Steroids and Chinese Medicine

Week ended February 24, 2024. interesting news items to look at this week were:

1. Steroids and Chinese Medicine: My eldest brother in Toronto Canada is a technologist who on his retirement successfully picked up TCM (Traditional Chinese Medicine) as an extension to his retirement life style. He said his approach to TCM is to deal with bodily imbalances and blockages. The TCM approach may take longer to show results than CWM (Conventional Western Medicine) but he is convinced the outcome of TCM would be less invasive and more beneficial in terms of holistic health than CWM. I totally agree with this philosophy and draw similar conclusion to how the Chinese economy is managed as compared with that of the US..

(i) Alibaba vs Amazon: In November 2021, the Chinese Regulators stopped the  IPO of Ant Financial Group in Shanghai and Hong Kong. Ant's $37 billion IPO, which would have been the world's largest.  

Had the IPO gone ahead, it would have added oil to the scorching hot China’s shadow banking bubble and turn into a systemic catastrophic disaster. At hind sight, the Chinese Regulators foresaw 12 months ahead that the unscrupulous western Covid money printing would lead to rampant inflation and a loud pop. This eventually began in November 2022 and the global financial market is still reeling from the printing spree and unsure of the next QE and a possible hyperinflation.  (Fig. 1).

I am sorry that some of us are emotionally stressed with respect to daily share price fluctuations. I take comfort,however,  that the Chinese Regulators knew what they were doing and if I am allowed to incorporate the Alibaba vs Amazon share price chart with those of BYD vs Tesla, than perhaps the macro picture would be more clearly understood. (Fig. 2).

Rather than feeding sugar to the already cancerous shadow banking and real estates sectors, slowing down these two sectors would free resources and energy and redirected growth in more promising cutting edge industries. The result is astounding. The Chinese economy in 2023 whilst on a strict diet grew at 5.2% whilst the US, with surplus liquidity from the Covid stimulus money and huge fiscal deficits grew at a more modest 2.5%. I expect for 2024 China will further distance US in terms of real economic progress.

(ii) Artificial Intelligence is very Artificial Indeed: The AI Proxy stock Nvidia this week reported its earnings and share price jumped 6.41% for the week. (Fig. 3).

This makes the market Cap of Nvidia topping $1,97 trillion, higher than the GDP of most G20 Countries including Brazil, Australia, South Korea, Mexico, Spain, Indonesia, Saudi Arabia,  Turkey, Argentina and South Africa. The price represents a trailing PE ratio of 66 times which is implicit of company’s next 5 year growth rate of 40% to 60% per annum. Part of stellar price performance was a severe short squeeze against those who shorted the stock just days before the results announcement with short sellers suffering a potential $3 billion loss. (Fig. 4).

In the same week Google suspended its Germini program from generating images as images of historic characters were generated of a different race. (Fig. 5).  

Gemini was launched earlier this month and advertised as Google’s “most capable family of models,” able to generate “captivating images.” Last Sunday a brother in Church asked a simple question on ChatGPT as to what day of the Chinese New Year was last Sunday. The Chatbot answer was two days out. I have already cast my vote on the whole AI stock phenomenon in last week’s Blog. Caveat emptor, my friends.

Genesis 11:1  Now the whole earth had one language and one speech. 2  And it came to pass, as they journeyed from the east, that they found a plain in the land of Shinar, and they dwelt there. 3  Then they said to one another, "Come, let us make bricks and bake them thoroughly." They had brick for stone, and they had asphalt for mortar. 4  And they said, "Come, let us build ourselves a city, and a tower whose top is in the heavens; let us make a name for ourselves, lest we be scattered abroad over the face of the whole earth." 5  But the LORD came down to see the city and the tower which the sons of men had built. 6  And the LORD said, "Indeed the people are one and they all have one language, and this is what they begin to do; now nothing that they propose to do will be withheld from them. 7  Come, let Us go down and there confuse their language, that they may not understand one another's speech." 8  So the LORD scattered them abroad from there over the face of all the earth, and they ceased building the city. 9  Therefore its name is called Babel, because there the LORD confused the language of all the earth; and from there the LORD scattered them abroad over the face of all the earth.