New home sales is ~60% of China’s home transaction, according to sqft from official stat. (Source: 全年新建商品房销售面积97385万平方米。二手房交易网签面积71812万平方米)
In the US, in 2024, ~700k new home sales vs. 4mn existing home sales. New home sales is ~15% of US home transactions.
60% vs 15%
Netflix was out, Microsoft, Nvidia and Tesla are in.
When FAANG was first coined, it was 2013. Netflix provided significant return in that mobile Internet and cloud era.
ChatGPT was out in Nov 2022 and swept the world in 2023.
Netflix doesn’t touch hardware and AI.
Nvidia was neglected as it’s not close to consumers except for the gaming PC. Later people may know it as a crypto mining machine, but not the backbone of an entire era.
Tesla was neglected as people can easily live without an electric vehicle. Now it seems that autonomous driving will eventually serve many people and be deployed in more use cases in the form of robots.
Microsoft was neglected because it was mature and old? Not sexy.
Why not bond risk premium?
Bonds typically have fixed payments but inflation is uncertain. One dollar 10 years from now is very hard to value.
Instead, you can trust credible companies more. They shall hold their position in the economy and take their fair share.
Isn’t that more “certain” in some way?
Thus, why we have equity risk premium.. there should bond risk premium over high quality companies.
How much would you need to be paid to switch from iPhone to another smartphone?
For many people, that’s way higher than the $1,000 or so price tag.
iPhone just works.
It’s similar in stocks.
People don’t want to sell good stocks (thus ownership of good companies) even it’s a bit pricer.
They just work.
Why do you want to switch to another company?
Overall retail sales dropped 3.3% yoy in the first quarter of 2025 in Beijing, with March dropping 10% yoy.
Auto contributed nearly 2% of the drop (-20% x 10%).
Meanwhile, average spending looks okay – it’s rising 2.3% yoy. It’s a very good number for Beijing actually.
It might be due to the parallel export (?) – people bought cars and export (e.g. Russia).
Bond market is volatile these days – US 10-years treasury yield just swung from under 4% to near 4.5% in a few days.
The inflation protected 10-year TIPS yield also rose from under 1.8% to over 2.2% in a few days. (this is like a 20% move? even higher than the 10% move in 10-year treasury).
I shall discuss 10-year TIPS more below.
It was ~5% in early 2000s. Then, it went down a bit before GFC. Between GFC and 2021, it was sub-2%. Now it’s back to pre-GFC level.
| Period | 10Y TIPS Real Yield | Key Characteristics |
|---|---|---|
| Pre-2008 | 2%–3%+ | Higher real rates, less Fed intervention |
| 2009–2021 | <2%, often negative | QE, ZIRP, low inflation, high demand for safe assets |
| Post-2022 | >2% again | Inflation shock, Fed tightening, rate normalization |
Source: ChatGPT
And in terms of why 10-year TIPS was low from 2009 to 2021, it seems that Fed QE is a big factor.
| Period | TIPS Purchase Status | Notes |
|---|---|---|
| 2010 (QE2) | ✅ Began buying TIPS | First inclusion of TIPS in QE |
| 2010–2021 | ✅ Continued buying in QE3, COVID QE | Purchases scaled with overall Treasury buying |
| Nov 2021 | 🔻 Began tapering all Treasury purchases | Including TIPS |
| Mar 2022 | ❌ Fully stopped purchasing TIPS (and other Treasuries) | QE ended completely |
| Jun 2022 onward | 🔄 Began Quantitative Tightening (QT) | Letting TIPS holdings roll off gradually |
Source: ChatGPT
As to whether yield will go up from here? The equilibrium real interest rates (r*) depend on several things:
1/ real productivity growth. AI is helping? So can push r* higher.
2/ global saving. Can be lower in China, thus less supply of capital. So can push r* higher.
3/ risk appetite. Going down sharply. So should push r* lower.
4/ DOGE. Lower gov spending should push r* lower.
5/ Reshoring. Need to borrow more. So can push r* higher.
Unfortunately, these factors are all moving..
Some people will be priced out if tariff significantly increases drug price.
That to some extent is like “killing” those people.
Of course, prices on drugs shall increase over time for different reasons.
Would you argue that if a drugmaker raises price, it’s “killing” people?
It will be interesting then.. as pharmaceutical companies are saving and killing people at the same time. They are still saving people net net.
For investors in pharma, if they expect higher profits, are they also killing people as companies need to raise price? But if you invest in drugs, you should be saving people right?
What a humanitarian cap on the industry!
For many in the US, tariff discussion should be very educational.
For one thing, people now know more about where things are produced and where different parts are coming from.
It asks people to debate what’s really needed to happen in the US and what’s not. And the feasibility of any changes.
Also, without all those analysis and breakdowns, many people probably just complain, but rarely value the importance of global collaborations – that it’s hard to have everything happen in the US.
The entire debate and the prospect of an iPhone city (the whole Boston population is needed) let people understand why those decisions were made in the first place.
The debate is magnified by the financial market. All participants globally need to think about this.
For wealthy people, a more expensive iPhone means nothing. They might see the impact of deglobalization as limited if it’s just things are just getting expensive. But the upheaval and collapse of the financial market will let the wealthy know it’s more than the living cost.
Cooling off the excessive confidence
If the economy is running too hot, you need to cool it off.
One way to cool it off is to add uncertainties.
Individuals and businesses will pause new investments and rethink how fast they shall run when uncertainty (not short-term, or can be overlooked) skyrockets.
Perfect excuse to change gears
Sometimes, business leaders also need a good external excuse to press the “pause” button. Why?
Normally, they want to be seen as the encouraging voice internally. That what business leaders do – to grow the companies. And they always want suppliers to increase their capacity. Thus, showing extra confidence in business can ensure suppliers are confident enough.
To be seen as credible in the long-term, business leaders can’t change the tone overnight. And it’s hard to change the tone if there is no external shock. Otherwise, it feels like you were trying to “trick” your suppliers or employees.
Suddenly, tariff becomes this perfect excuse – external, lingering, impactful.
It’s just the perfect time to take a step back and rethink business leaders. And it’s the perfect opportunity to change gears.
Ubisoft created a new entity and put valuable assets into it.
Tencent put money into this new entity and got 25% ownership.
While Ubisoft’s shareholder got nothing, Tencent can do more with the important IPs like Assassin Creed.
Maybe there is a limit on how much Tencent can buy into Ubisoft. Maybe the possibility of Ubisoft being acquired is low due to France regulation, not due to Tencent’s previous investments.
Probably it’s the complications and regulations around the world are making those deal structure necessary. Capital is not allowed to buy anything it interested in.
So.. on the positive side, will this model serve as a template for TikTok US?
ByteDance inject some assets (TikTok US) into a new entity, and new investors inject money or assets into the new entity, so that the new ownership structure can satisfy both US and China’s demands?