Global corporate, private, and governmental debt has never been this great percentage of global GDP.

With transient consumer inflation secondary to covid governmental QE stimulation, supply chain interruptions,  higher diesel and gas prices, avian flu poultry culling, Covid retiree surges,  7-8 % higher 2022 COLA’s to spend in the US service sector, and secondary transient labor shortages in the service sector to the 7-8% COLA increases,   QT measures and  interest hikes are smashing against recent European, Japanese, and US equity higher and lower high equity valuations.

Chinese equities and property valuations are at the cliff’s edge of precipitous falling, as Chinese workers over the last 5 months have received lower wages and defaulting  on mortgages, reinforcing lower property valuations and building sector corporate defaults. The previous 2014 Chinese real property valuation peak of 101 (relative to wages) was only exceeded in 2021 to 113 with current decreases to 105 in the 4th quarter of 2022. The last 6 months have been terrible have Chinese home owners.

Qualitatively. this is a global asset-debt system of highly leveraged debt-propelled over-produced, over-valued assets – a house of cards synergistically collapsing.

The Asset-Debt  Macroeconomic System integrates all of the system’s internal parameters – total debt, asset production numbers, asset ownership pool, asset valuations, ongoing interest rates, QE and QT programs, et. al. – and generates, in a self-assembly manner, the most efficient asset valuation growth and  decay progression, in a highly-ordered, elegantly-simple time-based patterned fractal manner. 

https://www.youtube.com/watch?v=s9YhX6rqDb4

For the Bank of Shanghai the final fractal series is a 28 March 2023 11/28/22-27/4 of 16-17 days.

The Hang Seng Index is the premiere proxy index of the Global asset-debt system. From the March 2020 low 33/72/70 of 73 weeks. It’s final 73 weeks is composed of a reflexive – x. maximal decay 2.5x, maximal growth 2.5x, decay 1.6x – :: 10/25/25/16 week fractal series.

(Updated 10 July 2023: The HSI final daily terminal sequence is an 11 April 2023 reflexive 10/25/25/4 of 16 day :: fractal series, identical to its terminal weekly fractal series.

China corporate debt was  29 trillion in the first quarter 2023, nearly equaling total US federal debt. 

Chinese corporate debt  supplied by the CCP and its banking system has powered the greatest ever GDP/dt  expansion in the world’s history.  But, now it is over,  straining since late 2017.

China is collapsing, not unlike the US collapsed in 1929 as wages are being decreased, service sector and manufacturing unemployment is growing, Chinese real estate, the asset ownership of choice,  is undergoing devaluation, and mortgages are undergoing default in a systematic domino exponential collapse. The Chinese financial industry has had wage reductions of up to 40 percent over the 3-9 months.

The global asset-debt system is interlocking. The collapse of the Chinese banking and real estate interlinked systems will parallel an  interlocking nonlinear collapse in global asset commodity and stock prices. Last week’s nonlinear daily  gapped lower valuation of the Bank of Shanghai is the early telltale death canary in the global system’s asset-debt coal mine. 

Since late 2017, the Chinese banking system and near  peak real estate valuation have been undergoing quantitative  fractal decline leading to a precipitous nonlinear devaluation over the next 3 weeks. The monthly fractal declines  for the Bank of Shanghai are following a very classic repetitive y/2-2.5y/2y decay fractal series.

 From November 2017 a 9/20/18 months decay series is followed by a like 5/12/9 of 10 month decay series ending in July 2023 with an expected lower low in about 10 months.

The y/2-2.5y/2y :: 5/12/9 of 10 month decay series equates to a y/2-2.5y/2y :: 19/42/35 of 38 week decay series.

The terminal portion of the 35 of 38 week series is a 3/28/2023  11/28/22/4 of 16-18 days. (The below graph incorrectly annotates day 5 of 16-17) Already, a large nonlinear lower  gap can be observed between day 1  and 2 (6/26 and 6/27/2023) of the final 17 day series. A 3/3 of 8/8 day decay series ::y/2.5y/2.5y  would complete the 17 day series.

Debt has been over expanded to power asset production and valuation growth in the US, China, Europe, and India. 

The global asset-debt system is currently near the time period of final valuation growth and abrupt  nonlinear deleveraging. An expected 10 additional months to a lower final low is expected in-spite of the federal reserve rapidly reversing course and introducing QE with again near zero long term interest rates.

For the US Wilshire the final daily  fractal series is a 17/36/26 of 37-38 day growth and decay fractal  series of xy/2xy/2xy, starting on 13 March 2023.

