China Risk Shared Confessions by Hugh Hendry & Tom Roderick

Sep 29, 2021

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Hedge fund manager, Hugh Hendry, again invites his former colleague, Tom Roderick, who manages macro at Trium in London, to review the revelatory and impending bust of China's legendary Evergrande Property. Macro hasn't been seen in Chinese waters for almost a decade. A strong currency with a positive carry and a stock market seemingly impervious to shocking state interventions has ensured a lack of willing naysayers. The Acid Capitalist, Hugh, and Tom, explains how China's property companies were the safest stocks in the global sector owing to their ability to transfer risk quickly. That the least risky companies are now in jeopardy does not bode well especially as Chinese property, relative to household wealth, is 4x greater than in the US. The boys consider a bull market in fear where sovereign Chinese bonds will supplant property as the de facto collateral position. They can conceive of a steeply inverted yield in a land more accustomed to wearing flats and they ask whether flaunting opulence and the mania for luxury may not sit well with the modern creed of common prosperity. Buckle up! This is macro conjecture for grown-ups.

Chapters:
00:00 Shared Confessions China's Geometric Risk Taking
02:45 Why Macro didn't Short the Red Lines
05:15 Why the $ is red Cabbage in Beijing
10:55 China Property Market was Risk Free
15:35 Fechner and the Geometry of Chinese GDP Growth
17:25 Why Now ? And the Grapes of Wrath
21:30 FX chart, Mad Max Leverage Internal or External ?
26:45 Everything is Macro
32:40 Is there a China Macro Trade with no Tears for Fears?
37:35 China the Land Of Flat Yield Curves
40.45 Stay At the Money with Your Strikes
42:00 Apathy is the Catalyst for Perplexing & Engaging Trades
46:15 Common Prosperity Questions Luxury Valuations

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