Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.
Speaker 1: My name is Mike Reagan, and I'm a senior editor
Speaker 1: at Bloomberg. This week on the show, while the attention
Speaker 1: of global investors has once again returned to China, but
Speaker 1: this time it wasn't because of the trade tensions with
Speaker 1: the US. Rather, it was China's own domestic crackdown on
Speaker 1: the for profit education industry, spooking investors to the tune
Speaker 1: of more than ten percent drop in the MSc I
Speaker 1: China Index in just two days. It was so shocking
Speaker 1: that Golden Sacks strategists actually came out with a note
Speaker 1: saying clients were asking them if China had become uninvestable?
Speaker 1: Well has it. We'll get into it with a chief
Speaker 1: investment officer who's currently in China, But first Charlie Pellett
Speaker 1: talls through this week's mystery co hosted is This week's
Speaker 1: mystery co host is Ye She. He is a markets
Speaker 1: reporter of Bloomberg and was a go chess champion as
Speaker 1: a kid in his hometown of woo Sheet, China. Since
Speaker 1: moving to the U S sixteen years ago, he's become
Speaker 1: a Seinfeld fanatic and still listens to reruns on his
Speaker 1: iPhone every night to help him understand close talkers like Reagan.
Speaker 1: He I to him as Seinfeld fanatic. As you know,
Speaker 1: I hopefully in the if Bloomberger Seinfeld, I'm thinking I'm
Speaker 1: probably the Kramer character. I don't I don't know, hopefully
Speaker 1: not the Newman character. What do you think? Yeah, my
Speaker 1: favorite is Geosh Castenda, Absolutely absolutely, I think he's everyone's favorite.
Speaker 1: And you also have now have been intrigued with go Chess.
Speaker 1: I'm gonna you're gonna have to teach me how to
Speaker 1: play that sometime, right. It's uh, it's like one of
Speaker 1: the Asian most ancient chess game, very popularly in China,
Speaker 1: South Korea and Japan. And I just taught myself at
Speaker 1: the age of the probably five six, and just uh
Speaker 1: really obsessed that he was playing it. But I want
Speaker 1: the the champion in the city when I was in
Speaker 1: middle school. Um, but I stopped playing in high school
Speaker 1: because I'm so busy. It was a study. So I'm
Speaker 1: sympathetic about the crackdown of the cram schools. I'm sure
Speaker 1: we all talk about on the show. That's a That's
Speaker 1: a good segue into our guest here and what's going
Speaker 1: on in China the gram schools UM and let's bring
Speaker 1: in our guest. He's uh really had a quite a
Speaker 1: resume in the financial industry. In the investing industry, it's
Speaker 1: one of the co founders of Research Affiliates, and more
Speaker 1: recently he is the founder and chief investment officer of
Speaker 1: Raylean Global Advisors. His name is Jason Sue. Jason, Welcome
Speaker 1: to the show. Glad to be here at Jason, I
Speaker 1: wanted to get into that idea about the the for
Speaker 1: profit educ asian industry in China. Now, luckily I know
Speaker 1: a little bit about this. I edity every day, so
Speaker 1: I've I'm able to read his insights on China, so
Speaker 1: so I know a little bit. But I think for
Speaker 1: a lot of Americans this seems like a strange thing
Speaker 1: for a market sell off, a crackdown on the education industry.
Speaker 1: But walk us through, um, you know, basically, what problem
Speaker 1: is China trying to solve here with this crackdown on
Speaker 1: for profit education and why such a dramatic impact on
Speaker 1: the market in China. Absolutely so this is a little
Speaker 1: difficult for I think Westerners understand because CRAM School, the
Speaker 1: for profit educational sector is something very foreign to Westerners,
Speaker 1: but it's a part of the Asian culture, not just Chinese,
Speaker 1: but really I think it is just a part of
Speaker 1: you know, the Korean, the Japanese and the Chinese culture. Essentially,
Speaker 1: CRAM schools offer you additional after school tutoring, and it
Speaker 1: often occurs in the form of sort of UH regurgitation
Speaker 1: UH memorization of a vast test bank of questions are
Speaker 1: likely to be on the next national entrance exam. Right
Speaker 1: in in Asia, gain gaining emissions into the top high
Speaker 1: schools and eventually from their top universities requires one scoring
Speaker 1: at the top of the list a national entrance exam. UH.
