Me? I believe Quantitative Easing (QE) is at worst a placebo; and the record on the efficacy of placebos is impressive enough to make even their prescription worthwhile in many cases. What I’m highlighting this week is not an academic paper but a telling report from the European Central Bank (ECB) that may go some […]
Author: Nial Gooding
Does China have a corruption problem? In the paper I’m highlighting this week, from Mr. Carlos D. Ramirez of the Department of Economics at the George Mason University, the conclusion is; er, not really. What’s especially interesting about this work is that was published in December 2012 some time before Mr. Xi went in determined […]
https://www.fas.org/sgp/crs/row/RL33536.pdf The link will take you to this Sunday’s paper, issued last December 5th, from the Congressional Research Service (Informing the legislative debate since 1914) by Mr. Wayne M. Morrison, Specialist in Asian Trade and Finance. In it Mr. Morrison does a thorough job of reminding readers of the history of America and China’s trading […]
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China Stocks – Are We In A Bull Market?
Preamble The last time (and I’ve sworn to never do it again) I was foolish enough to call the market was October 2010. At that time I confidently wrote we were most definitely and without a doubt entering a grand bull market. What a putz! That call was followed by the annus horribilis of 2011. […]
Stock markets have been shown to be reliable predictors of future changes in underlying economic activity and there’s no mystery as to why this should be. If you know your company is starting to lose business and job losses, perhaps yours included, lie ahead you might chose to lighten up your equity portfolio. You do […]
Today, a paper plus a rant on some pet peeves. [It’s my blog after all. Ho-ho-ho] The human brain was designed to get us safely around the Serengeti, not stock markets. Some of the wisest and most enduring advice for investors then urges us to overcome amygdalas and let prefrontal cortexs do the driving. In recent […]
Preamble Nobody knows what determines the overall level of stock markets in the short term; and the short term can sometimes end up being several years. We know though that in the long term underlying earnings trends of the companies that compose an index must, ultimately, be reflected. It should come as no surprise then […]
I wrote in an earlier post that China’s debt blowout in recent years was a Pig-in-the-Python (in May in fact https://www.chinadream.asia/chinas-credit-growth-the-pig-in-the-python-and-whats-coming-out/) and the situation would resolve itself in time. In this comprehensive and most recent survey of China’s debt landscape Mr. Yukon Huang, of the Carnegie Endowment for International Peace and the World Bank’s country director for […]
Xi Jinping’s Inner Circle – Part III The author, Mr. Cheng Li, is a director of the John L. Thornton China Center and a senior fellow in the Foreign Policy program at Brookings (he’s also a director of the National Committee on U.S.-China Relations and focuses on the transformation of political leaders, generational change and technological […]
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Folding Umbrellas
Summary conclusion Eight weeks ago I wrote the Umbrella Movement would fold with only timing moot. I was wrong footed on how long it’s taken but at last, and inevitably, it’s happening. In this note I want to look at the reasons for the failure and then, perhaps more usefully, try and think over some […]
Value Relevance of Environmental, Social and Government Disclosure The paper highlighted this week is a tour de force in terms of both a review of pretty much all (as far as I can tell?) the academic literature to date on how governance affects stock prices and a unique new study on the specifics of ESG […]
Me? I’m feeling OK about life. China continues its relentless ascent. The US, in spite of its chaotic political system, seems to be making progress. Europe (really only two and half sensible economies to begin with and now it seems finally acknowledging this fact) seems to be stable at least and wasn’t that G20 show […]
Should we build more large dams The actual costs of hydropower megaproject development For a short paper (click the link above) this one packs a mighty wallop. The authors, Mr. Atif Asar, Mr. Bent Flyvbjerg, Mr. Alexander Budzier and Mr. Daniel Lunn all from Oxford University, demonstrate empirically what most of us had long suspected. […]
Preamble From, what we recognized then, an unsustainably high valuation level of over 30x earnings in October 2007 China stocks have been in a multi-year valuation bear-market. Following the recovery from immediate post GFC lows valuations made a lower high in July 2009 of around 20x before heading down again. In August 2011 they dropped […]
Institutional investors, for the most part, own too many stocks and individuals own too few. So what’s the right number of stocks for a manager to own and legitimately claim to be truly ‘active’? The authors of this paper put their conclusion right up there in the title when it comes to China. To be […]
Why is it taking so long for a fresh capex cycle to re-engage in the US? In the last couple of years a new database on US private companies has become available from Sageworks Inc. It takes in data from all the major US accounting firms (and many of the smaller regional ones) on their […]
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What’s good for America..
Summary conclusion The outlook for the US economy is the outlook for the global economy. It’s therefore, in large part, the outlook for China’s. Given the recent sturm und drang commentary from the US I thought a quick look at underlying reality was in order. What I found was not only reassuring but suggests, to […]
With such a short history I’m suspicious of ‘proofs’ about anything extracted from China stock market data. I’m also reluctant to allow China’s stock markets any degree of Chinese-ness in terms of explaining their long run valuations. Local factors can matter from time to time but ultimately, just as people are people, stocks are stocks […]
When and How to Exit Quantitave Easing This is a very math intensive paper (click the link above for the full text) but the plumbing for the argument is less important than the main conclusions. QE works best when it’s applied in size and swiftly. The model developed in this paper by Professor Yi Wen, assistant […]
Summary Conclusion At the beginning of this week I wrote to friends I was scared. Irresistible forces seemed headed for immovable objects and it wasn’t clear how the mob, then reeling from clashes with tear-gas firing riot-squad-gear clad police, would proceed. My biggest worry was our Wednesday holiday would turn into a July 1st 2003-style […]