What Goes Up

China has driven GDP based on heavy capital investment. When, at some point, that ends, and China's GDP growth falls dramatically, what will happen to the rest of the world? Not that much, argues Michael Pettis. Pettis is a leading thinker on international trade and investment flows. He is currently a nonresident senior fellow in the Carnegie Asia Program, based in Beijing, and also professor of finance at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He formerly taught at Tsinghua University's School of Economics and Management and before that at Columbia University. He spent the first half of his career on Wall Street in trading, capital markets, and corporate finance, working with Manufacturers Hanover (now JPMorgan) and Bear Stearns. He has also worked as a partner in a merchant-banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team.

Howard French is the author of two books on Africa and three books on China, with one of those books being about China's booming ties with Africa. The more recent Africa book, "China's Second Continent," is about the million Chinese who have emigrated to the African continent since the 1990s and what they mean for China and for Africa. His newest book, “Everything Under the Heavens: How the Past Helps Shape China’s Push for Global Power,” is a meditation on China's historical self image and what that means for China's current political leadership. In this interview, he talks about post-reform China's interaction with Africa. Currently a professor on the faculty of the Columbia University Graduate School of Journalism, French for many years was a senior writer for The New York Times. From 2003 to July 2008, he was the newspaper's Shanghai bureau chief. Before his China assignment, French headed bureaus in Japan, West and Central Africa, and for Central America and the Caribbean.

In this far-ranging discussion, historian and corporate consultant Kenneth J. DeWoskin places China's 40-year reform period in historical perspective and makes sense of campaigns like the China Dream and the Belt and Road Initiative against the backdrop of China's massive debt. He compares China's economic development with that of Japan, Korea, and the Southeast Asian "Tigers" and looks ahead to where China will be in the next five years.Ken is a former partner for China Strategy and Business Development at one of the Big Four, founder of Deloitte's China Research and Insight Centre, and now serves as a Senior Advisor and Eminence Fellow to Deloitte for China research and insight. He concurrently serves as Senior Advisor to The Conference Board China Center for Economics and Business. He is a frequent contributor to J Capital. A former professor of International Business and chairman and professor of Asian Cultures at the University of Michigan, Ken has been involved with China for over 50 years and has lived and worked extensively in both China and in Japan. Among his publications is the early study A Song for One or Two, the most thoughtful and subtle analysis in English of China's early music.

In this interview, Tim Bergin, a former bond trader, talks about why both stock and bond market valuations are stretched by at least $50 trillion and what will happen when that begins to unwind. He does not envision a crisis like that of 2008, but asset owners will get a lot poorer. Tim has a particular focus on the Canadian economy and here discusses the real estate bubbles there and the ways in which banks and insurers are exposed to it. He looks at some long and short ideas that flow from the Canadian thesis. Tim worked on a proprietary credit trading desk for 12 years at one of the largest credit institutions, managing portfolios of convertible bonds, corporate debt, CDS, interest rate swaps, equities, options, and products. He also worked for two credit-focused hedge funds. He now manages his own money and advises clients through his company On Beyond Investing. He is a fundamental, value-based investor but looks for value wherever it can be found, different asset classes, sectors, securities etc. Listeners should note that nothing in this comment should be construed as investment advice or recommendations but only Tim Bergin's personal views. No one should make investments based on this podcast.

Bob Wittbrot writes and comments on global-economic and financial issues on his "Deep-Throat-IPO" blog. He is the founder and owner of Bob Wittbrot & Associates, the "best" (in his slightly biased opinion) Insurance Agency in Cleveland Ohio, as well as a former CPA, Auditor & CFO. He's earned Graduate and Undergraduate degrees in Accounting and Finance from the University of Wisconsin. Here he talks about the post-global financial crisis world and how it has given rise to companies like Alibaba, Tencent, and Softbank.

Sahm Adrangi is the founder and managing partner of Kerrisdale Capital Management. He is most known for short selling and publishing research. He first made a name for himself shorting Chinese companies, but has since broadened his approach to invest in longs and other sectors. Sahm started his financial career in credit – performing high-yield debt refinancings and post-bankruptcy refinancings at Deutsche Bank, as well as advising creditor committees in bankruptcy and out-of-court restructuring situations at Chanin Capital Partners. Subsequent to his investment banking experience, Sahm spent several years at a multi-billion-dollar distressed debt hedge fund, Longacre Management. In this interview he talks about fraud at Chinese reverse mergers, crypto-currencies, and some of his long ideas. Apologies for the rough audio in the first few minutes.