Speaker 1: So most students spend all of their days essentially preparing
Speaker 1: for that big exam. And the easiest way to to
Speaker 1: get a high score is not by doing well in school,
Speaker 1: not by just you know, by by understanding the actual
Speaker 1: knowledge UH. The easiest way to gain emissions is to
Speaker 1: practice test exams over and over and over and over again.
Speaker 1: And if you pay to go to one of the
Speaker 1: more UH premium UH tutoring programs, you just have access
Speaker 1: to the latest test banks. You have access to experts
Speaker 1: who may have UH greater ability to predict what's going
Speaker 1: to be on the exams. Uh and and thereby gaining
Speaker 1: enormous advantage. And so in Asia, it's a very expensive
Speaker 1: exercise to to go through these cram schools. They're they're costly,
Speaker 1: they're expensive, but it's also in terms of the hours
Speaker 1: that children commit to additional memorization and studying. I think
Speaker 1: this has become such a social problem. If you cite
Speaker 1: the the number one reason for for teens committing suicide,
Speaker 1: it's because of the just the unbearable hours that that
Speaker 1: they have to commit to this. And also for a
Speaker 1: lot of parents, it's it's it's very expensive and it
Speaker 1: feels very unfair because, uh, the premium programs that give
Speaker 1: you the highest chance of scoring high on the Nastal
Speaker 1: exams are quite expensive. So it's it's broadly understood and
Speaker 1: viewed as a social program problem. Uh. You know, Taiwan
Speaker 1: has tried to fix that. I think Japan has tried
Speaker 1: to fix that. Again. You know, as I mentioned, the
Speaker 1: the high suicide rate is really a problem, and I
Speaker 1: guess China has come down with its own way to
Speaker 1: fix the problem by essentially making these CRAM schools nonprofit
Speaker 1: and hopefully uh taking them out of the equation and
Speaker 1: never a pretty big chunk of equity involved in this.
Speaker 1: I guess you know, these companies have grown so large
Speaker 1: because of all those well absolutely, I mean the for
Speaker 1: profit cram schools are incredibly profitable. Their massive I mean,
Speaker 1: there was a point in time in China that the
Speaker 1: for profit educational sector is viewed as the most important
Speaker 1: consumption demand. Right like people are with would stop paying rents,
Speaker 1: they would stop eating just so they could keep paying
Speaker 1: for cram schools for their kids. And so you know,
Speaker 1: it was viewed by investors as one of the you know,
Speaker 1: probably safest industry to investent. The joking Chinese people asking
Speaker 1: why cracked um education companies are the cramp schools will
Speaker 1: bring down the whole market. Um. The joke was, I
Speaker 1: think about this way. If there's ten birds on a tree,
Speaker 1: you shoot down one, how many birds are left on
Speaker 1: the tree. I thought this is a good analogy to
Speaker 1: explain the fear. People are worried about who's the next
Speaker 1: target from for as you mentioned that Jason that for
Speaker 1: a lot of like foreign observers or investors, they don't
Speaker 1: quite understand Chinese policies. It seems quite random ad hoc
Speaker 1: in terms of policies and regulation changes. If we think
Speaker 1: about it, it it started with end Group in November when
Speaker 1: China put down their listing at the last minute. Then
Speaker 1: we start to have um government targeting Ali Baba Tennis
Speaker 1: and all these big internet companies for their acknowledged behavior.
Speaker 1: Then we have the d d UM the government banned
Speaker 1: their apps soon after the I p O in the US.
Speaker 1: Now we now we have the education companies. Is any
Speaker 1: coherent logic of all these government actions? Is any ultimate
Speaker 1: goal China is trying to achieve? Absolutely. I think the
Speaker 1: best analogy uh and hopefully one I think the the
Speaker 1: West will be more sympathetic to is you know the
Speaker 1: Chinese regulators. Uh. They see themselves as you know, part
Speaker 1: of the global E S G trend right. Um. You know,
Speaker 1: part of it is saying that, look, the free market
Speaker 1: doesn't solve all problems, so you can't just leave problems,
Speaker 1: especially social once the free market very much, you know,
Speaker 1: in line with the E S G. Uh, I think philosophy,
Speaker 1: which is you need regulators, you need socially minded individuals investors,
Speaker 1: uh to to sort of come and undo some of
Speaker 1: the excessis you know, some of the negative externalities of
Speaker 1: free market competition. And so I think the Chinese regulators
Speaker 1: very much I've been looking at, you know, what are
Speaker 1: the problems that perhaps we know profit maximization has created
Speaker 1: that they they think needs fixing, that that society can't
Speaker 1: tolerate anymore. So if you take the the educational sector,
Speaker 1: I think, as I mentioned, you know, that's that's been
Speaker 1: a social problem that a lot of Asian regulators, a
Speaker 1: lot of Asian economies have been trying to to fix.
