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Chronicle - Aug 27, 2023
Some oddities this week
This week saw a lot of major events, all of which were strange.
China: Is It in Crisis?
Numerous headlines emphasized the severity of the China property crisis and its potential spread to other industries. However, commodity prices appear oblivious to these realities. China is the second-largest commodity importer on the globe, after the United States. Moreover, China's stock market did not exhibit signs of an impending crisis. The China ETF is in a declining trend with some accumulating support, but it is not in a precipitous decline.
Who Is In Trouble?
The bond market also exhibits peculiar behavior. China's government bonds do not exhibit signs of an impending crisis. Year-to-date, the yield on China's 10-year bonds has decreased from 2.9% to 2.6%, providing investors with a healthy return. In response to a credit crisis, bond market returns should be negative.
BRICS, If That Matters
BRICS, one of many acronyms coined by economists and commentators, is in the spotlight this week as it expands its membership to six additional nations and achieves a vast array of statistical data. It is rather peculiar because adding up GDP or population has no significance. The main members of the BRICS do not share the same objectives. For example, China and India, the two most populous countries in the world, are strategic rivals, competing from borders to resources. Perhaps we should see BRICS for what it was: a collection of high-growth countries in the early 2000s, namely Brazil, Russia, India and China.
Is ESG Still A Trend?
In the last decade, ESG (defined by Morningstar as 'Sustainability') has been a popular term in the financial world. According to Morningstar, global AUM for sustainability funds is $2.8 trillion, or 5.8% of total global open-end and ETF AUM. It is tiny, but we have read about it everywhere in the news. As anecdotal evidence suggests, IFRS issued its first ESG reporting standards two months ago. However, a recent report by Morningstar indicates that the launch of global sustainable funds has declined since 2022. The report cites a difficult macroeconomic environment as the reason for investors' pessimism. We'll have to wait and see if this is the beginning of a downward trend or merely a cyclicality.
Republican Presidential Debate
With the exception of Donald Trump, all candidates participated in the first Republican presidential debate. While Trump leads by a significant margin in most polls, the underdog Vivek momentarily surpasses Trump in Google search trends during the debate. This feat is exceptional because Trump is simultaneously commencing his own Twitter interview.
U.S. politics are becoming increasingly similar to those of third-world nations. The following day, Trump turned himself in to detention and had his mugshot taken. And that made him absolutely popular.
IPO — A Blank Check Company
NNAGU 0.00%↑ 99 Acquisition Group Inc. is as a Delaware corporation whose business purpose is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The units list on the Nasdaq under the ticker symbol NNAGU 0.00%↑. Each consists of one Class A share, a warrant and one right to receive one-fifth of a share upon the consummation of an initial business combination. Warrants are redeemable at the customary price of $11.50 per share. Once the securities begin separate trading, shares, rights and warrants will list under the symbols NNAG, NNAGW and NNAGR, respectively.
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