Seeking Alpha

JC51

JC51
Send Message
View as an RSS Feed
View JC51's Comments BY TICKER:
Latest  |  Highest rated
  • Report: China sets 2015 growth target at ~7% [View news story]
    Whenever someone mentions "Chinese government estimates," I immediately tune out. As bad an investment as China has been over the past five years, the stuff hasn't hit the fan just yet. We might be at the beginning of the largest real estate collapse in history. The government is just starting to figure out that there policies have very little influence at this point. The rich are trying to flee the country. Still, there are a lot more shoes to fall before they hit rock bottom. I'm just sitting here laughing at the China cheerleaders. Good luck, buddies!
    Jan 28, 2015. 03:27 PM | 2 Likes Like |Link to Comment
  • My Best Stock Idea For 2015 [View article]
    What a lot of people failed to mention is the potential of this company to expand into the biotech. They already own 40% of Medicago, which develops flu vaccines and other products. Did anyone else notice that a subsidiary of Reynolds American helped develop an anti-ebola drug?http://nbcnews.to/1CzygG1 Altria has also invested in research. Tobacco has many different uses and I think this is one of the paths PMI could expand into if government regulation on cigs becomes unbearable. Smokeless tobacco has much better prospects. Companies need to think long-term and find ways to innovate and change strategy depending on the climate they're operating in. Could PMI become a biotech powerhouse down the road? IMHO it's certainly possible. Those tobacco facilities located around the globe could be transformed into research labs rather quickly. Just a thought.
    Jan 28, 2015. 02:46 PM | Likes Like |Link to Comment
  • Is China The Biggest Malinvestment Case Of All Time? [View article]
    "Is China in better shape than US...China has more foreign reserve (though depreciating) than most other countries."

    Japan's foreign currency reserves didn't help stave off a severe recession in the 90s. The US' gold reserves didn't prevent the Great Depression of the 1930s. China won't be any different. As scary as it sounds, the US is the best looking pig in the pen.

    "If US has 5%, they will jump up and down and their president would declare victory for the century"

    It's much easier for a backward 3rd world country to grow 8% than a developed one to grow at 3%. It's common sense. The same analogy can be made when comparing small and large cap stocks. Once again, it's Economics 101.

    You should take social and political factors into consideration when you're trying to determine how healthy an economy actually is. Iraq, Afghanistan, Ghana, and Turkmenistan all grew over 7% back in 2010. Are any of these countries stable? Is there rule of law there? There's a reason they're called "developing" countries. As we witnessed during the purge of Bo Xilai, China's political situation isn't much different than what we see in dictatorial Middle Eastern nations. I don't know about you, but I'm not knocking down doors to invest in any of these developing countries, including China, and I certainly wouldn't call their economies healthier or more stable than the US.

    "If you look at many countries like Japan and Korea which do not have a lot of natural resources/farm land per capita, they all started with exporting cheap consumer products and then developed their internal market and moved up the product chain. China is no difference. The difference is the size and scale"

    What you seem to be ignoring is how painful the transition will be from an industrial to service economy. Every high growth Asian country that has tried to make the transition has experienced a severe economic slowdown. Even now, Japan and South Korea's service sectors are only half as productive as the US'. China can't risk a severe slowdown because of their size, which, contrary to your opinion, is a huge disadvantage. Japan, Taiwan, and South Korea didn't have 1.3 billion people to worry about when they made the transition. If China's factories close or move elsewhere, the Chinese government will have to deal with tens of millions of unemployed and disgruntled workers.

    Another aspect that you failed to take into consideration is the fact that Japan and South Korea both lie under the US security umbrella (economically and militarily), which has helped them to flourish over the past half-century. This relationship cannot be underestimated. The technology transfers and agreements that have been made allow these countries to thrive. They give us bases to station troops, while we provide access to the US market. As long as the US Navy is able to secure the free passage of their goods around the world, the agreements remain in tact.

    "China at this point does NOT have to grow 8%"

    China needs to maintain at least 8% GDP growth just to keep up with the rate of urbanization and maintain stable employment levels.

    Sep 25, 2012. 05:55 PM | 2 Likes Like |Link to Comment
  • China's Transition Continues [View article]
    Once again, you don't know what you are talking about. The US donated over $30 billion of humanitarian aid last year, more than any other country - by far. Over 60% this aid was spent in sub-Saharan Africa. http://bit.ly/P9S74a When it comes to foreign aid donations, the US is in a league of its own. Since China received $27 million of US aid last year, they really shouldn't be complaining about anything. During the 2011 East Africa drought, the US donated over $500 million. China, on the other hand, doled out a measly $14 million. http://fxn.ws/P9S5cq China should focus more on donating humanitarian aid rather than procuring oil and mining contracts with "no strings attached."