Speaker 1: But if you even look back further right in in
Speaker 1: the recent month, as you mentioned, where it is um
Speaker 1: sort of cracking down on some of the big consumer
Speaker 1: tech where the monopoly power has made both war conditions
Speaker 1: very very bad for labors and also made it uncompetitive
Speaker 1: for smaller business to get in. For example, you know Maton, Uh,
Speaker 1: They're share price also took a beating when when the
Speaker 1: regulator announced that it is not acceptable for them to
Speaker 1: treat all of their employees as contractors and not pay
Speaker 1: a century social security for them. Um. So you know
Speaker 1: that's very much uh, something that that that's been talked
Speaker 1: about in the US, you know, with uber would lift
Speaker 1: where essence you regulars. As you know, the businesses are
Speaker 1: being unfair and not paying their fair share for uh
Speaker 1: you know what, other you know, for profit businesses have
Speaker 1: always paid. We just pay into the Social Security for
Speaker 1: for employees instead of treating them as contractors. So if
Speaker 1: you look at um these issues and understand them and
Speaker 1: clearly just they're gonna be idiosyncratic to each economy and markets,
Speaker 1: you'll start to be able to predict at least the
Speaker 1: Chinese regulators behaviors when it comes to what are the
Speaker 1: important E s G. Issues that they're grappling with and
Speaker 1: they're likely to act on, you know, Uh, Jason, It's
Speaker 1: one of those times I wish this podcast was on video.
Speaker 1: I just want to set the scene for listeners here.
Speaker 1: Jason is appearing to us from what looks like the
Speaker 1: Starship Enterprise from from from Star Check. Absolutely my favorite
Speaker 1: zoom background I've seen in a lot of these. I
Speaker 1: keep expecting to get a call from Scotty, you know,
Speaker 1: saying we we ain't got no power captain or something.
Speaker 1: But Jason wins the best zoon background of in what
Speaker 1: goes up History. I'm gonna say say it here right now,
Speaker 1: but Jason I in that intro, I said, I mentioned
Speaker 1: that note from Goldman that was out this week saying,
Speaker 1: you know, their clients are calling them up saying is
Speaker 1: UH is China uninvestable right now? And I know you're
Speaker 1: managing a active ETF with charity stock. So I'm assuming
Speaker 1: your answer is so, I hope not at least you know.
Speaker 1: But but but given this sort of you know, regulatory
Speaker 1: risk that we're talking about, how do you how would
Speaker 1: you answer that question? You know, you sort of hinted
Speaker 1: at the idea of trying to put your head in
Speaker 1: the mind of Chinese regulators and get ahead of what
Speaker 1: might come next. But what is sort of a good
Speaker 1: industry that in China is a beneficial to society that
Speaker 1: you don't have to worry about the government sort of
Speaker 1: turning off overnight like we saw in the education industry. Well,
Speaker 1: I would say now that the government has sat down
Speaker 1: and had a good talking to with the big financial
Speaker 1: I guess, with the big finn tax and the consumer
Speaker 1: tax uh, and then warned them about wielding monopoly power. UH.
Speaker 1: I think you know, for firms that truly have innovated
Speaker 1: and that have brought products and services that have made
Speaker 1: things better and easier, Uh, certainly benefited the consumers created large,
Speaker 1: you know, large number of jobs. You know. I think
Speaker 1: governments are are generally globally and and then certainly in
Speaker 1: China supportive of businesses and industries like that. So I
Speaker 1: would say, you know, broadly, you know, most of the
Speaker 1: firms that have sold off are probably good buying opportunities today,
Speaker 1: just pay attention to those are likely to be in
Speaker 1: a cross here of the regulators. Right so, uh, you know,
Speaker 1: firms are uh you know, continue to wheel monopoly powers
Speaker 1: and uh and and don't seem to sort of get
Speaker 1: the memo with regard to um, you know, the government's
Speaker 1: sort of displeasure with with monopoly hours and and anti
Speaker 1: competitive behaviors. Uh. And certainly, And I would say industries
Speaker 1: that traditionally in the West that we're more concerned about,
Speaker 1: you know, the liquor the tobacco, those are all likely
Speaker 1: to be issues as industries that are big polluters, that
Speaker 1: are anti green and being given that carbon neutral is
Speaker 1: now big initiative for for China. So those industries I
Speaker 1: think that that traditionally are more of the negative or
Speaker 1: low e s g uh firms and industries I think
Speaker 1: those sort of big risks in China. Uh and uh.
