Meanwhile...an important signal amongst the noise...

 While every news outlet is making sense of "reciprocal tariffs" and the resultant ramifications, a credit rating service (yes, I have railed against them in the past so this is to be taken with the usual cautions) downgrades the Paper Dragon.  Note the "rising public debt" trajectory" language.

Managing the political and social fallout from the coming 3-5 quarters of chaos will be a tall order for the CCP.  

Yuan Falls Versus Dollar as Fitch Downgrades China’s Rating to A

2025-04-03 12:45:46 GMT

By Nour Al Ali

(Bloomberg) -- The Chinese yuan fell further against the US

dollar, underperforming all major peers, after Fitch downgraded

China’s rating to A from A+. The outlook is stable.

Fitch said the downgrade reflects their “expectations of a

continued weakening of China’s public finances and a rapidly

rising public debt trajectory.” Meanwhile, China pushed back and

said the downgrade does not fully reflect the country’s economic

recovery momentum, calling it “biased”.

Volatility...

 ...ahead here.   I expect November to remind us it never went away...

It's been some time...

...since I wrote here.

We have had unprecedented coordinated responses to pandemics, earthly disasters, war (and the concomitant risk of human extinction) in Europe, AI threatening every job in the world, etc.

So what is there to be optimistic about?

Plenty. 

The prospect of cheap unlimited (and "free" in a pollution sense) energy from Fusion alone is enough to pour your next cup of coffee and reflect upon the state of the world.

Much more to come as we enter into a new era, not one demarcated by time, but of accelerating human achievement.

One MILLION jobs...

...a nice round number.  This is analogous to me threatening a restaurant owner that I will not eat all the meals his current kitchen and his as yet unopened future restaurants can produce in perpetuity because we must discuss the meat/pasta ratio in his spahghetti.

Threatening imaginary numbers is not really the effective and professional response one would like to hear from the middle kingdom. 

"Alibaba’s founder and chairman Jack Ma says the Chinese mega e-commerce company no longer has plans to create 1 million jobs in the US, citing the ongoing trade conflict as the reason Alibaba is retracting its promise to Donald Trump. A new round of tariffs between the US and China will make mutual trade more difficult.

A new API.

To make a techy analogy: The current administration acts as a different API ("application programming interface") between the United States and China.  However, the outputs and reaction functions continue to play a similar tune:

So we see statements like this:

"China called on the United States to play its part in resolving trade frictions between the two countries, and said Beijing isn’t devaluing its currency to boost exports as tensions simmered ahead of President Xi Jinping’s first meeting with U.S. President Donald Trump."

In light of evidence like this:



(Graph depicts Yuan dropping against the dollar since May...a bit counter-intuitive given the tarriffs put in place.)

Now, Trade Deficits are like political positions themselves...they typically change state ("good" or "bad") depending on whatever political position one wants to make at a given time...more on that later.  Devaluation is a response based on purchasing power, and is much more systemic than Trade arguments in that it effects all goods and services.***

***Which is, of course, why Trade Deficits/Surpluses are not quite as meaningful anymore.  In the Days of Adam Smith or David Ricardo, goods and services may have been unique to a country or region.  In the modern era, a product designed in California, with parts manufactured in several Asian countries, yet assembled in Latin America makes the very notion of country balances a much less powerful indicator of economic position.

It has been some time...

...since I last posted.  What with world events being so vexing, why was this so?

The answers are coming, dear readers.

But for now, let us ruminate on the trivial observation that the past 60 years of market data was formed from a historical period of truly remarkable peace.  The theories and assumptions derived form this period are similarly pollyanish in assessments of future market behavior.

Kinetic war will not be the cause of the next conflagrations.  This is wonderful news for absolute living standards.

Relative living standards, "not so much" as the colloquialism goes...

Of course it is.

China is building a replica of the Titanic.

Can countries sink to the bottom of the sea?  This particular rendition of the Titanic will not even sail.  A massive construction project to build an enormous boat which will never drop anchor.

Patrons of the Restaurant China have had a nice dinner, but it is time to skip dessert and request the check.