Tesla is following a 3 January 2023 24/56/46 of 57-58 day :: y/2-2.5y/2- 2.5y decay series, Observe the 56 day second fractal’s nonlinear gapped low between day 51 and 52, in the terminal 2-2.5x region, characterizing a second fractal. A secondary lower high peak valuation is expected near day 48 of the third fractal. The x/2-2.5x/2x :: 24/56/48 day growth fractal will then efficiently transform into a y/2-25y/2-2.5y decay fractal. An interpolated fractal from 5/16/2023 of 7/15/13-14/10-11 days will complete the 24/56/57-58 day Tesla decay fractal series.

Above: x/2.5x/2x Nikkei Growth followed by y/2-2.5y/2-2.5y Decay

Observable within the US hegemony 1807 great fractal pattern of x/2.5x/2.5x/1.5x :: 36/90/90/54 years with equity valuation lows in 1842-43 and 1932, and third fractal 90 year peak valuation in November 2021.

Also observable is an interpolated  1981-82 fractal pattern of 13/30 years :: x/2-2.5x.  This 1981-82 first and second fractal series began with US central bank QT resulting in a May-July 1981 peak prime rate of 20.5% to control inflation.

Historical %-GDP Deficit US defence spending initially maintained composite equity prices. Thereafter. over the next 40-42 years – falling interest rates, globalization of manufacturing with grossly cheaper labor cost, transoceanic shipment of goods, trade of hegemony petro-dollars and Euros for those manufactured goods,  repeal of 1930’s investment laws, looser bank lending regulations, lower corporate taxes, increased corporate buy-backs, financial engineering with tranching of CDO’s and CLO’s, gross assessment and lending fraud, and US, Euro, and Chinese central bank QE and lending programs with low, near zero and negative sovereign bond rates – have pushed composite equity valuations and property valuation to the November 8 2021 zenith and recent secondary peak valuations.

During this 40 year time plus period, there have been over-investment bubbles propelled by the  above cited stimulus modalities  in 1987, 2000, 2008, 2020, and 2021.

For the interpolated 1981-82 first and second fractal series, a sudden nonlinear ending is expected between 2x and 2.5x of the x base fractal. With x equal to 13 year, the nonlinear ending is expected between 26 and 32 years.

The US, Japanese, and Chinese equity markets; cryptocurrencies, gold, and  global CRB indices  all  have synchronized monthly and weekly  fractal patterns, for crash devaluations over the next 4 trading weeks.

The current weekly and monthly  fractal patterns began at the March 2020 global covid pandemic low valuations in March 2020. In an unprecedented fashion, the US money supply over 12-18 months was increased by 25 % resulting in inflation and thereafter decreased by 5 percent in the QT phase to control the resulting inflation. The 2020-2021 unprecedented increase in money supply, low interest rates and MBS programs have resulted in a supple bubble of equity and property valuations.

The y/2-2.5y/2-2.5 decay fractal series for the composites from the March 2020 low are 14/72/72 weeks. Currently the decay series is 33/72/68 of 72 weeks.

The Nikkei and its proxy DXJ fund have done among the best of global equities with a 33/72/66-67 week :: x/2-2.5x/2x valuation growth pattern.  See above green graph.

DXJ and Nikkei have matching first and second fractal patterns: 33 weeks: 6/15/14 weeks and 72 weeks 14/30/30 weeks. DXJ’s current  67-68 third fractal blow-off.

DXJ diverges slightly from the Nikkei and is composed of a 10/21/25 week fractal series followed by a blow.-off series of 4/8-9/4 of 8 weeks for a total of 72 weeks. The final four weeks  are expected to complete a composite decay series of 33/72/72 weeks or 8/18/17 months. See above red graph.

For the Hang Seng index the March 2020 first and second fractals are likewise composed of 33/72 weeks. The third 72 week decay fractal is composed of 10/25/25/11 of 15 weeks. The second 25 week fractal of this x/2.5x/2.5x/1.5x series took the HSI below its 2011 low – a telltale valuation sign of what s to come in the next four weeks.

Fractal patterns predict a Chinese property valuation crash and banking/equity crash (Shanghai Property Index and Bank of Shanghai/Shanghai Composite)  over the next four weeks. These patterns will be self-evident and detailed in follow-on postings as will the closing fractal patterns for crypto, gold, oil, and the CRB composite.

That the macroeconomy operates in a self-organizing fashion allows the label of a science to its intrinsic nature.