Tag Archives: markets

American Energy

Posted on by
Reply

…independence today. Tomorrow, American energy dependence.

Bloomberg is reporting that the US didn’t import any oil at all from Saudi Arabia last week, the first time in 35 years. That’s part of a longer term trend in declining Saudi oil imports over the last six years, especially. See the graph just below.

This trend is a result of the US technology advance of fracking which both drove down the cost of getting the oil (and natural gas) out of the ground and drastically increasing our own oil and gas production—virtually eliminating our dependence on foreign oil and gas and making us net exporters of both.

However.

Watch for American energy independence to (re)degrade into energy dependence on foreign nations under the Biden administration.

Watch that dependence made doubly vulnerable as the Biden administration reduces funding for our national defense, including particularly our Navy, so that we will be less able to defend the shipping lanes carrying that foreign energy to us.

The People’s Republic of China, beginning under the Obama régime, already is in a position to shut off the shipping lanes carrying trillions of dollars of goods, including crude, to us through the South China Sea, and they’re building/acquiring naval bases for the PLA on the west coast of Africa and creating “economic” ties with island nations on the eastern boundary of the Caribbean Sea, and on the north coast of South America. And Biden’s softness toward the PLC is well-known.

Sound Money and the PRC

Posted on by
Reply

In a Letter to The Wall Street Journal Wednesday, one writer had this on the idea of the People’s Republic of China being a competitor with its renminbi as global reserve currency and its bond market as debt safe haven:

Credible money paired with reduced government spending have long been pillars of conservative rhetoric stateside, and with good reason.

Indeed. However, what the writer elided are the capital risk the PRC poses with its history of limiting or barring repatriation of profit, the economic risk from the PRC’s requirement that foreign companies give up their technologies and intellectual properties to domestic companies as a condition of doing business in the PRC, and the political risk of the PRC’s requirement that companies supply its intelligence community with any information that community “requests.”

The absence of these risks in the US also is an important aspect of conservative economic and political thought—and not just rhetoric.

Surrender?

Posted on by
Reply

Recall that the New York Stock Exchange, pursuant to an Executive Order regarding US investors and People’s Republic of China’s PLA-owned or -controlled companies, had begun the process of delisting China Telecom Corp Ltd, China Mobile Ltd, and China Unicom Hong Kong Ltd.

Now the NYSE has walked that back and decided not to proceed with the delisting. Exchange management have chosen to not provide any details or rationale for their, other than that their decision follows “further consultation” with federal regulators. The Exchange’s full statement can be read here; it’s carefully uninformative.

I have to wonder: is this in response to the PRC’s threat to take the necessary countermeasures to resolutely safeguard the legitimate rights and interests of Chinese companies? Or is it an attempt to duck away from those threatened countermeasures rather than fighting a battle that needs to be won?

The foregoing was written Tuesday. Now the NYSE has reversed itself again:

it received “new specific guidance” from the Treasury Department’s Office of Foreign Assets Control on Tuesday, which listed the three companies’ American depositary receipts as being covered by Mr. Trump’s order.

Which raises an additional question: who’s actually in charge at the NYSE, since the new specific guidance should not have been necessary.

Miami as Financial Center

Posted on by
Reply

Financial firms are starting to figure it out: in addition to a better climate and (much) friendlier tax regime, Miami is the place to be for them. I have a thought on one bit of that maybe-migration, the opening statement:

This city has long pitched itself as an attractive location for finance and tech firms, with its tax advantages, flight connections to New York and cosmopolitan flair. Its efforts appear to be paying off.

I’m not sure that Miami needs to tout New York as being within easy reach. It should begin noting that it’s within easy reach of New York. There’s no need for Wall Street to remain in a city as anti-business, anti-financial success, as badly run generally as New York City, or as badly run and high-tax as is the State of New York.

Miami should encourage all of them to come on down to Brickell. The water’s better than fine.

Investing in the PRC

Posted on by
Reply

For good or ill, the People’s Republic of China has decided change the regulatory rules regarding Alibaba Group Holding Ltd’s banking activities. The company has lost

almost all its stock-market gains this year, just days after [PRC] regulators signaled a major change in their posture toward the e-commerce behemoth and its finance affiliate, Ant Group Co.

Notice that: the regulatory change does not cover the PRC’s banking or finance industries—it’s explicitly targeted at Alibaba’s subordinate, Ant. The PRC’s

central bank released a harshly worded statement Sunday criticizing Ant’s business practices and instructing the financial-technology giant to shift its focus back to its mainstay—and less lucrative—digital-payments business.

Notice that, too: the ruling is not the outcome of any sort of investigation, followed by trial in court to assess whether anything wrong actually was being done, followed by a court ruling based on the presented evidence. No, the order is government diktat.

Investors, unwarned by the existence of an investigation or subsequent existence of a court trial, have lost heavily. The only warning investors had was a Christmas Eve announcement of an investigation—and then came the diktat.

Alibaba’s swift comedown has led investors to reassess the regulatory risks faced by [PRC] internet companies…
The hard part is figuring out “how much of the recent regulatory moves against Ant and Alibaba is politically based, how far it will go, and when it will be over,” said Alex Au, managing director at Alphalex Capital Management, a Hong Kong-based hedge fund.

Yewbetcha.

This is what rule by law does, as compared to rule of law. This is why it’s foolish, potentially to the point of violating fiduciary responsibility, to invest in PRC businesses.

Remember this for the coming year.