Bond investors believing in fiscal stories, editing the China story, paying for cars in America and reading Italo Calvino's resistance novel.

Great links, images and reading from Chartbook newsletter by Adam Tooze

Noah Davis’ (1983-2015) Source: Cornell Sun

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Believing in fiscal consolidation stories

Global investors are ramping up bets in some of the world’s riskiest bonds, convinced the debt will extend its spectacular rally as the threat of default subsides in emerging markets. High-yielding government bonds — from Argentina to Turkey and Zambia — are once again luring money managers as policymakers promise reform, restructuring deals materialize and default risks abate. The strategy handed investors in emerging-market junk bonds 18.5% last year, nearly triple the returns in investment-grade sovereign debt, according to data compiled by Bloomberg. “We have overweights across the high-yield space in a select group of countries — and we believe in those fiscal consolidation stories,” said David Robbins, an investor who oversees the $3.7 billion emerging-market debt fund at TCW. Plus, “you probably won’t see any defaults in the sovereign space.”

Source: Bloomberg

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Trimming the China filings

When the pharmaceuticals group Wuxi Biologics listed in Hong Kong in 2017, a deal that Bank of America and Morgan Stanley worked on, its prospectus used language that could be deemed critical of China. It warned it might be “impossible” to comply strictly with some Chinese regulators’ demands because they “may not be consistently applied by other government authorities”. It said China’s legal system “is based in part on government policies and administrative rules that may have a retroactive effect”, meaning “we may not be aware of our violations of these policies and rules until some time after the violation” — language also used by other Chinese companies in prospectuses such as Xpeng, Li Auto, Asymchem and Tianqi Lithium in 2021 and 2022. But by the time Wuxi XDC — a unit spun off from Wuxi — listed in Hong Kong in November, that type of language was no longer in favour. The parallel section of the Wuxi XDC prospectus, which names Morgan Stanley, Goldman Sachs and JPMorgan as sponsors, instead told investors that China’s laws and regulations were “continually evolving” and “we cannot foresee how [they] will be interpreted and enforced”.  The shift in tone may seem nuanced but it is not accidental. Beijing introduced new rules last year, banning banks from including in the filings “any comments in a manner that misrepresents or disparages laws and policies, [the] business environment and judicial situation of the state”. Soon after the new rules took effect, Hong Kong’s stock exchange also repealed a requirement for Chinese companies listing in the territory to include a China-specific “risk factors” section — though companies still have to disclose “material or specific risks”. 

Source: FT

Can Americans any longer afford cars?

In 2023—a year during which inflation slowed down to a reasonable level, to the point that the Federal Reserve decided to stop hiking rates—new car prices jumped by 1 percent to an average of $50,364, while used car prices fell by only 2 percent to an average of $31,030. But as things stand, cars are still really expensive for many Americans. Just 10 percent of new car listings are currently priced below $30,000, according to CoPilot. Things are not much better in the used car market, where only 28 percent of listings are currently priced below $20,000. According to an October report by Market Watch, Americans needed an annual income of at least $100,000 to afford a car, at least if they're following standard budgeting advice, which says you shouldn't spend more than 10 percent of your monthly income on car-related expenses. That means that more than 60 percent of American households currently cannot afford to buy a new car, based on Census data. For individuals, the numbers are even worse, with 82 percent of people below the $100,000 line. "Simply put, cars have become more expensive," Joseph Yoon, consumer insights analyst at car consumer guide Edmunds—an online resource for cars inventory and information—told Newsweek. "In November 2019, the average transaction price for a new vehicle was $38,500. In November of 2023, that figure jumped to $47,939."

Source: Newsweek

Noah Davis The Future's Future, 2010 Source: ArtsyNet

Cognitive dissonance?

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Maldives between India and China

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Noah Davis (1983-2015)

was an American painter, installation artist, and founder of the Underground Museum in Los Angeles. When talking about his work, Davis has said, "if I’m making any statement, it’s to just show black people in normal scenarios, where drugs and guns are nothing to do with it," and describes his work as "instances where black aesthetics and modernist aesthetics collide."^[3]

Source: Wikipedia

Noah Davis, Candyman, 2007. Courtesy of Roberts Projects.

Source: ArtsyNet

Why landing on the moon is so difficult

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East-East: Hyundai to invest in GM’s mothballed Indian car plant

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Not so much neo-realism as neo-expressionism: Italo Calvino’s first (Resistance) Novel (1947)

“A completed book will never compensate me for what I destroyed in writing it: namely that experience which if preserved throughout the years of my life might have helped to compose my last book, and which in fact as sufficient only to write the first.”

Noah Davis, What They Did to Themselves (2010) Source: ArtNews

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