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Xi Whiz - China’s Getting Scary

November 2, 2022

“It is important to look at the enthusiasm in the U.S. markets and realize the fragility that we have on a global basis because these are things that in an interconnected financial world do matter. Even if they’re not in the limelight, they’re incredibly important. The Chinese currency continues to reflect and increase stress, even with the People’s Bank of China and the Commercial Bank interventions of selling the U.S. dollar in support of yuan. Chinese currency hit its weakest level since 2007 this week.” — David McAlvany

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany. 

Your family is a very talented family, your wife, very much into the arts. Your son now is playing a leading role in a musical. He had his first night this weekend.

David: That’s right. And then as you often have with the afternoon shows, there’s a little bit of a lull. They’re quiet shows. The audience is a little less engaged for those.

Kevin: It’s the kickoff. Yeah.

David: That’s right. So, Anastasia, we’re bringing in a little Russian conversational aspects and songs as I hear him sort of warming up his voice in the shower. It’s really—

Kevin: This was your teenage boy, is— Yeah, and now he is singing— You know, Anastasia. It reminds me, back, oh, 34, 35 years ago when I first started, Dave. I had someone call me. I can’t remember if they became a client or not, but they told me that they were friends with the real Anastasia, the one who had actually lived through the execution in 1918. Of course, there’s always been this legend about the Anastasia, and you and I are reading a book right now called The Story of Russia. So we’re thinking in these terms, but it’s interesting. Disney picks up on these themes. You don’t necessarily know if you’re being told the true story, but you are being told an entertaining story.

David: Absolutely. Well, the other entertaining story that I had, crossed my desk this last week was the positive GDP figures. I thought they were remarkably entertaining.

Kevin: Oh, yeah, we’re doing well, aren’t we?

David: Well, after two quarters of negative GDP, we end up in a positive print of 2.6%. And as you look into it, probably the most fascinating aspect, I think the most entertaining aspect, was called the deflator. The deflator is how they account for inflation. And so that adjusts the number, and, as it turns out, their inflation input runs around 4%. And I’m thinking, well, the annualized rate is still north of 8. So how did you get that cut in half just in time for the show?

Kevin: Well, you can add or subtract numbers. Joe Biden was talking the other day, and he said we had 54 states in the United States, so I think you can use whatever number you want, but listen—

David: You count a deck of cards, there’s probably 54 cards as long as it’s jokers included, right? 

Kevin: Or the two extra aces. Remember the two extra— Oh, the ones in your sleeve, right? Is it? Well, sometimes you— Speaking of shows, have you ever looked at a line and seen a lot of people wanting to go into something that you’ve never heard of before, and you’re like, Gosh, am I missing something? 

David: We’ve all done that. When you go by a restaurant and there’s not a soul inside, you say to yourself, there’s got to be a good reason.

Kevin: Right. Right.

David: Even if it’s not true. That’s the running assumption. Meanwhile, the restaurant next door that’s flowing out under the streets and has a line of 45 minutes wait, you think, they got to know something I don’t know. 

Kevin: Well, should I have been buying stocks last week, Dave? That’s what I wonder.