Not so Populated

It’s been a while for me to write this piece, but a lot of things have happened during these days. First of the first, NASDAQ finally seemed to find some reason to fall, while it’s almost the always reason: rising interest rates. Though Zoltan Pozsar depicted a very vivid, detailed or reasonable picture that some fixed income players’ very reasonable behavior, or expected practice in the market caused the 10 YR yield rising, the market still treated it as a sign of inflation, and suddenly fear rushed in the the fearless stocks, TSLA as a very good example, or ARKK the famous fearless fund, fell from moon down to earth. Mr.Powell, who might have had enough during Mr.Trump’s session, finally could say something equal to “I don’t f**cking care to the market.” Reasons for this correction, at least now a correction, are simple. The concern of inflation caused the higher yield, resulting a poor performance of the tech stocks, favoring value stocks. And Mr.Powell just paid attention to it rather than printing money to write the put, so everybody may just ignore the dreaming stocks and switch to some boring ones. So the tech recovery in most recent days might be just a short one, if the tone doesn’t change.

Another interesting story is China has set the growth goal to 6%, just like a conservative company. We could ignore the funny part of a country setting a growth goal like a firm, but pay close attention to the rather mediocre target. Com’n, U.S is expected to growth 8%, and Chinese just 6%? How will you guys, or we, pass the mid-income country trap? But it is what it is. In my humble opinion, Chinese aging population, an unsustainable debt ratio(You definitely should consider the hidden debt of local governments, the province, the city and the county when you try to understand the debt burden of Chinese government), a rising housing price which can be viewed as a bubble or the only reasonable investment in China, either works depending on your side, and the not so good geopolitical environment make President Xi not so optimistic. If so, he is wise enough. The most challenging part may still be the population. It’s a nightmare. The newly born babies data in China dropped to the hell.

The NPC sessions ended today, and the A Share seemed finally could breath. It has been down for a whole month, after a rather good year in 2020. Maybe after all the political drama, all the markets may begin to function in a more normal way.