Hyperloop VS High-speed rail

While China is developing her High-speed rail which China’s government claims that it is the world’s longest high speed railway network, the World especially US is working on the project called Hyperloop.

China High-speed rail trains can almost run at speed from 250 km/hr to 350 km/hr. Compared to the Hyperloop concept, High-speed rail trains may not be fast enough. A Hyperloop is a proposed concept of passenger transportation and conceive may carry passengers along the 560 km route at a speed of 1200 km/hr. The idea is that a pod can travel free of air resistance in a sealed tube at high speed efficiently. Even though some experts are skeptical and concerned about its cost and safety, some US companies such as Boeing, Tesla and SpaceX are still planning to think beyond the boundary. Maybe it is still a concept now, however, 10 years later or 20 years laters, we may thank these companies for this amazing idea.

We all know that China’s government right now initiates One Belt One Road development strategy which involving infrastructure investment, construction, railway, highway, automobile and real estate among Eastern Europe, Asia and Africa. There’s no doubt that the One Belt One Road project will help China to extend its affections around the world which triggered the US. The US must do something to balance the influence of China. Promoting Hyperloop project will be the way to go.

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What does it means when housing prices go down in Hong Kong

Given that the US federal Reserve increased interest rate by 0.25%, the escalated China-US trade war tension and the upcoming vacancy tax in Hong Kong, the world’s most expensive property market prices drop about 2.5-5% which compared to last few months.

Together with major Hong Kong banks raising their prime lending rate for the first time for decade, the property bullish market in Hong Kong has come to the end. People in Hong Kong are witnessing the economy is going down in 2018. The purchasing power from mainlanders are weaken due to the RMB devaluation. The HS index has already dropped from the top by nearly 5000 points. Hong Kong economy growth depends on Chinese economy and Hong Kong lacks economic characteristic after hand-over. Hong Kong does not have any developments on special or significant areas as such AI platform, IT or creative technology industries. Hong Kong economy growth is mainly leading by banking and housing markets. Most of the economy analysts believe that the bullish stock markets and housing markets in Hong Kong are benefited by the hot money from China.

When the Hong Kong economy is going down, industrial productions will drop, retail sales will drop, consumer confidence will drop, new jobs will drop and finally housing price will drop. House price will always be the last thing to drop. Once it begins to drop, the correction will be 5-10 years because property is not a liquid asset. If there is a recession in Hong Kong, no one can get a mortgage from bank and you cannot sell at good price.

Low inflation is a sign of recessions.

Federal Reserve must raise the interest rates or the recessions and deflation will come.

The low inflation is a signal of economic problems and related to weak economy. Global inflation rates have been low since the financial crisis of 2008. The too-low inflation makes unemployment high and makes the consumer confidence low. People and business may be less willing to make investment and spend on consumption, and then it may bring the economic to recessions and deflation.

Even though Donald Trump keeps inciting trade wars with Canada, EU and China, it has not sparked any increase of inflation yet. Economic history has shown that economies perform best with slightly higher levels of inflation, such as 2-3%. If the inflation too low, the companies may not have leeway to raise prices and that may force them to cut costs or cut back on hiring. And low inflation often come along with lower wages. Lower wages may cause consumers become less motivated to spend.

So I am looking forward to two more hikes in 2018.

Does Trump change the US traditional allies?

The US diplomatic relations with her traditional allies such as EU, Canada and EU are changing. There is no doubt that the trade policy is isolating US from her traditional allies. Moreover, the US-Russia summit which held on 16 July just increases her allies’ concerns that traditional allies are not permanent allies.

Obviously, the Trump-Kim summit represented Trump’s most significant victory during his presidency. And his also tweeted that “There hasn’t been a missile or rocket fired in 9 months in North Korea, there have been no nuclear tests and we got back out hostages.” However, Trump was facing a bipartisan fury after the Trump-Putin Summit and the media just denounced him as “shameful” and “disgraceful”. While many US politicians and US intelligence community believe that Russia really meddled in the 2016 election, Trump just called “President Putin was very, very strong”. There is no one can explain what Trump-Putin Summit means, not even the US government. I am very curious about what these two “HISTORIC” summit mean. Do they mean US is seeking structural changes on diplomatic relations? Is Trump going to set up a strategic alliance with Russia and North Korea to counterbalance China?

Trade wars and Fed’s rate hike meet at the same time?

We are stuck in the trade war and no one seems to foresee any clear path. Actually, before the US-China trade war was on everyone’s mind, the biggest fear facing the global investors should be rising interest rates.

Federal Reserve Chairman Jerome Powell emphasised that the economy is doing very well in June 2018. Some say that the Fed is going to act because of the US job market and inflation instead of the political news. In other words, if the trade wars have no impact on the US job market and inflation, the Fed will keep rising interest rates and two more hikes in 2018 are coming. Furthermore, the Fed has so many reasons to keep rising interest rates gradually. And I believe that the Fed plans to keep hiking even though the risks of trade war mount.

We are going to see that rising interest rates and trade wars will happen at the same time! Are you well prepared for that?

It is not just a trade war. It is a war.

The US president Donald Trump just announced that he is preparing another round of tariffs on Chinese goods which worth USD 200 billion. China’s Commerce Ministry responded that the upcoming round tariffs were unacceptable and warned that China would strike back against US with countermeasures. However, China has not yet provided any details about the tit for tat actions till now.

What Trump is going to do as the US president is spending $10 to make China losing $8. It is not just a trade war. It is a war! The US president just focuses on making China loses money. So, you should never think you are clever enough to gain in stock markets right now. Keep Cash!