Completely agree with you on China. I spent the bulk of my sell side career in China and never came across more confident views about the Chinese economy than when I visited Midtown Manhattan...
Great presentation. I agree with most of it. The level of hubris of the US political and business elite is striking to me. They think they can take on China and Russia without any serious pain. Good luck with that. It doesn't make me happy - a weakening US makes the world a more uncertain place - but I find it amazing to see that many Americans think that because they have natural resources and the Mississipi river and genetic superiority because they are descending from pioneers (no kidding I have heard them all) they can do stupid things and get away with it, it's never going to matter. I think they win ultimately, but pain and suffering seem unavoidable - already here for many Americans though the very rich are completely in denial about it - and whether it's a good win (US retaining primacy as #1 but in a more multilateral and balanced, dare I say democratic, international order) or a bad win (US empire) is hard to say at this point.
There is a lot to like about the US - particularly its capacity for renewal. But what I find most striking is that in 1980s, the American really worried about Japan taking over - despite having a much smaller population and no army. China is a civilisation in of itself- and I wonder where the confidence that it will head to decline like Japan comes from? I know the Chinese have studied the experience of Japan carefully to avoid the same mistakes. Let’s see…
It is interesting question... The US has shown that reserve curency status is a weapon. So China and Russia are trying to avoid using it. India will also likely be hesitant. And for the same reasons no one will want to use Chinese Yuan or Indian Rupee. Gold then perhaps? Or some.digital currency that no government can control?
Your use of the word tight or loose made me think you were describing monetary (M2 or the discount rate) conditions, but as you further explained how it pertained to treatment of the super wealthy made the presentation much clearer to me. The wholesale backing of SVB depositors demonstrated clear evidence that the politicians are being run by the super wealthy and regulations are only used when the regulations work for the desire of those in charge.
My working theory is that Central Bankers and economists work with a lag to politicians. When voters preferences change, policies change to that reality (see Republican or Tory economic policies in recent years). This then creates a different macro environment. Federal Reserve probably messed up politically with deposit insurance, so next set of Fed governors will be much more hawkish…
I do not know for US if it possible to turn much more in favour of masses. Electoral system is probably intentably made very expensive to run for any important office - therefore one cannot even seriously try if /she is not financed by the richest, or being part of them already.
Completely agree with you on China. I spent the bulk of my sell side career in China and never came across more confident views about the Chinese economy than when I visited Midtown Manhattan...
Yes - and now midtown manhattan is sure China is imploding
Sure is (+a real screecher from Dallas, TX) ;)
Russell have you done any work on the model portfolio?
Looking forward to it! 😊
Great presentation. I agree with most of it. The level of hubris of the US political and business elite is striking to me. They think they can take on China and Russia without any serious pain. Good luck with that. It doesn't make me happy - a weakening US makes the world a more uncertain place - but I find it amazing to see that many Americans think that because they have natural resources and the Mississipi river and genetic superiority because they are descending from pioneers (no kidding I have heard them all) they can do stupid things and get away with it, it's never going to matter. I think they win ultimately, but pain and suffering seem unavoidable - already here for many Americans though the very rich are completely in denial about it - and whether it's a good win (US retaining primacy as #1 but in a more multilateral and balanced, dare I say democratic, international order) or a bad win (US empire) is hard to say at this point.
There is a lot to like about the US - particularly its capacity for renewal. But what I find most striking is that in 1980s, the American really worried about Japan taking over - despite having a much smaller population and no army. China is a civilisation in of itself- and I wonder where the confidence that it will head to decline like Japan comes from? I know the Chinese have studied the experience of Japan carefully to avoid the same mistakes. Let’s see…
Posted a question here on Twitter:
https://twitter.com/gordonschuecker/status/1643234841515773952
About what China does with its close to $1T/y in trade surplus and what if it managed to accumulate and weaponize it?
Thx for any thoughts!!
It is interesting question... The US has shown that reserve curency status is a weapon. So China and Russia are trying to avoid using it. India will also likely be hesitant. And for the same reasons no one will want to use Chinese Yuan or Indian Rupee. Gold then perhaps? Or some.digital currency that no government can control?
And maybe amass even larger quantities of many different kind of commodities...?
Very possible.
Weird to see this article posted on zerohedge
Your use of the word tight or loose made me think you were describing monetary (M2 or the discount rate) conditions, but as you further explained how it pertained to treatment of the super wealthy made the presentation much clearer to me. The wholesale backing of SVB depositors demonstrated clear evidence that the politicians are being run by the super wealthy and regulations are only used when the regulations work for the desire of those in charge.
My working theory is that Central Bankers and economists work with a lag to politicians. When voters preferences change, policies change to that reality (see Republican or Tory economic policies in recent years). This then creates a different macro environment. Federal Reserve probably messed up politically with deposit insurance, so next set of Fed governors will be much more hawkish…
I do not know for US if it possible to turn much more in favour of masses. Electoral system is probably intentably made very expensive to run for any important office - therefore one cannot even seriously try if /she is not financed by the richest, or being part of them already.
I would not be so pessimistic. Populism is a sign that big money is losing power…
Interesting. Any view on luxury watch brands as a potential short?
That’s the weird thing - watch prices have fallen significantly - but luxury has held up…. Where watches over bought by crypto kings?
I think prices were bid up by the second hand / grey market unauthorised dealers exchanging wholesale at 10% margin a turn.
Not everything is crypto related 🤣🤣