Speaker 1: And again you know this is partly because you know,
Speaker 1: Chinese regulators and the Chinese societies no different to the
Speaker 1: Western societies. As they become wealthier and can afford it, Uh,
Speaker 1: they do demand some of the very same sort of
Speaker 1: E s G issues to be taken care of as
Speaker 1: as that we in the West do. So there's this
Speaker 1: sort of a perception um from the investors, especially after
Speaker 1: the recent events, that it looks like the Chinese has
Speaker 1: become anti capital now they are moving backwards. At least
Speaker 1: there's there's a perception there. I guess that's why Goldman
Speaker 1: had feeded so many calls from their clients, whether Chinese
Speaker 1: investment or not. It looks like there should be a
Speaker 1: China discount because people don't understand the rule anymore. People
Speaker 1: don't understand the boundaries anymore. Um and Uh. I saw
Speaker 1: there article from Steven Roach, his long term China boar.
Speaker 1: He he said he's been optism optimistic about China for
Speaker 1: the last twenty five years. Now he started doubt whether
Speaker 1: this is a this is a moment he should have
Speaker 1: a have a second sought, So, do you think that
Speaker 1: China is doing the right thing. Well, uh, I think
Speaker 1: you know, execution can always be better. I think, you know,
Speaker 1: lot more pre communication, being a lot more clear about
Speaker 1: what the regulators I want to accomplish, being much more
Speaker 1: I would say transparent with regard to the sort of
Speaker 1: E s G agenda especially, I would say, you know,
Speaker 1: carbon neutrality will be a good one. China's been signaling that,
Speaker 1: signaling its path or green. Uh. And and I think
Speaker 1: that's helped out the market a lot in terms of
Speaker 1: understanding where to direct capital, what to expect. If if
Speaker 1: China sort of shares that same kind of transparency with
Speaker 1: regard to perhaps more of the negative E S G issues,
Speaker 1: that would help the market out a bit as well.
Speaker 1: And certainly I think the investors got to do the
Speaker 1: other half right because actually it's it's been in the
Speaker 1: number of policy speeches given by presidents She going all
Speaker 1: the way back to late eighteen with regard to his
Speaker 1: concern about the inequity in the educational feel and and
Speaker 1: really the pain created by the crams schools on on
Speaker 1: the children's and their parents. So I think investors also
Speaker 1: have to to you know, listen a bit more tentatively
Speaker 1: to to sort of some of these policy pre signaling,
Speaker 1: but I would say yes, in terms of execution, it
Speaker 1: can always be be better understanding how markets can lose
Speaker 1: confidence um from from even the slightest I think surprises
Speaker 1: coming from regulators, especially when it comes to China and
Speaker 1: especially in this current environment. So yes, you know, much
Speaker 1: can be improved upon. But I would say that the
Speaker 1: work goes on both sides, by both the regulators in
Speaker 1: China but also investors looking to invest in China, because
Speaker 1: we've got to recognize it is a more foreign market.
Speaker 1: Our access to information is a little bit more challenged
Speaker 1: versus our access to information when dealing with say us
Speaker 1: UH than the ICY, and so investors really do have
Speaker 1: to work a little harder as well. Right, It's not
Speaker 1: a responsible approach for for managers and investors to to
Speaker 1: simply just blame Chinese policymakers in this case. You know, Jason,
Speaker 1: you have such a strong background and sort of the
Speaker 1: the academic quantitative approach to to investing, you know, at
Speaker 1: research affiliates and presumably now at this firm, and at
Speaker 1: risk of repeating a joke I think I've already made
Speaker 1: on a previous episode of the podcast, but you know,
Speaker 1: to me, it's like being a quant in the market
Speaker 1: is is sort of taking the you know, being like
Speaker 1: in the college classroom approach to markets where the retail
Speaker 1: trader has taken over and it's it's now more like
Speaker 1: a market that's a fraternity party rather than a classroom setting,
Speaker 1: you know. And I know in China it has that
Speaker 1: reputation for being a such a retail driven market. I've
Speaker 1: seen stats something like correct me if I'm wrong, something
Speaker 1: like volume is China is retail driven and and very
Speaker 1: much a sort of a gambler's ethos rather than a
Speaker 1: you know, buy and hold investors approach to the market.
