After a 5-year drought, Secretary of State Antony Blinken visited China because the Americans and Chinese are waging a quiet war. No tanks or planes are required, but there’s plenty of force and aggression on both sides.
The Chinese are justifiably concerned that the U.S. is attempting to stall China’s economic growth. In recent months, President Xi has been moving ahead with making it more difficult to do business in China as a foreigner.
One move from Germany’s playbook (the 1933-1939 era) is to claim that existing trade agreements and pacts signed in the past are no longer valid if they happen to be working against China’s current interests.
In other words, for the sake of national security, China’s leadership can break its promises and not respect signed documents.
Just so we’re on the same page, this was a law that passed. China can legally break previous contracts it signed if it deems them damaging to their best interests.
In April, they passed the Anti-Espionage Law, which allows its government to snoop around in documents of foreign companies doing business in China.
This is war, and Biden’s administration is fully engaged while dropping silent bombs as well.
Unlike Russia, which has been more unilaterally sanctioned with sweeping support by the West, China isn’t isolated even though the Americans are trying to weaken them considerably.
China is finding many allies in Africa, where its loans and trading partnerships are creating strong relationships, along with Latin America, where Argentina and Brazil have already begun settling debts in yuan, not dollars.
This and other monetary measures have recently led to a breakout in Treasury yields!
Since the ZIRP era reached its bottom in the months of April-August 2020, yields have gone up nearly 600%. The 10-year bond, which is the barometer for all other assets in the universe, are trading at 16-year highs (the same as they were in November 2007).
The more we continue to see rates rising, the more we need to understand that growth will slow down and quality will be the crucial aspect of investments. Leverage is expensive and profits are cheap when borrowing is so unaffordable.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
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Therefore, after presenting the first few companies in our portfolio, we continue (in alphabetical order) into part 2 today.
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Blackstone (BX): One of the greatest investment legends ever, Stephen Schwarzman, founded the company and leads it. Not only is it a giant in private equity, but also in real estate.
If you think hard times are coming, Blackstone is the type of organization that has proven itself to be a contrarian maverick. The company pays a 4% dividend yield.
My Personal Limit: $80
CBRE Group Inc. (CBRE): After two years of bloodbath in housing, CBRE, the world’s largest commercial real estate and investment firm, has shown the versatility of its business model.
In the next 60-90 days as we enter September, an enormous amount of debt needs to be refinanced. Distress in housing might appear, and we believe that it will present a great time to position in real estate businesses with CBRE being a clear candidate.
It is not expensive right now, either (23.54 P/E ratio).
My Personal Limit: $72
CrowdStrike (CRWD): One of the top cybersecurity businesses in the world, this one isn’t profitable yet. It is moving towards positive cash flow, so we value the company at 10x revenue in the meantime.
CrowdStrike is a beast, but I refuse to overpay.
My Personal Limit: $110
The next step is compiling the entire portfolio, which includes 25 more companies, in a PDF, which we are diligently working on!
As you can see, out of the 8 companies detailed so far, only one is below my personal limit price… the market is not cheap.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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