Author Archives: Charles de Trenck

     

 

 

The Division of Global Cop Labor

To keep a long story short: Apart from having messed up big time in Iraq, Afghanistan (who hasn’t?), and Vietnam, the US has generally acted as global cop over the last 70+ years. We all know Pax Americana has had its pros and cons. We also know that the US is pulling back somewhat from the global cop role, but staying in the game, while “allowing” China to ease in a little, while also allowing other countries to assume more regional cop roles. Perhaps Saudi Arabia’s recent Yemen action is a bit of a symbol for the current order. A lot of what the US has done since WW II is its own version of trying to clean up behind the disintegration of British, French, European colonization of the rest of the world … In other words, let’s not just blame the US.

 

chinese-women-in-military-female-soldiers-14The PLA’s Decadent Western Enemy Distraction Corps standing at attention. Should there ever be war with China, getting attacked by this division might actually make if a bit more bearable (“yeah baby, it hurts so good…”)

Photo credit: Xinhua

 

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Catching Themes

China Merchants has a knack for catching themes. China Merchants Holdings has been a decently managed company in the China context, holding decent port assets. But investors, mainland and foreign, always seem to get taken away by some idea of golden returns. In the late ‘00s there was all this fanfare about its Vietnam investment with billions of HK$ market cap added pretty much on the back of the concept.

Having Shanghai Port Group shares take off in the late ‘00s also helped propel the shares into the stratosphere for awhile, as owning a stake in a Shanghai listed company offered investors participation in China rallies.

 

silkie 235

No, I’m not part of a mop …

Photo via tinngan.vn

 

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Does the Dollar Hold Enough Attraction to Break Out and Hold at Higher Levels?

Now is the time to begin looking at the US dollar’s re-ascendance in a different light as we approach 1:1 against the euro. Shorter term we have to expect some possible panics around flat global growth in the face of a strong dollar. Historically, as we saw in the 1980s in Latin America, US dollar rebounds lead to blow-ups among the weaker global credits, just at the point where the dollar begins a breakout not seen in decades. But, times have also changed and we should expect this round of the dollar beating up some countries to slow earlier than perhaps what we saw in the days of the symbolic Reagan induced fall of the Berlin Wall.

 

dyk

Photo credit: Bloomberg News

 

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A Den of Corruption

A ruling class, no matter its spots or stripes, is everywhere given to over-privileging its own. And the stronger its hold on power, the greater is its accumulation of wealth relative to those outside the power circles.

I recently had occasion to update my thinking on China, its massive waste generation in the last 10-15 years, and Chinese Communist Party members as major beneficiaries of this massive waste, and therefore also the continued need for Xi Jinping to keep cleaning up the more blatant instances of corruption and wealth transfer.

The commodities boom of the 2000ds proved to be backed by a massive wave of over-production, waste and a social movement to self-enrichment by the privileged class of China. President Xi Jinping in many ways is now contributing to lowering commodity prices as a byproduct of his crackdown.

 

tien-an-men square

Photo credit: fmh

 

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The Cost of High Property Prices … You Can’t Hide Volatility under a Rug!

A good piece on high retail product costs in China appeared in the Wall Street Journal on 4 September 2013, with the article focussing on the high price of a “pro forma” cup of coffee in China – driven by high rental costs.

 


 

pricing grounds

 

 


 

The same analysis could be done for HK retail given HK$150 psf averages in Central and a recent record of HK$1,200 psf. Most of us know how hard we have to hunt for good food at a reasonable price, or simply rely on a 7-Eleven, a Maxim’s or a Starbucks for a quick snack in Central. And the insult comes when the Economist dares, despite a noble but outdated attempt, to throw the Big Mac Index low-end HK cost indicator out there to tease us.

 

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The Vikram Pandit Exit … And What Came Before It

Working at Citi for 10 years up to 2008 really drained me. The constant politics and uphill battles really got to me – to the point where I was having nightmares of Citi after I left. I finally got rid of the nightmares when I gained more distance and recognized I had done my best as an analyst on behalf of my clients with money generating or value preservation ideas.


Upon Vikram Pandit's resignation, I sent out a quick comment and reference to Sheila Bair's trenchant and generally correct analysis of Pandit.


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