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Xi Jinping’s New Market Reality in China

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For decades the Western world has been growing closer to China. Now, suggests Diana Choyleva in the Financial Times, with the consolidation of power over China by Xi Jinping and his loyalists, that trend is set to reverse. She writes: Ideology and national security trump all other considerations for Xi, including growth. He will double down on “common prosperity”, achieving economic self-sufficiency and pressing to bring Taiwan definitively under mainland control. For foreign investors in China, this means new investments will be “steered” (more or less politely) to the priorities set by the … [Read more...]

PETROSTATE: U.S. Exporting Record Amounts of Oil

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As Joe Biden unloads the strategic petroleum reserve and oil producers sell to Europe and Asia, the United States is exporting the most oil ever. Myles McCormick and James Politi report for the Financial Times: The US is exporting record volumes of oil and taking on a bigger role as a fuel supplier in response to the global energy crunch caused by Russia’s war in Ukraine, even as tensions flare over petrol prices at home. Combined US exports of crude oil and refined petroleum products surged to 11.4mn barrels a day last week, according to data released on Wednesday by the Energy … [Read more...]

WHERE’S SHERYL? Meta Revenues Decline Again

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In the second quarterly financial report since Sheryl Sandberg left Meta Platforms (formerly Facebook), revenues again declined. Salvador Rodriguez reports for The Wall Street Journal: Facebook parent Meta Platforms Inc. META -24.55%decrease; red down pointing triangle posted its second revenue decline in a row, as the social-media giant wrestles with a vortex of challenging business conditions that have combined to shave more than half a trillion dollars from its market value so far this year. The company reported quarterly revenue of $27.7 billion, down more than 4% from a year ago, … [Read more...]

Congestion FINALLY Declining at Ports in Southern California

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In The Wall Street Journal, Paul Berger reports that the congestion at California's southern container ports that made headlines earlier in 2022 has finally begun to subside. He writes: The backup of container ships off Southern California’s coast that was at the heart of U.S. supply chain congestion during the Covid-19 pandemic has effectively disappeared. The queue of ships waiting to unload at the ports of Los Angeles and Long Beach fell from a peak of 109 ships in January to four vessels this week, according to the Marine Exchange of Southern California. Shipping specialists say fewer … [Read more...]

Should You Index Bonds?

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Ellen Carr writing in the FT lists four reason why bonds should be actively managed. First, true indexation — that is, investing in all the securities in an index — is impossible in fixed income. It’s not just that the Agg contains more than 12,000 bond issues. It is also the challenges of trading corporate bonds privately between counterparties, or “over the counter”. The average corporate bond trades infrequently a month after issuance, resulting in potentially large spreads between bids and offers, a cost that the indices don’t incur. With that backdrop, it’s remarkable that the two … [Read more...]

Wildfires Erase California’s Draconian Climate Change Efforts

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Over the past twenty years, California has implemented numerous draconian restrictions to reduce its theoretical climate change footprint, but carbon emissions from recent wildfires in the state have entirely erased the business-killing efforts by the state. The Editorial Board of The Wall Street Journal reports: Two decades of greenhouse gas emission reductions in California went up in smoke in 2020—literally. So finds a new study on Golden State wildfire emissions that highlights the folly of Sacramento’s climate priorities. University of California researchers calculated that wildfire … [Read more...]

Hong Kong Markets Suffer Under Communist Rule

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Markets in Hong Kong were hit when the latest Chinese Communist party congress left great uncertainty surrounding the future of business in the city. Hudson Locket and William Langley report for the Financial Times: Shares in Hong Kong dropped to their lowest level since the end of the global financial crisis as investors reacted to the city’s economic recovery plans and the 20th Chinese Communist party congress in Beijing, where President Xi Jinping is expected to secure a third term. The benchmark Hang Seng index fell as much as 3 per cent to its lowest level since May 2009, while the … [Read more...]

The End of Speculative Real Estate Development?

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With interest rates rising fast, property developers may be taking a second look at their future plans for speculative development. Prologis, the world's largest logistics property developer, is slowing down its speculative investments. The Wall Street Journal's Liz Young and Sabela Ojea report: Prologis Inc. is pulling back on building new warehouses without tenants already signed on, as the world’s largest developer of logistics properties braces for a potential economic downturn. The shift away from what is known in the real-estate sector as speculative projects reflects “a more … [Read more...]

The Robots Are Taking the Jobs

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In a world of scarce labor, companies are increasingly relying on robots to perform work that used to be done by humans. The Wall Street Journal's Christopher Mims reports: A new wave of robots is arriving—and, in a world short of workers, business leaders are more eager to welcome them than ever. A combination of hard-pressed employers, technological leaps and improved cost effectiveness has fueled a rapid expansion of the world’s robot army. A half-million industrial robots were installed globally last year, according to data released Thursday by the trade group International Federation … [Read more...]

China Real Estate Debt Snowballing into Record Defaults

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According to Bloomberg News, over the past year, the Chinese real estate market has snowballed into record defaults and is worsening. Bloomberg reports: A worsening crisis in China’s property market is dragging junk dollar bonds from the nation’s borrowers deeper into distress, as the implosion of what was once one of the world’s most-profitable bond trades sends ripples across trading floors. Anyone who had been expecting a market turnaround from the 20th Communist Party congress which started Sunday has been left grappling with a further grind lower in China’s offshore credit market this … [Read more...]