I am beginning to wonder at the stupidity of some Institutional investors and their Brokers. Case in point REE/CM ETF funds.
As soon as the West undertook the decision to sever the leash to China's Monopoly, the writing was on the wall that China would look for ways to try and scupper the plan. Most of us are well aware of Beijing's ability to control their internal Markets, for years they have kept RE prices at or just below the levels that Western companies could operate profitably at. Eventually, the US decided to break that Monopoly by setting a pseudo floor price on NdPr by guaranteeing MP's (inc) future revenues.
This week's latest retaliatory move by China was to crash RE and especially NdPr prices, it has certainly had an effect. Yesterday's crash in SP's was pretty well across the board! But how? when the stated goal of the West was to totally divorce itself ie become independent of China!
IMO yesterdays across the board drops were brought about by Computer driven dumping, initiated when a number of ETF funds started to go into reverse. Why? take a look at what is in many of these Funds. One of the main ones, REMX still contains 26% of Chinese stocks, when those stocks tank because of a Beijing dictated price drop they will drag the whole fund down with it, to be quickly followed by every trader's computer Algorithm that uses that index to set its direction for the coming day. It becomes a self-perpetuating avalanche.
Only a fool would scuttle a ship and then leave his life-raft still tied to it!