Roger Lowenstein is one of the great minds of the financial world and has been observing and writing about Wall Street now for four decades. Roger is author of a full shelf of best-selling books about Wall Street, from When Genius Failed to The End of Wall Street, and the newest, America's Bank. Acerbic, clear-thinking, and richly informed with historical knowledge, Roger brings a rare breadth of understanding to parsing what makes the markets work. In this discussion, he talks about the Fed and the creation of a U.S. central bank, its best and worst governors, and why our economy and politics are in this parlous state.

Sander Gerber's Hudson Bay Capital has been sailing unmoored by the troubles that have beset most hedge funds this year, and that is due to the Hudson Bay "system," a rigorous method for "avoiding beta." In this episode, Sander talks about that method and how Hudson Bay makes its investment decisions. Hudson Bay Capital Management LP is an absolute-return, multi-strategy alternative investment firm, and Sander is its CEO and Chief Investment Officer. He became a member of the American Stock Exchange in 1991, acting as an options market maker. In 1997, he founded Gerber Asset Management LLC to develop and engage in proprietary investment strategies. In 2005, he founded Hudson Bay, which absorbed Gerber Asset Management's business. Sander graduated from the University of Pennsylvania and The Wharton School and first worked with Bain and Company. He is a member of the Council of Foreign Relations and The New York Economic Club and chairs the Investment Management Committee at the Woodrow Wilson Center in Washington, D.C.

Since 2008, Jos Evans has been trading commodities. Few people on the planet know as much as he does about iron ore. In his trading career, he grew frustrated with the arcane world of Inter Dealer Brokers, the ~$6 billion industry that anonymizes transactions so that traders buying or selling large blocks of assets don't get front run by purpose-built algorithm robots that run around looking for big trades. Traders need the IDBs, but in the trading world, they are relative dinosaurs. Trades are placed on chat and messenger tools, and the IDB relies on humans to gather information from buyers and sellers. Jos and his AI-X team have a new solution, based on artificial intelligence. In this episode, Jos talks about the AI Exchange and about what's happening with commodities today.

William Bao Bean knows more than almost anyone about the Chinese internet. Currently the Managing Director of Chinaccelerator, a start-up accelerator based in Shanghai, William has been helping Chinese tech companies get started for nearly 15 years. He was one of the earliest and most plugged-in industry analysts, working at Deutsche Bank, Bank of America, and Bear Stearns, and he did private investing with Softbank China & India Holdings and SingTel Innov8. In this discussion, William talks about online travel, search, gaming, payments, advertising, and what it takes to compete on the Chinese Internet.

Jordan Moelis is one of a breed of young hedge fund managers--he founded Deep Field in his mid-twenties--who came up during the industry boom after the global financial crisis. Here he talks about some of the stresses and rewards of being directly answerable for results. He also takes a look at movies and entertainment, a specialty of Deep Field. Deep Field runs a concentrated portfolio of well-researched ideas.

Snap-on's network of franchisees sell the premier line of auto-repair tool kits to mechanics all over America. But the market is pretty much saturated, and Snap-on is in denial. Since 2011, the company has committed that particularly American sin: binging on credit. Snap-on has been encouraging its franchisees to sell more and more using high-priced loans from the company's own Snap-on Credit division. Tim Murray thinks a lot of franchisees are mad as hell and aren't going to take this anymore. That will erode sales for this century-old American institution.

The price of food at the grocery store has been declining for two years and yet the price of the big packaged food companies on the stock exchanges has been rising. This opposition will not long stand. Evan Lorenz, one of the great financial journalists of that Wall Street sacred text, Grant's Interest Rate Observer, talks about Big Food and some clumsiness on the part of the usually deft investors 3G and Berkshire Hathaway.

John Fichthorn, the founder of Dialectic Capital Management and now Head of Alternatives at B Riley, and John Barton, his long-time colleague and a Managing Director at B Riley, deeply experienced with finding, qualifying, and trading frauds, fads, and flim-flams, In this podcast, they offer lessons from the front lines of short-biased funds.

China is trying to avoid the fact that its growth is chained to an ever more irrational load of debt and that the debt-intensity of growth becomes higher every year. Brian McCarthy manages a fund predicated on the idea that, far from rebalancing, China sees no other political options and will keep piling on debt until it hits a wall. That wall will entail a sharp devaluation of the RMB.