US-China Series

Paul was joined at the Expert Series by Luis Fernandez de Mesa of Pembroke Emerging Markets LLP to discuss Brazil’s upcoming elections.

Among others Luis discusses how close the race is between the four candidates, the disruption caused by the stabbing of candidate Bolsonaro, the outlook for the now hospitalized Mr Bolsonaro and for Mr Haddad – the replacement of former president Lula – and if he can garner enough support from his party. Towards the end Luis discusses the outlook for the equity market.

Paul was joined at the Expert Series by Scott Morris of the Center for Global Development in Washington, D.C. to discuss the debt dynamics of the Belt and Road Initiative (BRI).

The fifth anniversary of the announcement of the BRI sees the program mired in suspicion, exaggeration, and unviability. The discussion, based off the findings of the Center’s work published in March 2018, covers China’s new role as a sovereign creditor, the Chinese financial architecture, debt considerations of countries with Belt and Road funding, the actual scale of BRI, the commercial viability of many projects and some of the political issues surrounding the program.

The Q&A section examines in detail issues that China’s absence from the Paris Club creates.

To discuss the latest developments on NAFTA and US - China trade, the Expert Series hosted trade guru Chad Bown, Reginald Jones Senior Fellow at the Peterson Institute for International Economics.

Most of the discussion focuses on the progress of the US’ trade negotiations with Mexico and Canada. The most interesting part of the discussion is on the outlook for Auto tariffs, which are becoming increasingly likely given the focus on the “rules of origin” procedures between the US and Mexico. Chad inadvertently paints a few really scary scenarios in which the Trump administration would put up blanket tariffs against all US imports, designed to avoid the temptation for car companies to start producing more cars in Mexico and importing them into the US from there.

For an update on the latest developments in the Chinese housing market, Paul welcomed back Robert Ciemniak. Robert is the CEO of Real Estate Foresight, who provide the most granular independent research on China housing markets. They apply advanced data analytics tools and combine data science and technology with on-the-ground research, with a track record in accurately forecasting the Chinese housing markets.

Today’s discussion revolves around the three major narratives that can be observed in the housing market today, or as Robert calls it; The Three Games. The first game is the “Whack-a-Mole” policy of smoothing out prices across China, second is the deleveraging effort and the problems that causes for smaller developers and the market, and the third game is the evolving theme of the growing numbers of rental properties and the effect that has on the market.

For a conversation on the prevailing macro environment, Paul hosted his good friend Bob Savage. Bob is the CEO of CC Track, a quantitative service focusing on supporting FX trading. Bob is a highly experienced Macro and FX analyst, having previously worked at Goldman Sachs, Lehman, and BoA as a Macro FX Sales manager and FX prop trader for over two decades.

Among others Paul and Bob discuss US Fed Chairman Jerome Powell’s move to a more discretionary methodology to conduct monetary policy, something which Bob thinks is incredibly significant. Furthermore, they touch on several global risk factors; Bob’s negative view on Emerging markets, potential problems in Europe arising from Brexit and the Italian budget, tightening USD liquidity, and China and renminbi weakness and the deleveraging cycle.

For this edition of the Expert Series, Paul welcomed Isaac Stone Fish for a discussion on Chinese Soft power. Isaac is a journalist and a senior fellow at the Asia Society's Center on US-China Relations in New York; he is also a contributor to CBSN, an international affairs analyst for PRI's The World and a visiting fellow at the German Marshall Fund.

Soft power in a Chinese context was first discussed by former president Hu Jintao, and is concerned with the development of a positive Chinese narrative around the globe. Isaac discusses how and where China uses Soft power to shape its image. Paul and Isaac delve into everything from using lobby groups in the US-China trade dispute to why Xi Jinping is so afraid of Winnie the Pooh.

For a discussion on UK and European sovereign fixed income and credit markets, The VFTP Strategist Series welcomed European interest rate strategist Bert Lourenco. Bert gives a great level of detail and nuance, emphasizing what drives supply and demand in these markets, and thus what drives the shape of the curve.

Paul and Bert start the discussion with who are the natural buyers of European fixed income, and how this has influenced the shape of interest rate curves in the UK and the EU. They also discuss Brexit and the pickle in which Mark Carney finds himself, the rise of populism in Italy and how this affects the Eurozone, and they look at life after Mario Draghi and the possible policy changes that will ensue.

For the inaugural edition of the VFTP Strategist Series, Paul welcomed Keith Grindlay, MD at Macro Thoughts, an independent macro research firm in London.

Paul and Keith discuss what Keith thinks are the key drivers of asset markets for the years to come, China’s growing influence on the world through Belt and Road, and the increasing impact that Chinese policy has on the global economy, something which Keith thinks is still underestimated by many investors. Next, they discuss Europe at length; the structural issues, how those issues are affected the growth in populism, and how that in turn affects asset prices. They conclude with Keith’s outlook for global asset price.

For a discussion on the global Liquefied Natural Gas (LNG) market, but from China's perspective, the Expert Series welcomed back Dr Michal Meidan. Michal leads analysis of Asian energy policies and geopolitics at Energy Aspects, with a particular focus on China.

Among others, Paul and Michal discuss China’s transition from coal to natural gas, the impact of last years' LNG shortages and what the Chinese government will do to prevent those shortages from happening again, the influence of the trade dispute on LNG prices, and where China gets its LNG from. Furthermore, they also touch on Russia, Europe, and the changes in maritime regulation pertaining to shipping fuel.

For part two of our Expert Series discussion on China’s Social Credit System, with an emphasis on data protection and data privacy, Paul hosted Samm Sacks, senior fellow in the Technology Policy Program at the Center for Strategic and International Studies (CSIS). Samm's research focuses on innovation, cybersecurity, and emerging information and communication technology (ICT) policies globally, with an emphasis on China.

Firstly, Samm discusses what data protection and data privacy mean in China. Next, she reviews the regulatory landscape. She then puts China’s data protection system in a global context and discusses how it compares to Europe’s GDPR regulation. Finally, Samm ties these points back into China’s Social Credit System, building on Martin Chorzempa’s discussion in part one.