Remember to lock in that flash sale linked down below 69 for V-day Now we gotta talk about China What's going on in China because there's a lot of talk that China is going to substantially drive up inflation in the United States And we want to know what's going on with the Chinese consumer because the Chinese consumer usually only makes up about 32 of the Chinese market, the real estate market making up substantially more. Some say over two-thirds of them of the uh Chinese Uh, Essentially, GDP is made up by moves in a real estate market and housing. Uh, and so the Wall Street Journal put together a good piece on what's going on with China. We've got some additional evidence as well that we're going to look into to see what's Wall Street thinking is going on with China Because initially the thesis That Wall Street had was that you're going to see a move up in inflation because of the Chinese reopening.

Now, I've been really bearish on that idea. My opinion has been no: I Don't actually think you're going to see a massive inflationary surge in China because the amount of excess savings that an individual has in China is next to nothing compared to what individuals had in the United States per person. In China, you potentially have excess Savings of about 500 per person. In the United States, you had excess Savings of about six thousand dollars per person.

When it came time for us to have a reopening event that suggests that the U.S inflation was obviously able to be a lot stronger because you had 12 times as much money in a shorter period of time. You also had the belief that the US government was going to bail you out. That's where you had in the United States you don't actually have that in China China actually provided more corporate welfare than it gave individual, uh, sort of stimulus of money. you didn't really have that sort of individual support you had Chinese individuals who had to save a lot more money and essentially fend for themselves to prevent Uh being damaged by the economic moves now.

Uh, let's talk about this: Wall Street Journal article. Then we'll get into the some of the pieces regarding what Wall Street thinks about this. Keep in mind: I live stream every day the mark actually just every day of the week around 4 30 to 5 a.m I usually start in the morning California time and I bring you the day's news so look forward to seeing here. It's also then posted to Google podcast, Apple podcast and Spotify All right, let's take a look at this: Wall Street Journal Here yesterday posted don't count on China to save the world China has historically relied on government stimulus and heavy investment for corporations to power itself out of out of slumps.

However, that mix may not happen so well in 2023. The reason for that is China is already deeply in debt, its housing market is in distress, and much of the infrastructure that the country needs, which is usually where you would spend money has already been built. Remember, you have a country China that spent billions of dollars building essentially ghost cities hoping that if you you build it they will come and people just didn't end up coming. Consumer confidence in China remains low, and really, what you're starting to see in China is this opening of wallets from wealthier individuals that people are spending more money locally in China on restaurants, bars, and travel and folks Wonder Hey, are we going to see inflation because of that in the United States And there are some insights that we can get from earnings calls from some other companies to suggest hey, how is that spending going in China And so when you look for example, at a win, this is Wind Resort's earnings call.

They tell us that the strength in Macau and sort of this post-covered recovery in Macau has been really strong. Now Macau is just a a region of China. It's sort of deemed like a semi-autonomous region. They speak their official languages are traditional Chinese which is slightly different from Mandarin and Portuguese.

Yeah, they've only got like a 680 000 population, but it's It's a destination for people. and wealthier people tend to go to Macau to gamble. and so Wind talks about a substantial increase in Uh in in gambling during the Chinese New Year. But they also talk about how the strength seems to be continuing post: Uh Chinese New Year Now they do mention that their hotel occupancy is only at about 89.9 A little bit of a potential red flag if you're starting to see less Hotel occupancy, you want to be closer to 95 plus percent Hotel occupancy because it makes hotels more desperate to fill rooms compared to like Airbnbs.

So a little bit of a red flag for Airbnb. But what you have over here is we have seen typically after post-chinese New Year In the past the period does see a Slowdown, but we have been very encouraged to see the business remaining very strong. very strong with mass gaming direct VIP and retail sales better than a previous Uh periods in the past. So what you're seeing is more uh Chinese spending than you have seen in the past.

At this reopening now of course it seems like this would be a unique opportunity. so questions are given that you know how often do you go away from Covet Zero But some folks are saying hey, you know what if the Chinese recovery keeps going, maybe people are just going to keep spending and if they keep spending, maybe maybe you could really prop up Global GDP You're seeing a similar report from Las Vegas Sands Uh, they're saying that this right now feels like a different animal. You've got sort of a a special customer spending a lot of money in Macau and so maybe if you wanted to play a bet on a Chinese reopening Maybe you focus on some of the casinos who are going to benefit from increased visitation and travel amongst China. But is that travel in China going to lead to a sort of an inflationary impulse? That's the big question.