    In addition, the US donated $950 million to the victims of the tsunami in 2004. China donated $63 million.http://bit.ly/P9S5ct I think the majority of people around the world are wondering when will China finally step up to the plate and put its money where its mouth is?

    I rest my case!
    Aug 11, 2012. 04:50 PM | 2 Likes Like |Link to Comment
  • China's Giant Catch-22 [View article]
    "Please site your source that the cn economy is 30% reliant on X (exports), my figure from a former Govt advisor is 20%."

    From The World Bank: http://bit.ly/QUAcSO

    Pretty easy to find!
    Jul 29, 2012. 06:38 AM | Likes Like |Link to Comment
  • China's Giant Catch-22 [View article]
    Once again, your statements are not based on facts. The Europeans and American consumers were able to bail out China during the last Asian Financial crisis in 1997 because their economies were shielded. However, in 2008-09 the only thing preventing the Chinese economy from collapsing was the government's $600 billion stimulus package (equal to 15% of China's GDP). All they really did was kick the can down the road.

    China's economy is reliant on exports, which make up over 30% of their GDP. Simply put, if they lose their 3 largest trading partners (US, EU, and Japan = over $1 trillion in exports), their economy would collapse. This isn't debatable. If the US and EU economies collapse, the developing nations economies will get hit even worse. South America, Middle East, SE Asia, and African countries (all export oriented regions that also rely on EU and US consumers) will not replace American and European consumers. It's simple economics.
    Jul 28, 2012. 06:52 PM | 1 Like Like |Link to Comment
  • China's Giant Catch-22 [View article]
    When China stops using currency manipulation, tariffs, value added taxes, procurement directives, quarantine inspection permits, and indigenous innovation policies to give their domestic companies an unfair trade advantage over American companies, we'll stop complaining. In addition, China's rampant IPR theft steals billion$ from American companies. This in turn harms American workers. China cannot compete on a level playing field.
    Jul 28, 2012. 06:06 PM | 2 Likes Like |Link to Comment
  • China's Giant Catch-22 [View article]
    Great article! Probably one of the best I've read on this topic. You covered all of the major points.

    People seem to forget that the US economy kept churning along after Japan's economy imploded back in 1989-90. Back then, people were predicting Japan would take over the world, or that their foreign currency holdings would shield them from an economic catastrophe. They couldn't have been further from the truth. It won't be any different this time around, except China will be lucky if it experiences a Japan-like "Lost Decade." China's economic imbalances are far larger than anything we saw in Japan. Not to mention, Japan was already developed by the time it hit the "brick wall." They also never had close to 1 billion people living in poverty, unlike China. They can ill-afford to to let this kind of collapse occur. The necessary reforms China will be forced to undertake could take a decade or longer to implement and the transition will be very painful. It looks like they'll kick the can down the road as long as they can, at least until after the 5th generation leadership transition. Eventually, they'll have to face the music.
    Jul 27, 2012. 05:52 PM | 10 Likes Like |Link to Comment
  • The Good News: China's Soft Landing. The Bad News... [View article]
    As many of us have already mentioned numerous times, according to Vice Premier Li Keqiang, China's GDP numbers are "man-made" and "unreliable." http://reut.rs/qp5sgQ I'm sure if the Chinese government told you it was snowing in Hawaii, you'd take their word for it.

    According to Zhu Min at the IMF, China's debt to GDP ratio has surged to over 200% over the past 5 years. http://bit.ly/sCz8Df

    Last October, an audit by Zhou Mubing, China's Vice Chairman of the China Banking Regulatory Commission, revealed that local governments had accumulated $1.7 trillion in debt. Provincial government debt is twice the debt load of US states and local governments. http://huff.to/sw1ofB
    Jul 21, 2012. 04:50 PM | 1 Like Like |Link to Comment
  • Worried About The Chinese Rate Cut? You Shouldn't Be [View article]
    China needs to maintain at least 7% GDP growth just to keep employment at stable levels. When these numbers deteriorate, unrest increases (i.e. Tiananmen Square Protests in '89). China's Electrical output/consumption and cargo shipping numbers indicate that the economy is growing in the low single digits, which would mean that things are worse than what is being reported. There are 1 billion rural residents earning less than $2000/year, basically living at the same standards as the average Nigerian. For them, a major drop in GDP growth could lead to malnutrition or worse, which is why the government puts so much emphasis on these numbers. You should also take social and political factors into consideration when you're trying to determine how healthy an economy actually is. Ghana's GDP growth rate was 13% in 2011! Iraq's was 11%! Turkmenistan 10%! Afghanistan 7%! Are any of these countries stable? Is there rule of law there? There's a reason they're called "developing" countries. As we witnessed during the purge of Bo Xilai, China's political situation isn't much different than what we see in dictatorial Middle Eastern nations. I don't know about you, but I'm not knocking down doors to invest in any of these countries, including China, and I certainly wouldn't call their economies healthier or more stable than the US.
    Jun 9, 2012. 12:30 PM | Likes Like |Link to Comment
  • Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4% Y/Y, Office starts -21%, Retail starts -18.7%, Land sales -54.7%. Foreign funding of property development -80.8% Y/Y. The only thing holding up real estate investment is a flurry of completions by desperate developers. Once this ends, the hit to GDP may be enough to push the economy into a hard landing.  [View news story]
    "Borrowing your 'not necessarily', U.S. debt in 1990 was a paltry ~$7T unlike the $15.6T now and growing at an 7% annual rate unabated."

