I know I haven’t been blogging for a while. I also haven’t been tweeting. I am shut out of X-Twitter because of two factor authentication issues. As such, I am doing a post today that is Twitter-like, giving my thoughts on a variety of news articles. Here we go:
President Xi’s hero, Chairman Mao said “Women hold up half of the sky.” And, that randy guy Mao certainly “held up half the sky” with many of them. But women in China will not “hold up half the sky” for President Xi. Women in China increasingly do not want to marry and have children. If present trends continue for 75 years (dubious to go out that far), India will be four times larger than China. Even the US will be bigger than China.
Inside a Flaming Jet, 367 Passengers Had Minutes to Flee. Here’s How They Did It. This is very impressive, and shows how a highly conformist society like Japan has its advantages.
‘“Everyone was screaming from the initial impact and then everything got eerily quiet because everyone was confused,” Hayashi said. The passenger next to him appeared to know about emergency procedures. “She started yelling, ‘Put your head down, keep your seat belts on, stay in your seat,’ ” he said.’
From Bloomberg’s evening summary (1/2/24):
“The most common concern or belief we have heard from investors is that overbought conditions and euphoric sentiment will set up for a reversal to start 2024 in both bond yields” and stocks, said Dennis DeBusschere, founder of 22V Research. “The overbought conditions and sentiment readings are tough to argue with.”
Nobel Prize Winner Cautions on Rush Into STEM After Rise of AI
No, keep your eyes on the prize. STEM majors can do creative work. Humanities majors can’t do STEM. Don’t go to college for a major that doesn’t pay you back.
LPs Doubt Venture Funds’ Startup Valuations
The incentives are perverse in setting marks for private equity. There is a tendency to overstate values, and face the problem later when the fund winds up and has to admit losses versus the overestimated marks.
Xi’s Solution for China’s Economy Risks Triggering New Trade War
China’s investment-driven economy is much less productive than most think. It overinvests in industries where the world already has too much capacity (think of what they did with steel), and creates product prices where their investments are practically wasted. This leads to overstated GDP statistics, and greater inequality in China. The Chinese Communist Party has a materialism fetish that makes them think only industry matters. And so they impoverish most of their citizens.
China Leaders Sought Quick Zhongzhi Resolution to Shield Markets
Note that the CCP takes no blame for this. While housing was a tailwind for their economy, they let the bubbles grow in multifamily housing, financial companies, and local government financing vehicles. They only cared that headline GDP statistics kept growing, not the net economic welfare of their citizens.
2023 saw record killings by US police. Who is most affected?
“From 2013 to 2022, 98% of police killings have not resulted in officers facing charges, Mapping Police Violence reported.”
Unless you can get rid of police unions, this is not likely to change. The unions take lower pay raises in exchange for making it difficult to fire officers.
Buying Home and Auto Insurance Is Becoming Impossible
Not so much impossible, but expensive. When the P&C insurance has back-to-back losses from underwriting, surplus is not adequate to write as much business at the same price. Premiums rise for almost everyone, but more so in recent disaster-prone areas… and that goes extra for states that over-regulate insurance.
BuzzFeed’s ‘Dire’ Debt Problem
I know this is kind of “old school,” but don’t buy stocks that don’t earn profits. I know this means I will miss rare unicorns. But most people don’t buy them near the beginning, anyway.
It’s also wise to avoid highly indebted small-cap stocks, whether owning the stock or the debt. It doesn’t take much to capsize a small company like $BZFD.
The Bond Market Rally Is Overlooking a Soaring $2 Trillion Debt Problem
I think deflation is more likely than inflation. The US and other nations are likely to use financial repression (again) to deal with their debt issues. Eventually that will fail in a messy way.
Trumponomics 2.0: What to Expect If Trump Wins the 2024 Election
More of the same, only louder and meaner.
Xi’s Chief of Staff Is Quietly Amassing Even More Power in China
Cai Qi – a man to watch. President Xi is losing touch with reality as almost no one dares to give him honest feedback.
Is private credit a systemic risk?
Probably not, unless investors as a whole underestimate their need for liquidity. Still, remember that new fast-growing asset classes have to go through a failure cycle in order to mature into an asset class where risks are priced mostly right.
Google Lays Off Hundreds in Hardware, Assistant, Engineering
I worked a firm that did annual layoffs. It really ruined employee morale.
There’s Finally Hope for the Office Real Estate Market
This might be a good opportunity. Things aren’t getting worse.
Iran Captures Oil Tanker Off Oman as Mideast Turmoil Deepens
Things are getting messy enough globally, and with US weapons stockpiles depleted, we could be on the edge of something that will prove hard to deal with.
Credit Card Delinquency Rates Climb to Decade High in Fed Study
Credit weakness on mostly the low end of the consumers. There has also been an increase in buy now pay later activity mostly in this same demographic area. It will be a mess, but not big enough to have material second order effects.
Larry Hogan Steps Down From Advocacy Group, Fueling Talk of 2024 Bid
He would be a good president – he’s the best governor the State of Maryland has had in my lifetime.
Fed Posts Largest-Ever Annual Operating Loss
If we are going to have fiat currency, let the Fed’s assets be only T-bills and gold. Don’t take on duration risk, including RMBS.
Taiwan Election Piles Pressure on Delicate U.S.-China Ties
Taiwan’s Raucous Democracy Is Another Challenge to Xi’s Ambition
Dolt that he is, Xi does not get that his recent actions have turned marginal Taiwanese away from reunification. Taiwan is very happy that it is a capitalist democracy. They don’t want to be ruled by authoritarians. Taiwan will not join Communist China without a fight that will destroy most of the value of Taiwan.
Fed Tiptoes Toward Dialing Back Key Channel of Monetary Tightening
The Fed should stop playing around with the size of its balance sheet, and shift its assets to what it was pre-GFC. Simplify. The Fed is doing too much, and as always, they don’t know what they are doing.
Reinsurers launching provisions amid continuing Middle East conflict
Insurers Seek to Exclude US, UK Ships From Red Sea Coverage
War is an undiversifiable risk. Pseudo-wars are similar, so reinsurers are quickly updating new contracts to reflect that.
Humanity does not want to be one big happy family on the terms of the developed countries.
Inside a Plan to Save Homeowners Hundreds of Dollars Closing Their Mortgages
“The alternative, called an attorney-opinion letter, allows a real-estate attorney to essentially attest that there are no problems with a property’s title. The average borrower relying on such a letter has saved more than $1,000 compared with more traditional title insurance, Fannie said.”
Probably would work, though title insurance is almost bulletproof.
The M.B.A.s Who Can’t Find Jobs
This happens from time to time. When I was an undergrad (1982), out of curiosity I went to a presentation on whether you should get an MBA or not. The advice then was don’t get it, many employers don’t want to pay up for an MBA, so get your BA and apply for work.
Large Backers of Private Equity Are Asking For Their Money Back
Many large LPs are telling GPs they won’t invest in their new PE funds unless they pay them off for old funds that are past the ending date. PE is kind of like a life insurer that mis-reserved a block of their policies, allowing too much income to flow early, and then figures out too late that the block now has an embedded loss.
US Companies Pay Up to Hedge Debt After Interest-Rate Volatility Soars
Looks like many CFOs fear long rates rising again, and are willing to pay up for a cap on their financing rates.
Xi, Biden and the $10 Trillion Cost of War Over Taiwan
The $10 Trillion figure is a wild guess in my opinion, but this article is a good qualitative breakdown of all the risks involved.
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Maybe I will blog more in the future, but business has taken up a lot of time lately.