In fact, that's the question not only the Wall Street Journal continues to delve into, but also some Wall Street analysts who look at Commodities inflation. She'll talk about Commodities in China in just a moment. But to finish off here with the Wall Street Journal piece The Wall Street Journal talks about China's economy being forced uh, basically forecasts to grow strictly because of the consumer. Some suggest that in 2023, the consumer might end up Supply supporting the Chinese economy to the tune of about two-thirds of GDP growth, which is usually how much housing grows.

So you might see a flip-flop between a consumer taking the place of housing this year in China it'll be really interesting, but so far where you're seeing the spending is amongst the wealthier segment. Look at this, you've got Swiss Watchmaker Swatch group suggesting they're seeing a large Revenue rebound powered by China Hong Kong and Macau You've also got Lvmh saying that the recovery in China is quote quite spectacular and that there's a serious bump for everybody. so a lot of this without that, a serious bump for everybody though seems to be for travel, so a lot of what you're seeing in the China recovery is a lot more travel and entertainment spend and the rich people are spending money on casinos and luxury goods. that seems to be so far where you're seeing this.

Chinese Recovery: You're talking about some potential excitement about getting back out to spending. but again, the big question being how long is it going to last Now when it comes to Commodities a lot of folks are suggesting you're going to see a big spike in like Metals Commodities but there's a belief that even though markets are pricing in this idea, you could see a Commodities price spike. You might actually not because of less real estate investing coming to the Chinese market now. I Thought that was fascinating because if you actually jump over to see what some Commodities experts are saying, you get a little bit of an idea about.

Okay, well, what could actually end up happening? So TD put out a piece on this. They talk about seeing China's recovery starting to take shape, starting to see more ridership, and we know we have that increased household savings and more deposits. More consumer spending coming. but what do they actually suggest for Commodities Well, they say that so far they actually think Commodities might just end up moving sideways.

They say they see little impact from China's reopening in commodity markets to date, and that they do see upward pressure on global energy markets in the coming months. So maybe upward pressure on fuel because of travel. but sideways trading for metals and part of the reason you might see this sideways trading for metal is because less real estate and infrastructure building leading demand indicators suggests copper and aluminum are over stocked, which argues for lower metal consumption going forward as well as that real estate sort of slump you've got in the country in in China. And talk about over here that a lot of speculation has gone into Commodities leading to higher commodities prices, but that could suggest the recent Bull Run in Commodities is ultimately out of steam because you might not see that push in Chinese Commodities Who knows if that'll also translate over to the energy space.

So my conclusion on what's going on in China so far is the following: Yes, we might still see oil move up a little bit, but I Really don't think you're going to see 100 and a hundred dollar per barrel oil. This is something that I've been pretty consistent about over the last few months suggesting that I don't see it I don't see that hundred dollar, uh, per barrel of oil called although a lot of people have been calling for it, a lot of Institutions saying it's coming. China's going to reopen. It's going to blow up spending and sure travel and entertainment is blowing up, which could be good for the casinos.

Could be good for companies like Starbucks but probably not good for actual metal. Commodities And if that reopening demand isn't as wild or doesn't last as long as we think can end up being bad for energies and commodities. so not so great in terms of wanting to be bullish on energy. Bullish on Metals for China Maybe you could be bullish on luxury goods.

maybe you could be bullish on Starbucks But the question also is how long is uh this? uh, this? Chinese reopening spending going to last so far based on what we're seeing in earnings call is yeah, you've had a boom during Chinese New Year but uh, you're seeing more of kind of like this gradual reopening so we'll see what ends up happening in China But so far it doesn't feel like it's a massive inflationary boom that a lot of people were warning about and the leading indicators are saying no massive inflationary boom Now obviously we just got CPI numbers in the United States which really gave us some head scratchers like apparel shooting up point eight percent used cars moving down 1.9 which is the opposite of what the free Market was saying. You got folks like Gabe here donating 50 to save long on uranium. but while you've got all these sort of mixed signals, nothing's really screaming. You've got a massive boom in inflation, and like this massive boom of second wave inflation coming in the long run.

We've got noisy signals all over the place, but none of the noise is really pointing to the worst case scenario. It kind of reiterates, we might be seeing that Nike Swoosh Recovery where? Yeah, we're gonna get mixed signals. Yeah, we're gonna get little pockets of spending like Macau rich people spending more money. but are we gonna see this big boom and more? Commodities Inflation? Probably not.

Are we going to see this big boom in energy inflation? Probably not. Are we going to see this big boom in worker inflation? So far, the answer to that is no. We're seek more worker availability and we're going to see a big boom in product inflation? Probably not. so far.

Not really seeing that. although there have been some red flags like why did apparel go up 0.8 of the CPI reported used car prices go up, but CPI not even capture that. It's going to be interesting. sort of like a brace for impact point of view.

But this is what a lot of folks are looking at when it comes to China and the potential inflationary impulse that China could bring us so.