REVEALED: 10 potential netflixes of the 2020s

Monday, 3 December 2018
Melbourne, Australia
By Bernd Struben

  • ‘Gold will erupt…’
  • Have you been paying attention?

I don’t know what they ate for dinner. Or what they washed it down with.

But by the time US President Donald Trump and team finished their two hour meal with Chinese President Xi Jinping and his gang in Buenos Aires on Saturday, their placating words on the trade dispute spurred investor hopes across the world.

Enough at least, to send the ASX 200 up 1.73% at time of writing and China’s CSI 300 up 3.13%.

US investors are also optimistic, with futures for the Dow Jones up 1.91%.

Now I hope this positive outcome didn’t surprise you, despite all the doubts sowed by the majority of mainstream analysts over the past months.

We’ll get back to that below.

But first I need to tell you about the most important piece of medium-term stock speculation research Port Phillip Publishing has ever produced.

It’s called The Third Wave Portfolio. And it’s intended to pinpoint the stocks with the highest potential of being 2020’s superstars.

To be precise, the Third Wave Portfolio showcases 10 global stocks.

One you might have heard of.

The rest will probably be completely unknown to you. I hadn’t heard of most of them myself.

But their current relative obscurity is unlikely to last. And it’s one of the reasons we believe these stocks could rise not hundreds of percent but, potentially, thousands or even tens of thousands of percent.

Not overnight though. Over the course of the next decade.

Each one of these stocks could do this by riding something called ‘The Third Wave’.

For reasons you’ll see on Wednesday, this Special Portfolio is perhaps the most important — and timely — stock research Port Phillip Publishing has ever published.

Tune in tomorrow and you’ll see why.

Now to the markets…

Markets

Over the weekend, the Dow Jones Industrial Average was up 199.62 points, or 0.79%.

The S&P 500 gained 22.41 points, or 0.82%.

In Europe the Euro Stoxx 50 index finished down 1.03 points, or 0.03%. Meanwhile, the FTSE 100 fell 0.83%, and Germany’s DAX closed down 40.99 points, or 0.36%.

In Asian markets, Japan’s Nikkei 225 is up 309.74 points, or 1.39%. China’s CSI 300 is up 3.13%.

In Australia, the S&P/ASX 200 is up 97.95 points, or 1.73%.

On the commodities markets, West Texas Intermediate crude oil is US$52.62 per barrel. Brent crude is US$61.17 per barrel.

Turning to gold, the yellow metal is trading for US$1,221.73 (AU$1,661.99) per troy ounce. Silver is US$14.23 (AU$19.36) per troy ounce.

(More on gold below…)

One bitcoin is worth US$4,123.18.

The Aussie dollar is worth 73.51 US cents.

‘Gold will erupt…’

We’ll get back to Trump and Xi’s pleasant words from Argentina — and what they mean for markets — shortly. But first…

With Sam Volkering taking a bit of leave, on Friday you heard from our in-house resources analyst, Jason Stevenson.

Jason’s had a love hate relationship with gold over the last five years. If you read Friday’s Port Phillip Insider, you’ll know he’s now firmly back in the love camp.

For reasons that hinge on rising Democratic efforts to impeach Trump, to a range of global uncertainties that could shock the markets in 2019, Jason sees gold surging higher.

And he isn’t alone.

Bloomberg ran the following headline on Saturday, ‘As Fed Rethinks Path for Rates, Gold’s Poised to Rally in 2019’.

The article quotes Trey Reik, a senior money manager at the US unit of Sprott Inc. which oversees $7.6 billion, as saying:

Once you get to the consensus view that the Fed may be done, the dollar may come under severe pressure. Gold will erupt.’

And Sprott isn’t the only big name money manager calling for higher gold prices. The same article continues:

Goldman Sachs Group Inc. recommends an outright long gold position into next year. “If U.S. growth slows down next year, as expected, gold would benefit from higher demand,” analysts including Jeffrey Currie said in a Nov. 26 note that endorsed bullion as one of its top-10 trade ideas for commodities.’

You can add to the positive outlook for gold the potential shocks from a faltering Italy, potential impeachment proceedings against Trump, ugly looming snags in the Brexit process, and perilous levels of global debt…to name just a few.

