The not-fun part about 3 day weekends is cramming a full week of work into the next 4 days. Not a long reading this week….

Financial Lessons from a 5 year old

My 5 year old daughter is very excited that I am teaching this semester. Unlike my day job as a “portfolio manager,” she actually understands what a “teacher” does. Over the weekend I was working on some notes and she shared some ideas for my class where I “teach people about money.”

  • “Don’t throw it out if it’s crinkled or wet.”
  • “Don’t let your pet eat your money.”
  • “It’s good to give out some of it but not all of it.”
  • “You can have as much as you want.”
  • “Only use money for important things.”

Some deep insights there. This will all be on the final exam.

China: Three Pressing Concerns

China: Three Pressing Concerns

  • I’m not a China bull… that’s for sure. But I still try to read bullish narratives to get the other side.
  • I agree that the best entry point for stocks is when stocks are cheap and the outlook is negative. This certainly describes the state of the Chinese equity market today. There are also signs that Beijing will have to relax its zero-tolerance COVID polices.
  • This definitely skips over the Uighur genocide thing…
  • Economically speaking, the bigger omission here is the current status of China’s property market. Is it safe to assume that the economic impact of China’s property market is benign at best? How can a piece titled “Three Pressing Concerns” not call out the property market?!
  • Alpine Macro’s view is far from non-consensus… it’s aligned with that of T Rowe Price which also sees opportunity in an easing regulatory burden and is broadly bullish on China in the year ahead
    • T Rowe at least acknowledges the risks from the property sector but is rather flippant in addressing them. China “has the right policy tools” to avoid major issues and a few unnamed developers could consolidate the market.

Chinese housing prices were increasing in the low double digits but are now approaching zero… do they reverse from here and inflect higher?

China Housing Graphic

In the US, housing prices initially weakening in 2006 before enjoying a bit of a dead-cat-bounce before the financial crisis.

US Housing Graphic

This isn’t to compare the US and China but to point out that real estate imbalances are not easily or quickly corrected. Sinking property values ripple through an economy and strongly impact credit and consumer confidence. Then again, Modern China is the exception to many rules…

From American Eden By Victoria Johnson

American Eden: David Hosack, Botany and Medicine in the Garden of the Early Republic by Victoria Johnson.

American Eden is the story of David Hosack (pronounced Hozz-ick) a great American that I had never heard of. Not a founding father, Hosack was certainly in the next tier of influential citizens who helped guide and establish our young country after independence. An accomplished doctor and also a leading botanist, it was Hosack who treated Alexander Hamilton after his duel with Aaron Burr.*

One of Hosack’s many contributions to medicine was his opposition to bloodletting. During this period of time, doctors would attempt to treat patients by bleeding them. Dr. Benjamin Rush, who signed the Declaration of Independence and was considered one of America’s top medical authorities, was a particularly strong believer in bloodletting. It’s amazing anyone survived that time period!

During an epidemic of yellow fever in NYC, medical science got political and the terror brought out the worst in people… sound vaguely familiar?

During this outbreak, Alexander and Eliza Hamilton were cured by Edward Stevens, an associate of Hosack’s who also eschewed bloodletting.

“Hamilton published an open letter to Philadelphia’s College of Physicians touting Stevens’ approach, and within a week Stevens himself had published an account of his methods. Rush was livid. He thought Stevens’ treatment ineffective and believed Hamilton’s implicit criticism of bloodletting was politically motivated; everyone knew Rush was a staunch supporter of Jefferson.”

“In early September, a group of neighbors on Water Street attempted to have a sixteen-year-old girl forcibly deported to the countryside. She apparently came down with a cold, and she recovered in two days.”

*#4 “If they don’t reach a peace that’s alright
Time to get some pistols and a doctor on site
You pay him in advance, you treat him with civility
You have him turn around so he can have deniability”

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