Given China’s importance to the world economy, I wanted to focus this week’s post on some of the challenges China is facing in the short and long term.
China’s Economy
From an investor perspective, there is very little optimism that China’s economy will experience stronger growth after severely disappointing in the wake of its Covid reopening.
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Beans the Cat
Heather and I have ended up with a rescue kitten. I won’t go into the circumstances, but his name is Beans. This is what he looks like.
As you can see, his eyes are very intense.
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You know Covid destroyed supply
Stimulus exploded demand
Inflation ran
The Fed cried
(What does the 10-year do?)
Break on through
To the other side
The 10-year Treasury yield broke through to a new cycle high and is now back above where it last peaked in 2008.
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Last week the CPI report was released. One can see that shelter is now by far the biggest component of inflation. Non-Housing Services are growing at a moderate rate while Core Goods prices are declining.
This chart shows how CPI excluding shelter has been moderating quite significantly,
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Jerry Garcia was born on August 1st, 1942 and died on August 9th, 1995. The eight days between his birthday and the day of his death are known as the “Days Between”. It also happens to be the name of a very poignant Grateful Dead song,
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This will be a rather short blog following up on last week’s focus on key levels for the 2 and 10-year Treasury yields.
I’m a bit tired as last night (Thursday), I had a flight connection through D/FW Airport to return home to Orange County.
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It’s great to be back blogging after a long sabbatical [2014] that had CWS and I focused on an extraordinarily time-consuming, complex, and large portfolio recapitalization. In addition, I have also been spending a lot of time doing open heart surgery on the book I’m working on via a comprehensive reorganization and re-write.
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Last week’s ADP payroll report really rocked the bond and stock markets. It was further support for the Fed to remain tighter for longer. This chart shows how strong private employment growth was.
On the other hand,
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Fed Chairman Jay Powell understandably garnered a lot of attention after the Fed meetings concluded last week, which resulted in the first pause in rate hikes after 10 consecutive increases. At the same time, to manage expectations, the Fed dot plot forecasts two more interest rate hikes before they’re done for this cycle.
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I had the great privilege to attend the French Open at Roland Garros on June 4th. We saw two women’s matches and one men’s match involving Novak Djokovic. This was the first time I saw Djokovic play in person, so I was really happy we had tickets on the day he was playing on center court.
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