    Just as US debt has more than doubled 1990, so has the economy ($6 trillion to $14 trillion). I believe that a Chinese economic collapse would have little effect on this. When Japan's economy hit a brick wall in 1990, they didn't dump their treasury holdings. China will likely follow suit. It would do more harm than good, particularly to their manufacturing sector (the lifeblood of their economy). US treasuries are the only market that can handle such a large amount of liquidity. If the Chinese cut back and started buying other currencies, it would actually be an expansionary policy for the US. It would have the same effect as a QE. Europe's economic woes and uncertainties only make treasuries more attractive. The US economy is really the best looking pig in the pen. What a scary thought!
    May 16, 2012. 08:06 PM | Likes Like |Link to Comment
  • Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4% Y/Y, Office starts -21%, Retail starts -18.7%, Land sales -54.7%. Foreign funding of property development -80.8% Y/Y. The only thing holding up real estate investment is a flurry of completions by desperate developers. Once this ends, the hit to GDP may be enough to push the economy into a hard landing.  [View news story]
    Not necessarily. When Japan's economy hit a brick wall back in 1989-90, the US kept churning along. Countries that rely on exports to China, particularly commodity exporters, will get hit the worst. Australia, Brazil, Canada, Russia, Saudi Arabia, and Iran should be worried. I would argue that a decline in commodity prices would actually be beneficial to the US economy. Europe is a more dire concern for the US than China.
    May 16, 2012. 05:15 PM | Likes Like |Link to Comment
  • Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4% Y/Y, Office starts -21%, Retail starts -18.7%, Land sales -54.7%. Foreign funding of property development -80.8% Y/Y. The only thing holding up real estate investment is a flurry of completions by desperate developers. Once this ends, the hit to GDP may be enough to push the economy into a hard landing.  [View news story]
    They could pass another stimulus and engage in another building spree, but what good is that going to do when there are already millions of apartments sitting vacant across the country. I guess that's the risk you take when you rely so heavily on fixed asset investment for growth. The house price to income ratios across the country dwarf anything we saw in the US. There's no comparison! The demand isn't there and won't be for a long time. Political infighting is only making matters worse. China is caught between a rock and a hard place. The reforms that need to be undertaken will lead to much slower growth over the next decade or longer.
    May 16, 2012. 05:02 PM | Likes Like |Link to Comment
  • Patrick Chovanec details the "unraveling" of Chinese real estate: April housing starts -14.4% Y/Y, Office starts -21%, Retail starts -18.7%, Land sales -54.7%. Foreign funding of property development -80.8% Y/Y. The only thing holding up real estate investment is a flurry of completions by desperate developers. Once this ends, the hit to GDP may be enough to push the economy into a hard landing.  [View news story]
    "Does it provide a better windows for Japan rebirth"

    I think it's only a matter of time before Japan wakes up. Eventually, they will become more assertive in the region to protect their interests. In terms of quality, they possess a stronger military than China. I think what's going on in the South China Sea should set off some alarm bells. The Chinese government could try to stir up trouble with its weak SE Asian neighbors to deflect attention away from its political and economic instability.
    May 16, 2012. 05:00 PM | Likes Like |Link to Comment
  • Swensen's 6 ETF Portfolio [View article]
    Vanguard FTSE All-World ex-US ETF (VEU) already allocates about 23% of its portfolio to emerging markets, so I don't think you need to add another emerging market fund. You'd just be exposing yourself to more volatility. Also, every time I read an article about this portfolio, it mentions a different bond fund. I thought you are supposed to invest in gov't treasuries with a 5-7 year time frame. Any ideas on this?
    May 1, 2012. 11:45 PM | Likes Like |Link to Comment
COMMENTS STATS
345 Comments
243 Likes