Speaker 1: So I want to ask you a two part question
Speaker 1: about that, and feel lucky sometimes I asked twelve part questions,
Speaker 1: So two parts let you off easy. But uh so,
Speaker 1: how is a quant approach China given that type of
Speaker 1: of dominance in the market among the retail set. And secondly, um,
Speaker 1: you know, are there lessons to be learned from analyzing
Speaker 1: that cohort of the Chinese market for what we're now
Speaker 1: seeing in the US where this growing dominance of of
Speaker 1: retail investors and kind of their unpredictability and they're sort
Speaker 1: of you know, investing on whims and message boards. I'm
Speaker 1: guessing momentum probably is a factor that that translates regardless.
Speaker 1: But I'm just curious, you know, as as a quant
Speaker 1: how do you how do you approach a retail driven
Speaker 1: market like China? And you know, are there lessons to
Speaker 1: apply to the US market as the retail trader sort
Speaker 1: of takes over. Absolutely, So, first of all, you're absolutely
Speaker 1: right that China is a retail dominatant market and because
Speaker 1: of that, there is a very much casino feel to
Speaker 1: it and rader than a loan term investment, retirement um
Speaker 1: investment based um feel too to that market. The result
Speaker 1: of which is, in a short run, prices can feel random, right,
Speaker 1: Prices don't seem to rationally respond to either news or
Speaker 1: sort of changes and developments in the fundamentals of companies.
Speaker 1: Now that's of course not a China specific issue. Any
Speaker 1: market that's heavily retail, for example, in the US has
Speaker 1: gone from three percent retail to now closer to thirty
Speaker 1: percent retail with you know robin Hood free trading and
Speaker 1: and you know Wall Street bet dot com, Uh, you
Speaker 1: know type type of activities and uh, and you know
Speaker 1: in China, it's just you know, three times the the
Speaker 1: the the magnitude right because they they're they're closer to
Speaker 1: or thirty. So I think as an investor in the
Speaker 1: short run, what will help you be successful is actually
Speaker 1: focusing more on what drive sentiment, right, so be it
Speaker 1: the news cycle orright, be it what is capt doing
Speaker 1: the attention of media, of major influencers on on blogs
Speaker 1: and and podcasts. Those are probably likely to give you
Speaker 1: more of an edge trading in that market. So in
Speaker 1: some ways, UH think of you know, short term signals,
Speaker 1: betting out short term momentum, short term mean reversion, looking
Speaker 1: at almost you know, technical pattern UH type analysis are
Speaker 1: going to give you an edge more so than looking
Speaker 1: at long term fundamentals understanding industries and firms. Uh. And
Speaker 1: in fact, you know, the most successful investors in China today,
Speaker 1: you know, are not the stock pickers who understand casual discounting,
Speaker 1: not the quantz who understand sort of these long term
Speaker 1: factors I predict earnings growth, but really people who employ
Speaker 1: technical analysis on a on a daily basis, you know,
Speaker 1: the you know, I would say more of the high
Speaker 1: frequency market maker type of investors and strategies uh and yeah,
Speaker 1: So in that type of market, uh, or you simply
Speaker 1: have to bring into play a lot more of the
Speaker 1: non fundamental, more of the sentiment based analysis to um
Speaker 1: to really have short term success. But I think in
Speaker 1: the long run markets always converge and come back to
Speaker 1: fundamental and China is no difference. It just means you
Speaker 1: have to put up with more of the short term noises.
Speaker 1: I just I'm I want to let you talk to
Speaker 1: your book a little bit here and uh to talk
Speaker 1: to me about the Railian quantamount old China e t
Speaker 1: F rayqu was the ticket right? And tell me race race? Okay? Good?
