
Steve just released a video presentation explaining his prediction. If you're an investor, you don't want to miss it. If his prediction is correct, anyone who owns stocks, bonds, real estate – honestly, almost any financial asset – will be affected. You can view Steve's presentation here.
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April 21, 2015
