Big DAX Trouble in Little China

China vs Germany

By this point, even my barber asked me what’s going on with the DAX vs China out-performance.

The DAX has outperformed China by 15% in a month (I’m using HSI here as a proxy)

And over a year, it’s even more impressive: DAX outperformed HSI by 40% !!! In fact, if you had come in the new year and that was your only trade, you’d be the best performing macro fund in the world probably. Investing is easy … in hindsight !

Incidentally, if we plot the DAX against the EU Nat Gas price we arrive at a near perfect inverse correlation!

Was the DAX a nat gas trade after all???

While we ponder on all these existential questions, I can’t help but think that the DAX and the HSI / China should start trading together or converge at some point since there are similar economic drivers between them.

There’s an important economic conference taking place in China this week, aptly called the “Central Economic Work Conference”, where China’s best and greatest leaders gather to set economic policies and goals for the year ahead.

This may be a catalyst to get it going a bit, assuming they get their act together.

In the meantime, the FXI (China) ETF printed a little bullish candle. If you look at the bottom right of the chart and squint you might notice it. I call that candle “Hope”!

While we wait for all these life-changing events (in the life of a fruit-fly), I leave you with a meme from one of my favourite films of all time.

Bless and Good Luck to All. We will need it

Disclaimer:

This isn’t financial advice.

This is the trading blog of a shrub.

Don’t be Stupid.