Speaker 1: That was a test. I'm just making sure you got
Speaker 1: your ticketres right there. So say say, I'm a guy
Speaker 1: in the elevator there on the Starship Enterprise with you
Speaker 1: when and you've got two minutes to to tell me? Uh,
Speaker 1: you know, sell me on the CTF. What it's an
Speaker 1: active ETF, So what you know, what's the selling point
Speaker 1: for it? As far as your methodology and how you
Speaker 1: construct the portfolio compared to say the f x I,
Speaker 1: you know, the index tracking passive ETF. That's US investors
Speaker 1: are pretty familiar with. What's what's your sales pitch. Well,
Speaker 1: if you want to access China right, UH, you want
Speaker 1: to access China actively. And that's because a capweight to
Speaker 1: passive index UH doesn't make sense for a very inefficient
Speaker 1: market where in the short run, lots of great companies
Speaker 1: are underprised and lots of back companies are overprized UH,
Speaker 1: and where you know, giving you know, doing some research
Speaker 1: is going to give you an edge in terms of
Speaker 1: knowing what the informed institutions are buying, perhaps knowing what
Speaker 1: the informed UH and and well plugged in people who
Speaker 1: understand policy shoots are buying and doing so the active
Speaker 1: approach is certainly going to help you. Additionally, by the
Speaker 1: you know, low price, good quality firms that will grow
Speaker 1: and avoid I think a lot of the hype, a
Speaker 1: lot of stories, a lot of firms that do eventually
Speaker 1: become regulatory risk, either because of poor governance or because
Speaker 1: you know, sort of just general pool compliance with the
Speaker 1: regulatory environment. So you gotta go active in the market.
Speaker 1: That's retail traded, Jason. One of the rationales I heard
Speaker 1: for the crackdown on the CRAM schools was tryinga's three
Speaker 1: child policy. You know, they want to encourage UH families
Speaker 1: to have three children, and obviously if you have to
Speaker 1: pay for three sets of cram schools, that's gonna get
Speaker 1: gonna get pretty expensive. Um. But I wonder that's a
Speaker 1: fascinating concept to me because here in the US, we
Speaker 1: have a hard time getting people to wear a mask,
Speaker 1: you know, to to stop a virus or get a
Speaker 1: free vaccination. Uh, you know, we have a hard time
Speaker 1: having the government getting people to to anything. But in China,
Speaker 1: you know, I wonder is it harder to get couples
Speaker 1: to have three kids than to say the wonder child policy?
Speaker 1: And how important is that of apolicies? First, the economy
Speaker 1: and how you're thinking about investments, does it play into
Speaker 1: it at all, this potential for for a sort of
Speaker 1: a baby boom relative to what China has seen in
Speaker 1: recent generations. Okay, so first of all, you're absolutely right.
Speaker 1: I think it is probably far more difficult today to
Speaker 1: ask you know, Chinese couples to have kids than to
Speaker 1: not have kids. And then again, and that's more of
Speaker 1: an Asian phenomenon today, right, if you look at Taiwan
Speaker 1: and you look at South Korea, like the birthrate per
Speaker 1: couple is is less than one, right, So that's that's
Speaker 1: obviously very bad for demographics. Right, that's very bad for
Speaker 1: looking at consumption growth, you know, ten twenty years down
Speaker 1: a row. When when you have such a you know,
Speaker 1: rapidly dropping population, kids are very expensive. As a father
Speaker 1: of freaking I will tell you you met your quota
Speaker 1: and talking about you done well, done well, yeah, and
Speaker 1: as the kids are very expensive from both a financial
Speaker 1: resourcing perspective, but also for young couples in China today
Speaker 1: right where there's a lot more I think opportunities to
Speaker 1: make more money change your quality of life. So you
Speaker 1: start to think about, hey, you know I have opportunity costs.
Speaker 1: Right when I'm raising kids, I I'm maybe not out
Speaker 1: there making money or spending money, given that I'm able
Speaker 1: to make a lot more money now. So I think
Speaker 1: what we're seeing is really an issue we see in
Speaker 1: developed markets, right, you know, as as economy evolves developed um,
Speaker 1: people's willingness or the need to have more children simply
Speaker 1: have declined. So that's just something I don't think you
Speaker 1: could mandate easily and change now. Of course, you know
Speaker 1: the government has sort of gone out and try to
Speaker 1: research what's stopping young couples from having to you know,
Speaker 1: having kids or wanting to have kids, and you know
Speaker 1: that the responses, unsurprisingly have been so expensive. Race kids
Speaker 1: are part of the cram school. Part of it is
Speaker 1: um uh, you know, real estate, right because if you
Speaker 1: want to be in areas that are safer, nicer, better
Speaker 1: school um that real estate is expensive. Of the government's
Speaker 1: also been talking about, you know, how to how to
Speaker 1: change or you know, influence real estate prices so that
Speaker 1: that it's not so expensive for for for people to
Speaker 1: have access to good school districts and so on and
Speaker 1: so forth. But I don't think that will solve everything,
Speaker 1: right d These are on the margin issues, but they're
Speaker 1: not all the totality of the issues. Um So, I
Speaker 1: think the regulators and then the policymakers in China are
Speaker 1: going to find it frustrating that they're they're they're trying
Speaker 1: to do so much, but the the the out the outputs,
Speaker 1: the outcomes may not may not actually be as meaningful.
