Mario Cavolo

Mario's Market and China Advisory Monthly Subscription Newsletter

The Core Approach

The core approach of my business and market advisory service follows a “macro to micro” approach; first to know the global economic picture and then down into the China-related views and finally, down to the micro view of each of us as individuals determining our own strategy and position. As a subscriber you will also find much additional commentary on the cultural aspects of China, which greatly impact the business and market environment.

I. Following The Trends of Key Global Economic and Market Correlations

The Global Business Environment with More of a Focus on China (and related Asia)
Major Global Stock Market Indexes and Commodities
Major Currencies
China-exposed ETFs and Stocks

In layman’s language: While there are certainly other parts to the puzzle, I spend the vast majority of my time following those asset classes above to make sure we have a clear, workable perspective of the global economic picture from which we then consider the China business and market environment. You will find further details below.

II. China: Understanding and Impact – Delivering the Essential “On the Ground” Perspective

Truly Understanding the China Business Environment
The Enormous Influence of Chinese Culture and Values
The Chinese Mindset – How Chinese “Think”
The Impact and Correlation of Chinese Stock Market Indexes
(Hong Kong/Shanghai/Shenzhen/Taiwan)

Specific Trend and Trade Recommendations in Global and China Asset Vehicles Primarily Via Select ETFs.

Following the Trends of Key Global Economic and Market Correlations I start with core global asset class understanding; making sure we (that’s me and all my resources) give you an intelligent overall picture and understanding of the trend and relationship for the coming year in major global indexes, major currencies, gold, oil and a few other assets when timely and poignant, such as the agriculture commodities.

Every day I start with the macro picture and work my way down, watching and researching the global stock indexes, the major continent economic conditions, gold, oil, and currencies. I don’t know how one could leave any of those asset classes out of the picture. I didn’t start understanding stocks and gold until I started following currencies; obvious to many of us now and make sure that now includes you!
On the various price charts we start with the longer term views (monthly, weekly, daily) and work our way down into the hourly and minute charts (8 hour, 4 hour, 2 hour, 60 min, 30 min). That’s the foundation I believe everyone needs and then we’re ready to focus on the China-related business and market insights with specific trend and trade analysis and positions.

I filter through a large pile of media analysis out there within which I can smell the analyst's bias and agenda. Sometimes they do it unintentionally, sometimes because they have their own agenda. Either way, you'll get my commentary to cut through the nonsense that really doesn't make sense and why it doesn't make sense.

Mainstream media investment news is already too old by 24-72 hours. Most of you know this and that’s why you subscribe to various timely and insightful subscriptions. Besides the monthly newsletter, we also uncover timely insights when they surface and deliver them to you with a "flash update" to your mailbox. It may be about a business situation, a political or financial policy announcement, a particular trade position. If it’s juicy in any way, we'll send it out to you as fast as we can.
I am not a bull, not a bear, not a doomsayer. I am a no nonsense, insightful realistic business advisor and coach. As a professional speaker, writer and media/radio host, I am responsible for the words which come out of my mouth and I have no interest in embarrassing myself. With regard to the market positions, I am happy to make money going long or short. I tend to favor the short side because I am a realist and like the fact that the short side happens fast and so can be very profitable. But I also see how the markets are propped up to the long side by mysterious forces and think ignoring that fact is dangerous. Again, especially with regard to the ridiculous and damaging misrepresentation of China-related information which I read every single day, it is my mission to correct those distortions so we can understand and respond more intelligently and more profitably.

China: Understanding and Impact - Delivering the Essential "On the Ground” Perspective

It is my mission to make sure you truly understand China. By this statement I mean to include:

China Business
China Markets
China Culture
China Mindset

Misunderstanding about most every aspect of Chinese business and Chinese culture is a global disease. It infuriates me and it is my mission to constantly correct it with respect to each key influential perspective you must understand. Every edition will include fresh topics covering some aspects of these four components.

To what degree am I qualified to accomplish this feat? If you take the time to read my many articles located on the website, you will get a sense of what I know and what I don't know. You will perhaps appreciate my insightful and direct point of view, yet it is also easy to notice that I am not a trained economist or academic.

