Daily Writing 10/03/2019

My goal is to write every day.  I am going to do things that are outside of my comfort zone.  Writing this blog forces me to be accountable.  I will put myself out there even if it’s not perfect.  I will do everything I can to be open to the world so that I can make mistakes and then learn from them.  Writing should be fun and enjoyable for both the reader and the writer.

I’m not organized enough to structure my blog in any meaningful way, but at least I am practicing how to write different things.  I won’t be afraid to put myself out there because I am trying my best.  Taking action is the most crucial step.  I will not take criticism or feedback personally.  I will work to hone my skills as a writer and a communicator.

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Market Observations 10/02/2019

The overall economic environment in China does not look stable. 

Our outlook for 2020 continues to deteriorate. We believe political risk presents a significant challenge as Chinese president Xi Jinping continues to consolidate his grip over an increasingly totalitarian Chinese state.

Hong Kong retail sector struggles

Struggles in Hong Kong’s retail sector are set to continue as prolonged protests impact tourism and local spending. This weakening comes at a time when momentum was already weak from China’s slowdown and trade war.

Retail sales have declined 23% year on year in August after the consensus was for a 14% drop.

Early indicators point to waning economic momentum in China.

According to Bloomberg Economics, “a range of early indicators continued to point to a lack of momentum in China’s economy in September, as the U.S. imposed additional tariffs on about $110 billion of Chinese imports.”

Furthermore, business surveys how continued weakness, particularly in SMEs.

National Day, Shadow Banking, and Pork Prices

The start of a new month brings with it some new ideas.  Here’s what I’m thinking about:

The 70th Anniversary of the founding of the People’s Republic of China

Today marks the 70th anniversary of the founding of the people’s republic of China.  It’s interesting to note that western reporting of Hong Kong protests is overshadowing reporting of the National Day festivities underway in Beijing.

This has been an event the Chinese leadership has been focused on for quite some time.  Many China analysts speculated that the lead up to this significant event influenced top leadership’s decision making, particularly concerning the repeal of the profoundly unpopular Hong Kong extradition bill.

 

Shadow Banking in China

Over the past several weeks, I have focused my attention on domestic capital flows in Mainland China.  Nearly all lines of inquiry into the subject refer to the importance of shadow banking activity for China’s overall economy.

Andrew Collier, the author of “Shadow Banking and the Rise of Capitalism in China” and Managing Director of Orient Capital Research, presents four key metrics economists have used to understand the risks of China’s shadow banking sector.  Enumerated and summarized below are these metrics:

  • The private sector credit-to-GDP ratio
  • The growth of real credit per capita
  • The real credit growth gap
  • The debt service ratio

Most compelling is Mr. Collier’s assertion that “none of these measures of credit suggest China is in good shape.”

 

Pork Prices in China

Unrelated to the story surrounding the senior UBS economist and his controversial remarks in June, over the past few weeks pork prices in China have been the Wholesale pork prices in China have nearly doubled since the end of last year due to a proliferation of African swine flu.

 

CNPORKWH Index (China Agricultur 2019-09-03 08-33-50_cropped_2
China wholesale pork spot price (RMB/kg) Source: Bloomberg

 

Why does this matter?

Unstable commodity prices breed unstable societies. Especially when you consider that China is the largest consumer of pork in the world.  Officials in all levels of government are openly acknowledging a slowing of China’s economy for reasons distinct to consumer commodity prices.  If we start to see too downward economic forces converging then, this could lead to Hong Kong-style unrest in Mainland cities.  Food for thought.

My First Ultra-Marathon

Last month I achieved my long term goal of running an ultra-marathon.  An ultra-marathon is any race longer than the length of a standard marathon.  In 2017 I watched a documentary about a 100+ mile race through treacherous Tennessee back country.  I can’t recall the name of the documentary but the name of the race is the Barkley Marathons.

I remember observing the motivations of the runners in the documentary and it made me think about the real purpose of running.  I played sports growing up but whenever I tried running I always felt it was boring, now I realize that that’s partially the point.

 

 

Training for the marathon taught me a great deal about the true meaning of mental toughness.  I never considered myself to be a particularly strong person, but once I started racking up the training miles week after week I came to realize that I would need to become much stronger in so many aspects.

I did not document my training before the race but I think if I tried to record things it would have taken away my attention from the preparation itself.  The best I can do is share a couple of photos of the day.