Speaker 1: Let's say they're hoping to achieve play some romantic music
Speaker 1: over loudspeakers or something. I don't know, I don't know. Yeah,
Speaker 1: we'll see what stand clear. Of the craziest things we
Speaker 1: saw in markets this week, well, With that said, guys,
Speaker 1: I can't let you go without partaking in our tradition.
Speaker 1: And Jason, I hope they weren't about this, but we
Speaker 1: have a tradition here. We we end each show with
Speaker 1: the craziest things we saw in markets during the week. Yeah,
Speaker 1: I have a feeling you got something crazy for us.
Speaker 1: I want to start with you. Yes, it's actually related
Speaker 1: to the three child policy. Um So Punjuhuan City, which
Speaker 1: is the city of one point two million people in
Speaker 1: southwest China's Trains province, is giving each couple each baby
Speaker 1: actually um essentially fine hundred you one, which is eighty
Speaker 1: dollars and months for families that have um second child
Speaker 1: or third child until other babies ten three. So this
Speaker 1: is the first time. It's first of China city offer
Speaker 1: cash for people to have more baby East. It's probably
Speaker 1: pretty standards in the western countries to have child subsidies,
Speaker 1: but not long ago. China. At one point China policy
Speaker 1: and into certainly attended into two China policy, and now
Speaker 1: we have a three side of policy and people are
Speaker 1: offering cash to have people who have more babies. I
Speaker 1: think that's pretty crazy. That's that that will work better
Speaker 1: than my romantic music idea. I think that's how you
Speaker 1: do it. I just offer cash. Yeah, how about you, Jason?
Speaker 1: Have you seen anything crazy in markets this week? Well?
Speaker 1: I think the craziest thing I saw was the massive rebound,
Speaker 1: uh you know in the educational sector. Well, essentially, if
Speaker 1: you read the policy announcement, these firms should be worth
Speaker 1: pretty dying close to zero. But somehow there's still people
Speaker 1: who are willing to jump in and catch a falling
Speaker 1: knife hoping there is a rebound, right, And so I
Speaker 1: found that pretty crazy, right, you know, people are not
Speaker 1: doing their homeboorking. That is pretty good. Yeah, I mean
Speaker 1: I wonder how long it's gonna take to sort of,
Speaker 1: you know, remove the profitability from these companies. It's that
Speaker 1: is crazy though that Yeah, you're right though, why would
Speaker 1: they why would anyone pay anything for them? At this point?
Speaker 1: If literally that the regulator says, like the firm you're buying,
Speaker 1: we are going to make them into nonprofits, meaning they're
Speaker 1: not going to pay a dividend, right, they're not allowed
Speaker 1: to make up profit. But somehow you still want to
Speaker 1: become a shareholder. Yeah, that's just good. That's a good one.
Speaker 1: That's a crazy one. All right, I'll give you guys
Speaker 1: mine I uh listeners know, I like the alternative assets,
Speaker 1: and the more alternative the asset class, the better. So
Speaker 1: I bring to an auction that's going to happen next
Speaker 1: month in Great Britain. They're auctioning off one slice of
Speaker 1: wedding cake from the wedding of Prince Charles and Princess
Speaker 1: Diana forty years ago. Someone's still available. Yes, yes, someone
Speaker 1: saved one piece of wedding cake. I'll just and I
Speaker 1: hate to say it to you, guys. We have to
Speaker 1: play prices right with me now here, I'm gonna ask
Speaker 1: you each what you think the expected bid is for
Speaker 1: this piece of wedding cake. Put those quad skills to work, Jason,
Speaker 1: and let you know here it's ice came from. They're
Speaker 1: actually twenty three and as far as supply goes, there
Speaker 1: were twenty three official wedding cakes for that wedding. Pretty
Speaker 1: amazing happened almost forty years ago, exactly. Uh July one
Speaker 1: features a Marza pan bass and a sugar on like
Speaker 1: coat of arms colored in gold, red, blue and silver
Speaker 1: on top. I was given to Uh, one of the
Speaker 1: household servants of the Queen Mother and she kept this
Speaker 1: thing for all these years. Um, so it hasn't got
Speaker 1: on auction yet, so who knows what the actual price
Speaker 1: will be? But what do you guys think to two
Speaker 1: part question again start with you what do you think
Speaker 1: that the expected bid is for this in British pounds?
Speaker 1: And second part is would you take a taste of
Speaker 1: this wedding cake? I was trying to say ten bitcoins,
Speaker 1: and so we are talking about alternate to that assets,
Speaker 1: but we can't do the conversion to the British pounds. No,
Speaker 1: and no, I won't take a bite on the bit
Speaker 1: to the cake. Smart man. Ten bitcoins? That that puts
Speaker 1: it up the posts thirty thousand British pounds. Jason, how
Speaker 1: about you? You're going over under that? Oh? I well,
Speaker 1: I think he's a ten bitcoin so that that makes
Speaker 1: about three three hundred of thousand pounds. You know, being
Speaker 1: being from Boston where I I track, you know Tom
Speaker 1: Brady's progression, even though he's moved on to a different city.
Speaker 1: Now I know his his rookie his rookie card fetch
Speaker 1: something like one point three million. Uh last time I
Speaker 1: got auction. Uh. And then it's it's not the only
Speaker 1: car left in the world unlike this, this piece of
Speaker 1: wedding cake. Right, so I gotta I gotta say the
Speaker 1: wedding cakes gotta fit something like let's just say one
Speaker 1: point five million pounds. How's that? And when it's that expensive,
Speaker 1: I'm not going to take a bite. I will say
Speaker 1: it's Dominic Winter auctioneers. I imagine they would like both
Speaker 1: of you two to be bidding in this auction, because
Speaker 1: not about this up is the surprising low value they think.
Speaker 1: They're thinking only five pounds. I think it's gonna go
Speaker 1: We're gonna have to check back on this in August
Speaker 1: when it actually goes up, because I think it's gonna
Speaker 1: go for a lot more than five five pounds. I
Speaker 1: might buy the thing myself. I think they're way off,
Speaker 1: and they're expected bid on that. Maybe that's a way
Speaker 1: to drum up interest and get get people up bidding
Speaker 1: on it. But a similar piece of cake sold in
Speaker 1: nineteen I think, um, right after Princess Diana died for
Speaker 1: like a hundred and fifty thousand pounds, So depreciating asset.
Speaker 1: Wedding wedding takes are appreciating asset. The only question I
Speaker 1: have is how do they'll send that cake. How do
Speaker 1: you very fine from the wedding they well, they have
Speaker 1: it comes with some kind of documentation. I'd have to
Speaker 1: look up the story, but there is um the the
Speaker 1: servant who collected it. It was given to her. I
Speaker 1: think i's just leftovers, like here, you want some cake?
Speaker 1: And she knew that this might be worth a few bucks,
Speaker 1: so she tucked it away and she wrote on top
Speaker 1: of it, wedding cake from Princess Diinas. So there's some
Speaker 1: kind of These auction houses are good at authenticating this stuff.
Speaker 1: I'm not I'm not sure how, but I it would
Speaker 1: be a pretty good scam to have a forty year
Speaker 1: old piece of wedding cake was not Actually they somehow
Speaker 1: turned us into an n f T. It might be
Speaker 1: what even more right and NC is someone actually eating
Speaker 1: the thing? And then you saw that for that? Might
Speaker 1: that you might get your million and a half for that,
Speaker 1: But we'll see. I'm gonna check back because I think
Speaker 1: you guys were in the right direction. I think it's
Speaker 1: gonna go a lot more than what they expected, right,
Speaker 1: because people pay crazy money for crazy things. Is that's
Speaker 1: that's the lesson of this segment. I think, so but
Speaker 1: guys really enjoyed this conversation. Jason, Sue and yees She.
Speaker 1: Thank you both for your time. Jason, I know it's
Speaker 1: earlier where you are, so thank you for getting up
Speaker 1: early for us. And uh, absolutely and get back to
Speaker 1: the flight deck there of the U S S Enterprise
Speaker 1: What Goes Up. We'll be back next week and so
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