This is why Jason Stevenson sees gold going higher than most mainstream analysts would dare to speculate. And it’s why he spent many long days researching three gold ‘Shock Stocks’ that could rocket higher on a rising gold price.

You can get all the details in Jason’s new research paper here.

Have you been paying attention?

Now let’s get back to the positive noises coming from the leaders of the world’s two largest economies.

Following weeks of threats to ratchet up sanctions on 1 January, Trump eased up on the pressure. And Xi, in turn, ramped up the concessions China could make to put an end to the trade ructions.

In short, the two men agreed that China and the US would halt additional tariffs as their teams embark on fresh trade negotiations. The goal is to reach an agreement within 90 days.

Trump, in typically…erm…staid fashion, labelled the deal ‘incredible’, ‘tremendous’ and ‘positive’. The Chinese were almost as ebullient.

From the RAW newswire:

‘“It’s an incredible deal,” Trump said. “What I’d be doing is holding back on tariffs. China will be opening up. China will be getting rid of tariffs.”

He said under the deal China would buy a “tremendous amount of agricultural and other product” from the United States.

“It’ll have an incredibly positive impact on farming.”

State Councillor Wang Yi, the Chinese government’s top diplomat, told reporters in Buenos Aires the two sides believed the agreement “effectively prevented the expansion of economic frictions between the two countries”.

“Facts show that joint interests between China and the United States are greater than the disputes, and the need for co-operation is greater than frictions,” he said.

Now a lot of sticky issues need to be resolved within that time. If not, the White House says that Trump will go ahead with increasing tariffs on China’s goods from 10% to 25%. Something they say the Chinese agreed to. And something that will almost certainly send global markets back into a tailspin.

Already, political and financial pundits are coming out of the woodwork cautioning about the potential pitfalls ahead that could yet usher in a global trade war.

They may be right. There are a lot of dots to connect between now and then.

But let’s not forget these are mostly the same voices who doubted any progress would be made in Argentina. The same voices who believed Trump when he said he’d go ahead with his timeline for hiking the tariffs on 1 January. The same voices who appear to have largely lost the thread the moment Trump moved into the White House.

While anything is possible, I’ll go back on record to say both sides have enormous reasons for seeing this new ‘incredible deal’ through. And I fully expect them to do so. Just as I fully expect there to be further bluster and threats from Trump on the way.

We’ll see how that plays out over the coming months.

In the meantime, permit me a bit of self-indulgence.

Here’s a review of some Port Phillip Insider issues where I wrote to you — repeatedly — that the US–China trade tensions would end sooner than later.

On 2 October, shortly after Trump successfully renegotiated NAFTA (soon to be the USMCA) I wrote the following about my outlook for the US–Chinese trade conflict:

Most analysts are suggesting you prepare yourself for a protracted trade war between the world’s two largest economies.

I’m going to disagree. And not just because I tend to swim against the stream.

But the ball here is in China’s court. They’re going to have to make some significant concessions for Trump to, well, trumpet to his base before he’ll ease off the pressure. And President Xi Jinping will need some prodding from back home to make those concessions.

That prodding is likely to come from the nation’s powerful business leaders. China’s stock market has been amongst the world’s worst performing this year. And now the trade war is beginning to impact Chinese factories.

I returned to the theme on 30 October. Here’s an excerpt from that day:

China’s Xi Jinping has been busily accumulating power, including earning the right to rule for life. But I suspect his authoritarian grip isn’t nearly as ironclad as the Communist Party would have the world believe.

If China’s economy begins to splutter, unrest in the rapidly urbanising country of 1.4 billion people could grow quickly. And Xi could find himself out of a job…his legacy in tatters.

That’s why Trump can confidently play hardball…

That’s why you should keep an eye on what happens during the Group of 20 summit in Buenos Aires.

The summit takes place on 30 November and 1 December. And though still in the planning stages, Trump and Xi are intending to meet on the sidelines.’

The next day, 31 October, I continued:

Though still in the planning stages, Trump and Xi are expected to meet on the sidelines. I think from there we’ll see new high level trade talks announced…and that this time they’ll reap results.

