🔬China Property Contagion, I Wrote a Poem, and Much More

"It’s not supposed to be easy. Anyone who finds it easy is stupid"
- Howard Marks

"In God we trust; all others bring data"
- Michael Bloomberg

Table of Contents

🗣️ Market Chatter
🔥 Hot Headlines
🤭 Joke Of The Day
🙋‍♂️ Trivia

Market Chatter

U.S. exchanges were closed for Freedom Thanksgiving, so here’s a quick update on the Korean markets…

• 아시아 주식, 금요일 상승: 닛케이 +0.94%, ASX 200 +0.45%, 코스피 +0.06% 아시아 주식 대부분 금요일에 상승.

• 일본과 호주에서 이익을 얻으며 한국 주식은 보합세. 항셍 선물은 개장 시 손실을 가리키고 있음. 미국 시장이 추수감사절로 휴장한 조용한 해외 거래 세션을 따라 S&P 500 선물은 거의 변동이 없음. 미국 국채, 일본 국채 및 호주 국채 곡선이 가팔라지면서 채권 시장은 손실을 확대. 외환 및 상품 시장에서는 미미한 가격 움직임.

• 중국 당국은 은행이 운영 자본을 위한 무담보 대출을 발행할 수 있도록 허용하는 보고서들 가운데 개발자들에 대한 압력을 완화하기 위한 노력을 계속함.

Hot Headlines

CONTAGION FROM CHINESE PROPERTY SECTOR - Zhongzhi Enterprise Group, a major player in China's shadow banking sector, has reported severe insolvency with liabilities between 420 to 460 billion yuan ($58 to $64 billion), far exceeding its assets of about 200 billion yuan (for non-accountants, it’s better when assets > liabilities). The firm's financial struggles, largely tied to China's real estate sector, have raised concerns about potential contagion to the broader financial sector. Despite efforts to sell assets and seek strategic investors, the prospects for investor repayment remain uncertain, with analysts expecting regulatory intervention but minimal chances of full repayment. Queue the bail-outs? (Reuters has more details)

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BULLISH STOCK MARKET - Bank of America's equity strategy team, led by Savita Subramanian, forecasts the S&P 500 reaching a record high of 5,000 in 2024 (about a 9.7% increase from current levels), describing the coming year as a "stock picker's paradise" amid recovering markets. Despite challenges like a weakening consumer and potential impacts from Federal Reserve rate hikes, the team anticipates 6% earnings growth, driven by companies adapting to higher rates and inflation. They argue that a strong economy, rather than Fed rate cuts, is key for market growth, noting that current low equity allocations and bearish sentiment among investors could support a bullish market outlook. Please be right (for once) BofA.

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FILLER - It’s a really slow news day so here’s a haiku I wrote:

Waves of market tide,

Ebb and flow of fortune's hand,

Wisdom steers the ship.

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MORTGAGE RATES - Mortgage rates have declined to their lowest level since mid-September, with the average 30-year fixed rate falling to 7.29%, according to Freddie Mac. This drop in rates, driven by lower Treasury yields and signs of a softer economy and cooling inflation, has spurred a modest increase in mortgage applications and home loan demand. However, the impact of previously higher rates is still evident, as existing home sales have fallen to a thirteen-year low, and economists expect contract signings for previously owned homes in October to be significantly lower than last year. Still not exactly cheap. (The nerds at Barron’s have more)

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NVIDIA DELAYS CHIP FOR CHINA - Nvidia has postponed the launch of its new artificial intelligence chip, the H20, in China to the first quarter of next year, complying with U.S. export restrictions. This delay may impact Nvidia's market share in China, as it competes with local rivals like Huawei, and comes after U.S. rules barred Nvidia from shipping advanced AI chips like the A800 and H800 to China.

(Reuters) Novo Nordisk invests $2.3 billion in France to boost production of obesity drug Ozempic as a supply shortage rages on. This follow a recent $5.7 billion investment in Denmark.

(Reuters) German union Verdi calls for strikes at Amazon on Black Friday. "Amazon employees have decided to rename Black Friday 'Make Amazon Pay Day'", said Silke Zimmer, the member for retail on Verdi's governing board. Ouchy.

(WSJ) Binance Guilty Plea Shows What Crypto’s Really About. Hint: It’s crime.

(CNBC) Putin’s peace talk comments send a signal to the West; Kremlin says Europe poses a threat to Russia. Cuz we’re all scared of France.

(CNBC) Oil and gas industry needs to let go of carbon capture as solution to climate change sayith International Energy Agency.

(CNN) Jack Ma backs off on plans to sell Alibaba shares after stock plunge.

Trivia

I enjoyed the Medici trivia yesterday so here’s a few more…

1. Under which Medici did the bank reach its peak, becoming the largest in Europe?
   A. Cosimo de' Medici
   B. Lorenzo de' Medici
   C. Giovanni di Bicci de' Medici
   D. Piero de' Medici

2. What year marked the founding of the Medici Bank?
   A. 1397
   B. 1488
   C. 1548
   D. 1627

3. What crucial banking practice, still used today, was popularized by the Medici Bank?
   A. Online banking
   B. Branch banking
   C. Mortgage banking
   D. Mobile banking

4. Which famous artist did the Medici family not directly patronize?
   A. Michelangelo
   B. Leonardo da Vinci
   C. Raphael
   D. Caravaggio

( answers at bottom)

Joke Of The Day

A man passes away and his funeral is set to be held in his hometown where one of his sons lives. The other, a wealthy businessman, unfortunately can’t make it to the ceremony so instead he offers to pay for the entire thing. A few months later, the businessman is looking over his finances and notices a recurring bill of $120 a month. Confused, he called up his brother and asks him if he knows anything about it.“Oh yeah,” the brother replies. “Dad always wanted to go out in style so we rented him a tuxedo.”

Trivia Answers

1. A. The bank reached its zenith under Cosimo de' Medici (1389 - 1464).

2. A. The bank was founded in 1397.

3. B. Through their network across Europe, they popularized Branch banking.

4. D. The Medici never patronized Caravaggio.

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