With respect to sharing China-related commentary and analysis, I know what it means to "think and act like a Chinese" My social and business circle of foreigners are also living here at least 10 years, most of them happily married with a Chinese wife same as myself. I mention this because yes, it does matter. We will never "be" Chinese, but as much as realistically possible, we have earned the nickname Chinese refer to us with: An Old China Hand. We speak the language. We discuss business in Chinese. (My own Chinese language skills are intermediate level. I dare not say fluent!) We understand most of the subtleties in the language base. I can have a healthy argument with my wife, in Chinese! So to you, my Chinese is pretty amazing. If I have to give a longer speech or emcee an event in Chinese, for example, I have to be given that language well in advance and study several extra hours to be able to deliver that particular vocabulary. I once played a supporting role to famous Hong Kong and Chinese actors in a Beijing CCTV national TV mini-series entitled “Crazy Dancing Lady”. I had over 700 lines in 40 scenes during the course of the shooting. I spent 18 hour days on the set, learning my lines while having to communicate with the director and the crew and with famous actors and actresses like Zhen Zhe Wei (Eric Tsang) , China’s #1 male supermodel Hu Bing, and Cecilia Yip. THAT’S how I learned my Chinese, in the real world, with all of the subtle meaning and emotions attached.

Rather like astronauts, the number of us living in China for more than 10 years is quite small. We understand and have internalized the completely different set of values and context in relationships, business discussions, negotiating style and strategy. We know that in China, communication of direct meaning is rare. A "no" is rare. Hiding relevant information on the other hand, is common. The attitude is "why should I reveal my advantage if you don't know about it?" Americans regard that as deceit. Chinese can’t understand why you would be so stupid as to show your hand. But it depends, on the “situation”, the “context”.

We understand the macro and micro business environment of China. I have my consensus set of resources hand-picked and filtered over the years. I can smell a moron a mile away. Those of us in China for over 10 years can typically tell within less than a minute of watching another foreigner whether or not he or she is a new arrival, less than two years or an old hand. We're swimming in the Chinese business and culture vibe every minute of the day right here on the ground in China; business and cultural attitudes, mindset, and context.

Here’s an example; Jim Chanos’ recent commentary calling for a property bubble in China. I read the CONTEXT within which such statements are made and quickly get annoyed when I know darn well that such comments are being made out of proper context. They are far too rhetorical and don't add up in reality to what is really going on here in China. I don’t know Jim Chanos and I’m not really trying to knock the guy. I just know that anyone who is here in China in the thick of it right now knows that talk about a bubble in that intended context of the word “bubbles” is just plain silly. The guy doesn't even live here. I have lived in China for 11 years. I am on the ground; my finger is on the pulse. By the way, I am not saying a bubble could or wouldn't burst. I am saying those comments are as broad and general as to make them meaningless headlines.

Let's look at the property market in China. If property prices in China's 10 major cities go down THIRTY percent from current levels, so what? You think that's a problem or a bursting bubble? Oh please! 50% of the property owners don't even have mortgages! The other 50% paid an average of a 30% down payment for their mortgages and those mortgages are mostly 10 to 20 years because Chinese are not dumb enough to get a 30 year mortgage where then bank rapes you on interest charges during the first 10 years. Chinese DON'T CARE. They bought the apartment; they will pass it on to their children or sell it five years later. We're talking about 100's of millions of homes which fall into this circumstance I am describing. Such a supposed 30% bubble crash doomsday scenario would be no more annoying than a buzzing mosquito interrupting a sip of green tea.

Specific Trend and Positions in the Global and China Markets

Each month this section is where you will find our specific trend expectations and trading strategies. The world markets are now greatly influenced by the movements of the Hong Kong/Shanghai/Shenzhen bourses. At this time, our recommended trade positions are mostly in the ETFs for gold, oil, energy, currencies and China-related ETFs including several related China/Asia ETFs. If we tell you that we're long USD and short the EURO, we also let you know exactly which asset vehicle we are using for those positions. For example, EUO is the 2x short ETF we typically use if we are going to short the EURO. CZM/CZI is Direxxion's 3x leveraged China ETF pair. You will get a reminder warning from me not to stay in the leveraged ETF’s for too long a period of time because their daily calculating will eat away at your money. Quite simply, I expect you will use stop losses to limit your trading losses when a trade goes against you. I am not your babysitter. If you decide to let it ride hoping for a turnaround, that’s your business.

I remind you here and now that the first rule of trading is to NOT LOSE MONEY. The second rule of trading is to make money. Take profits frequently because when they are in your pocket, they are in your pocket. Of course let positions run with trailing stops. But when a position spikes favorably in your direction, taking some profit off the table, adjusting your position is smart. Don’t talk to me about the exception to the rule; that if you do that you could end up missing “the big move” Give me a break ok? I know I know. Consistently taking profits off the table is a good idea. Locking in some profits is a good idea because it is part of a smart, balanced approach. You will find this overview in every edition of your monthly newsletter. After receiving two or three issues, you can skip it and jump right down here to this month’s specific content.

What more can we do than invite you to become a subscriber with a 30 day free trial. If after receiving the first issue and a couple of flash updates during the month, just let us know before the 30 day period is up and we will happily cancel your order.

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All the best,

Mario Cavolo