[I take great exception to Bass’s take on Russia/Ukraine but not his take on China and their lockdowns, which is why I am posting this. ABN]

Another take on China’s shutdown of Shanghai, Shenzhen, Guangdong, etc. China is desperately in need of crude oil, LNG, food, basic materials, base metals, and more. Putin’s invasion/massacre has created additional energy scarcity, inflation, and skyrocketing food inflation. 1/12

Whilst China hasn’t had any material problems with the virus from Wuhan in the past, it’s interesting that their draconian lockdowns (in conjunction with telegraphing the purchase of fewer cargos of LNG and crude) are forcing global economists to ratchet growth expectations 2/12

lower whilst concurrently shifting future demand projections for commodities lower. Everything China desperately needs to acquire is trading down in price as a result of the lockdowns. If we all take a look back, the primary driver of China’s current account moving into 3/12

negative territory happened to be the Chinese citizens traveling and spending abroad(they could only spend USD, EUR, YEN, etc).COVID abruptly halted Chinese travel,gave the CPC supreme censorship power (Chinese travelers no longer open to uncensored internet) 4/12

and allowed a crushing takeover of Hong Kong without further incident (COVID appeared at the zenith of HK protests). Either the occurrences of COVID are perfectly coincidental (and incredibly helpful to the CPC’s existential crises) or a much more insidious modus operandi 5/12

is at work. Remember, rampant food price inflation was one key grievance that led to the Tiananmen Square protests/massacre as well as the Arab Spring. It’s too late for Xi and the world to avoid the food price spike as it will certainly worsen next year given input pricing. 6/12

Continue reading “China’s shutdown of Shanghai, Shenzhen, and Guangdong explained: “China is desperately in need of crude oil, LNG, food, basic materials, base metals, and more”: Kyle Bass” →