With this in mind, global stock markets could be set for a big bounce in early December. Particularly China’s CSI 300 index, currently down 22.84% in 2018.

We’re certainly seeing that stock market bounce playout today. And with Trump having seemingly cowed Fed Chair Jerome Powell into capping US interest rates for the time being, that bounce could run well into 2019.

I offered a few Aussie blue chip stocks that were likely to benefit from a resolution of the trade war on 31 October. On 7 November, I also mentioned an ETF you might want to look into:

If you agree that the trade war is on its last legs, and China’s economy could see a boost, you could also consider investing more directly in Chinese stocks.

The Chinese stock market has been one of the worst performing global markets this year. The CSI 300 is down 25.8% since its high on 24 January.

However, it’s up 5.8% since 29 October.

If Trump and Xi bury the hatchet, positive investor sentiment could see those gains continue. And the iShares FTSE/Xinhua China 25 Index [NYSEARCA:FXI] could gain right alongside it.

At this point, blind to the fact I might be a bit obsessed with the issue, I followed up again on 15 November:

The writing is on the wall.

Granted, it’s a bit smudgy…and open to interpretation.

But the way I read it, the simmering trade war between the US and China is nearing its endpoint.

This will have profound implications for global trade and the Aussie stock market.

Of course, not everyone agrees. But then what fun would that be?

One of the many prominent analysts who did disagree was Nobel Prize winning economist Joseph Stiglitz.

Stiglitz predicted there was a greater than 50% chance we were about to embark on a damaging trade war. He stated, ‘It’s just beginning to sink in that we are going to go to a trade war of a serious proportion.’

But his obvious hatred for Trump — he mentioned misogyny, racism and bigotry in his analysis — looks to have blinded Stiglitz to what was really happening.

As I wrote that day, ‘If Stiglitz is proven wrong here, as I suspect he will be, this should prove great news for the battered Chinese stock market.’

On 19 and 20 November I returned…once more…to the trade war. This followed on the APEC meeting, where Mike Pence — playing the role of ‘bad cop’ — sent fear rippling through the markets with his hard stance on China.

The Australian Financial Review, for example, ran the headline, ‘China revolts as US trade war escalates’. The rest of the mainstream financial press had similarly dire forecasts.

My response?

The consensus view, as you can see in the excerpts above, overwhelming has it that the trade war is only just beginning. It may even evolve into a new Cold War.

Shock? Horror? Time to sell all your stocks even remotely dependent on international trade?

Maybe.

But I don’t think so.

On Tuesday, 27 November, I took my last stab at connecting the dots in this big picture.

I expect we’ll hear positive noises coming from both sides following the two leaders’ meeting in Brazil this weekend.

Xi will give the nod to his team to make some significant concessions. And Trump will do one of his signature backflips and offer to suspend the next round of tariff hikes while his people work out a deal he can crow about back home.

If I’m right, that should prove good news for the Aussie and global stock markets heading into the Christmas holidays.

If you’re still with me after my rather lengthy reflection to bask in the spotlight, I have some questions for you.

Have you been paying attention?

Did you get ahead of the pack and invest in some key Aussie exporters likely to gain from a thaw in the trade tensions? Or perhaps invest in iShares FTSE/Xinhua China 25 Index [NYSEARCA:FXI]?

Whether you answered yes or no, we’d love to hear from you. Alongside any other thoughts you may have on the trade negotiations going forward…or anything else that’s on your investor brain.

Send your replies to letters@portphillipinsider.com.au. If we publish your email, we’ll only use your first name for privacy reasons. Just put ‘Attention Bernd’ in the subject line so I’m sure to receive it.

That’s well beyond my word count for today! Back with you tomorrow.

And don’t forget to check out the latest on life inside China from The Australian Tribune:

‘Shocking! 1.1 Million Chinese Spies Move in With Uighurs’

Over in the US concern is mounting that more than a few of the 360,000 Chinese nationals studying in US schools could be spying for the Communist Party.

In Australia, the Defence Department says that state sponsored hackers, predominantly from China, were penetrating the department’s computer systems.

But the real spying, on a level that would put George Orwell’s 1984 to shame, is…

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd