Evergrande Extravaganza and Beyond

If you're like me and most of the rest of us, you never heard of Evergrande prior to the last couple of weeks when it started roiling the markets. So I offer this week's edition of WealthTrack as Wall Street wiz James Grant explains it all.  He's been tracking Evergrande for four years and predicted that the very high flying company could turn in to another Hindenburg.  Enjoy the weekend.  

EVERGRANDE EXTRAVAGANZA AND BEYOND - A message from Consuelo - September 30, 2021

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Sponsored by: September 30, 2021 Dear WEALTHTRACK Subscriber, It can take a long time for a bubble to burst.  Four years ago in 2017 Grant's Interest Rate Observer, a highly regarded financial newsletter wrote an article about the now infamous China Evergrande group. Back then it was anything but a familiar name except in China and among some institutional investors.  The article was titled “Ever Higher” as Grant published a chart showing the extraordinary rise in China Evergrande's stock price on the Hong Kong exchange that spring. (A link to the article will be available on WEALTHTRACK.com)   As Grant’s noted then:         We call the attention of the readers of Grant’s to this situation because, in the  first place, everything about  Evergrande is incredible (the board of directors in 2016 earned $46.5 million, J.P. Morgan reports), and, secondly, because we suspect that the company name will one day become proverbial, like “Bank of United States” or “Hindenburg.” Fast forward to 2021 and indeed Evergrande, once the world’s most valuable property stock, has become famous as the world’s most heavily indebted property company. With an estimated $300 billion in debt, it also could become Asia's largest bankruptcy as China's government seems less and less likely to come to the rescue. Why should the U.S. investors care? What if any significance does it have outside of China?  That is where financial thought leader, journalist/sleuth and historian James Grant comes in. Grant is the Founder and Editor of Grant’s Interest Rate Observer, a twice-monthly journal about all interest-sensitive investments which pretty much covers the waterfront. It is considered a must-read by professional investors including at leading hedge funds, private equity and investment firms.  Grant is also the author of 9 books including several financial histories. One particularly relevant to the Evergrande situation is Money of the Mind: Borrowing and Lending in America From the Civil War to Michael Milken about the forces that led up to the credit binge of the 1980’s, one of America's biggest speculative booms at that time. Those credit exploding forces are with us today, only they are much bigger and have gone global.   Grant will discuss Evergrande’s broader ramifications and the challenging new era emerging in the U.S. as inflation reappears in the midst of 4000-year lows in interest rates and record levels of government debt.     Also in our EXTRA feature Jim Grant discusses his latest literary project, a deep dive into 18th century finance through the lives of two brilliant 18th century statesmen and orators, Edmund Burke and Charles James Fox who were also perennially broke!   If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify. Enjoy your weekend and make the week ahead a healthy, profitable and productive one!   Best regards, Consuelo