Consciousness Streaming

Perfection is illusory.  Stillness of mind.  Playful language.  Nouns, verbs, and adjectives.  Only nouns and adjectives.  Verbs later.  Simplicity.  Reduction.  Grinding to completion.  Completion is illusory, too.  Rather, grinding to virtuosity.  Increase intelligence.  Be calm.  Now include verbs.  Language is meant to be a tool.  At best, a crude one.  Sometimes all you have are bones and flint.  That’s fine.  Read the masters.  Be.  Mimic.  The self is illusory.  Part of something larger than yourself.  It is not a choice.  Five hundred words versus five hundred thoughtful words.  Some people are mirrors.  Some people are sources of light.  Some people are sources of darkness.  All people are sources of light, sources of darkness, and mirrors.  A person cannot choose to be a mirror, they just are.  A person can choose to be a source of light.  One person’s light is another person’s darkness.  Don’t be darkness.  Be stillness.  Be calm.  You pay your dues with your time.  “Your time on Earth is fixed for you.”  You reflect the emotions and attitudes of the people you spend the most time with.  Choose your friends wisely.  I am a mirror.  Your life is not some grotesque pasqulonely_islandinade delivered at the expense of your own self-esteem.  No one cares about you.  That is not a sad thought, that is a liberating thought.  No one cares.  The world is a place to play.  To be human is to reflect and absorb the emotions of the world.  Fervor toward a cause.  Ecstasy.  A dopamine hit.  Trough.  Worthlessness.  Regret.  To feel one emotion is to feel them all.  To not feel anything at all is a tragedy.  A dearth of emotion is a travesty.  Human suffering.  Suffering is the baseline.  A person can rise above suffering.  You cannot make me feel embarrassed.  Only I can choose to feel embarrassed.  I never will.  Lifting the world with my heart puts me on firm ground.  Breathe.  One thousand times a day, we die.  The ego stretches.  Grotesquely bloated.  Lies.  Small lies.  Half-truths stacked on larger lies.  The ego consumes.  Ridicule.  Absence of guilt.  Fear.  Fear of fear.  To be the person we dream of being.  To live a fantasy.  To live to suffer.  To die one thousand times each second.  Raw.  Distortion.  The deep end.  To be the best, you can be.  To make the largest contribution to the whole.  The self is illusory, the whole is real.  The whole is bloody.  Bashed by rocks and burned.  Yet it survives.  Survival as a service.  Breath.  To endure life’s impalpable suffering.  To smile and thrive through such suffering is nothing short of heroic.  Please love yourself.  Would you love yourself if it made others happy?  Perfection is illusory.  Emotions are real.  Fear and courage are both real.  You choose.  Crippling anxiety and ecstasy are real.  You choose.  To be light and to be dark are real.  You choose.
You choose.

Five Hundred Words 7/01/2019

Wednesday, July 1, 2019

Daily Writing

9:25 PM

I haven’t written in my blog in about six months, I apologize for not keeping up with it, but I am grateful to all those who continue to stick with me in one way or another. Writing on China has started to become trickier over the past several months. I last focused on China at the height of a significant drawdown in global equities in global equities. In the following six- or seven-months markets have rallied as we have seen equities rise to new all-time highs. Global bond yields have plummeted, and even Italian bond yields are now lower than those of the United States. However, one thing that has not changed is the status of the United States and China trade talks. We still believe that a deal between the US and China will not lead to a global amelioration between the two countries. China is a theme we will continue to follow carefully moving forward.

In the meantime, stay tuned as we delve deeper into the China-centered macro themes that are growing in importance increasingly each day.

 

Market Data

Resource Commodities

 

July 1, 2019

June 11, 2019

April 1, 2019

December 13, 2018

Gold Spot

1390.10

1326.40

1291.80

1245.00

Silver

15.150

14.725

15.120

14.720

Platinum

832.00

815.00

851.00

802.00

Copper

2.7073

2.66

2.95

2.780

Crude(WTI)

58.80

52.85

61.07

51.41

 

Global Government Bond Yields

 

July 1, 2019

June 11, 2019

April 1, 2019

December 13, 2018

US 10 year

2.02%

2.14%

NA

2.91%

US 30 Year

2.54%

2.61%

NA

3.16%

UK

0.81%

0.86%

NA

1.26%

Germany

-0.36%

-0.23%

NA

0.27%

Brazil

7.27%

7.96%

NA

9.86%

Italy

1.96%

2.39%

NA

2.93%

Japan

-0.16%

-0.11%

NA

0.05%

 

Major Indices

 

JULY 1, 2019

June 11, 2019

April 1, 2019

December 13, 2018

VIX

14.06

18.84

NA

21.00

DOW

268.05

26049

NA

245.76

S&P 500

295.66

288.90

NA

266.45

NASDAQ

8091.16

7822.57

NA

7096.00

CFETS RMB

92.66

93.18

NA

NA

 

Currency Cross Rates

 

July 1, 2019

June 11, 2019

April 1, 2019

December 13, 2018

USD/JPY

108.44

108.5100

NA

113.6700

EUR/USD

1.1284

1.1330

NA

1.1355

AUD/USD

0.6973

0.6959

NA

0.7223

USD/MXN

19.10

19.12

NA

20.069

USD/CNY

6.86

6.91

NA

6.878

USD/HKD

7.81

7.83

NA

NA

USD Index

96.83

96.69

NA

97.15

Checking In

I’m writing because I have neglected this blog for longer than I’d like.  I’m undergoing a series of positive life changes and I feel compelled to share several of my insights over the past several months.

I’ve started using a new app called RescueTime, and I find it to be incredibly useful.  I’ve started tracking how I manage my time during the day, and I’ve found that using an app like RescueTime helps me to gain a sense of motivation and satisfaction by being more productive.

I haven’t consistently added to my blog content since the end of December before my major trip to China.  The honest reason is that the trip to China had an immense impact on how I view my current life trajectory, and I’ve taken the past few weeks to try to readjust and figure out what to write about.

I am not trying to be clever.  My primary goal by writing this blog is to allow folks to gain better insight into who I am and what I am thinking about.  This blog is probably best suited for folks who are primarily interested in reading who I am.  I will try to share my story bit by bit.  Thank you for your patience.