Media Worth Consuming – July 2021

Jonathan Rochford

Narrow Road Capital

A monthly wrap-up of interesting and informative media on finance, economics, politics and society that you might have missed.

Individual American investors are expecting long term returns over 17%, but institutional investors are far less optimistic. Equities are on pace to have bigger inflows this year than the last 20 years combined. Money losing companies are raising capital like never before. The unicorns of today lose more money for longer than Amazon ever did. Investors will eventually take the red pill and realise a bunch of stocks are massively overvalued.

Foreign investors are having the rug pulled from under them by the Chinese government, the crackdown on companies with overseas listings may have been a response to the US requirement for robust financial audits. Chinese property developer Evergrande is teetering on the edge of insolvency. After its credit impulse fell, China’s PMIs have also fallen.

Tether’s claims to be a stable coin look increasingly suspect and its unravelling could trigger a wider cryptocurrency meltdown. Credit Suisse knew Archegos need to post more equity, but they couldn’t be bothered forcing the issue. Some of Canada’s lenders are happy to offer no money down and very high loan to income home loans, unconcerned about soaring property prices and the potential for interest rates to rise. ESG sovereign bonds are greenwashing, as they don’t require countries to make meaningful change.

Politics & Culture

Democrat politicians from Texas fled the state on a private jet to disrupt legislation that would have required voters to show ID, a measure supported by 75% of the population. Joe Biden lashed out at social media companies for not censoring stories that criticised him. The Trump Organisation’s CFO has been charged with tax fraud that amounts to around $60,000 per year over 15 years. The lack of discipline among politicians reflects wider society. American journalist Tucker Carlson claims the NSA intercepted his emails and leaked them to other journalists.

Those celebrating 100 years of the Chinese Communist Party should reflect on the more than 45 million people killed by Mao’s disastrous leadership. A US military plane landed in Taiwan for 34 minutes and the Chinese government had a tantrum over it. They also had a dummy spit after an American TV network used a map that didn’t include Taiwan as part of its territory. Hong Kong police arrested five speech therapists over books that allegedly allude to China being wolves taking advantage of sheep. Twitter is taking down tweets that criticise the Chinese and Indian governments.

Governments in the US are struggling to handout the billions set aside for rent debts. San Francisco is running a tent city for homeless residents that costs as much as renting them an apartment. A Florida woman has racked up $165,000 in fines for parking on her own property. The solution to bad government is to take their money away. Corporates and academic institutions are increasingly dropping merit based selection for gender and race quotas. Population data shows that people are falsely claiming to be indigenous to get jobs and promotions.

Economics & Work

Unemployment has fallen faster in American states where unemployment payments have been curtailed. Unemployed residents of Illinois receive almost as much in benefits as the average resident earns from working. When America declared a war on poverty and increased welfare, it ended up increasing dependency and the poverty rate. Could giving poor people smartphones hold them back from getting out of poverty? The arguments against per child handouts. The evidence continues to pile up against universal basic income. The economics of dollar stores.

Progressive tax structures become destructive far earlier than generally thought. Pollsters asked Americans whether they wanted a growing economy or more taxes, and the growing economy won hands down. The American healthcare system would be far cheaper if insurance didn’t cover primary care.

Finally, some high profile economists made the obvious points that deficits aren’t free and that they are the old ripping off the young. The advice of mainstream economists leads to outcomes like Lebanon. Central banks have engineered the stagflation of the 1970s and the credit bubble of 2007 at the same time.

Haiti might be so badly broken it is beyond international help with it being an example of how foreign aid can create dependency rather than economic growth. Cuba has high levels of economic equality, with its citizens sharing in poverty after its communist rulers have run the economy into the ground. Bernie Sanders keeps defending Cuba’s many failures, but it has failed just like every other socialist experiment. Venezuela is planning its third redenomination in 13 years, this time consolidating the currency one million to one. China may never be the #1 economy as its productivity and population growth are falling.


Low calorie diets and weigh loss have seen many diagnosed with type 2 diabetes go into remission. Under lockdown, takeaway food, drugs and violence soared in America. Tips from meat scientists on how to grill a perfect steak. Scientists found that trout can get addicted and go through withdrawal symptoms from methamphetamines. British drug dealers are now selling supposedly “ethically sourced cocaine” at four times the regular price. Swimming is good for your brain but scientists are still figuring out why.

China has banned skyscrapers over 500 metres tall due to concerns about build quality. Chinese farmers are using TikTok to sell their fruit and vegetables to city dwellers. Individual parking spaces have sold for a record $1.53 million in Hong Kong. Russia passed a law that only Russian made sparkling wines can be called Champagne. Kenya has quietly become a geothermal powerhouse, generating 50% of its electricity from the reliable and renewable source. Corporates are finding that net zero is harder and more expensive than carbon neutral.

England’s Covid cases have dropped substantially since “Freedom Day” making fools of “experts” who predicted that easing restrictions would be a threat to the world. Was the panic worse than the pandemic? The economist who gathered the data and proved that schools aren’t super spreaders. US cruises have restarted with unvaccinated passengers facing restrictions on their activities.

Over 97% of Americans being hospitalised are unvaccinated, with around 43% of the population estimated to be unvaccinated. Various studies show that Pfizer’s vaccine reduces deaths and hospitalisations by around 90%. mRNA vaccines are linked to a very small number of heart inflammation cases. Governments are using lotteries with prizes including an apartment, gold bars and shopping sprees to encourage citizens to get vaccinated.

A 23 year old Nintendo game cartridge sold for $1.56 million. Softbank’s humanoid robot keeps getting fired for failing to carry out its duties. An Australian cyclist rode the Tour De France course on his own and without support, beating the race riders by five days. The Norwegian women’s handball team was fined €1,500 for wearing shorts instead of bikinis. A man who played rugby union for Australia 70 times has been refused Australian citizenship

This article has been prepared for educational purposes and is in no way meant to be a substitute for professional and tailored financial advice. It contains information derived and sourced from a broad list of third parties and has been prepared on the basis that this third party information is accurate. This article expresses the views of the author at a point in time, and such views may change in the future with no obligation on Narrow Road Capital or the author to publicly update these views. Narrow Road Capital advises on and invests in a wide range of securities, including securities linked to the performance of various companies and financial institutions.

Jonathan Rochford
Portfolio Manager
Narrow Road Capital

Narrow Road Capital is a credit manager with a track record of higher returns and lower fees on Australian credit investments. Clients include institutions, not for profits and family offices.

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