Some Things Are Gone for Good
I know it's partly a function of age, but holy moly, time is flying. You'd think that once Thanksgiving snuck up on me I'd be on alert for Christmas, seeing as how the two work in tandem. But alas, you'd be wrong. I haven't done a lick of shopping — and I'm not going to.
We decided a few years back to stop wasting money on material gifts that don't fit, are quickly consumed, or just clutter up the house, and instead focus on family experiences. So Santa's gonna have to find us on a Mexican beach, about 50 miles south of Cancun.
I took a couple years of Spanish in high school. I think. It might've been college. Oh boy, there's that "function of age" thing again. I do recall that the instructor was the son of missionaries, and he grew up in Peru. So he wasn't just fluent; he was immersed. The total opposite of the French teacher I had in middle school, who spoke French with a perfect Virginia drawl.
It's possible that I've lost a bit of my Spanish, but I'm pretty sure the literal translation of Cancun is "hellhole." But fortunately, the translation for Akumal — where we will be staying — is "snorkeling oasis with $3 Tito's drinks at the beach bar."
Okay, okay, Akumal actually means "place of the turtles." We spent a portion of our Christmas vacation there a couple years back, and I can tell you — hay muchas tortugas.
I can also tell you that the reef that spans the length of Jade Bay is dying. The brain corals are all partially bleached, and the ocean floor is littered with the broken stalks of finger coral. A hurricane made landfall right there maybe a decade ago, and that may account for some of the damage. But it's still true that coral is among the most sensitive creatures to the warming oceans.
And to make matters worse, there's a devastating new disease sweeping through Caribbean reefs. Scientists say the coral's immune system is weakened by warming water and so the mortality rate is 66–100%. Hundred-year-old coral can die within weeks of infection.
Part of the reason for going to Akumal is so my kids can see actual coral...
RIP China Trade
We humans like to think that when history doesn't outright repeat, it will at least rhyme. But sometimes when things change, what's lost really is gone forever.
The U.S. — and the world — has benefitted greatly from trade with China over the last 20 years. Resource-driven economies have boomed, and some American tech gets half its revenue from the Commies.
The trade talks have shined a light on China's trade practices. Subsidized manufacturing, a tightly controlled currency, surveillance tech, IP theft — I don't think the genie's going back in the bottle...
Government ultimately and inevitably becomes a vehicle by which those in power stay there. The irony of a People's Republic of China is especially rich as Jinping & Co. put the final touches on their surveillance state dream and the Orwellian nightmare becomes reality.
Earlier this year, the party issued the 3-5-2 policy. The FT says, “The 3-5-2 policy is part of a drive for China’s government agencies and critical infrastructure operators to use ‘secure and controllable’ technology.”
And what it means is that China is switching foreign hardware and software for domestic versions. Think Microsoft, Dell, Adobe, etc. 30% next year, 50% in 2021, and the final 20% the year after.
It sounds like China's version of the Huawei ban, but for the Chinese people, it's far more sinister. It's basically the final piece of the People's Internet — an internet that is completely controlled by the government to deliver the government's message. Oh, and it will spy on your every move with real-time AI facial recognition software on millions of surveillance cameras running at 5G speeds...
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The 5G Fight
So Qualcomm has some critical patents that mean it will have a chip in every single 5G device in the world. Pretty awesome, and that's why we added Qualcomm to The Wealth Advisory portfolio at $51.40 (currently ~$84).
What happens when China decides to ignore Qualcomm's patents, flout the WTC, and put its own chips in exact "made in China" replicas of the iPhone?
What are we gonna do? Economic sanctions? Order Starbucks and GM to pull out of China? Send troops to protect American interests?
I think it's inevitable that China makes this move at some point in the next couple years. It's part of a larger trend in play across the world...
We've tried some "one world" stuff. And now, a border wall with Mexico is a critical issue for any U.S. election. England is nearly out of the EU, mainly because its citizens don't want Eastern Europeans moving in next door. Saudi Arabia doesn't want to sell oil to the world anymore, and so it is selling Aramco. Russia is expanding its borders and influence because Putin rightly assesses that no one will move to stop it.
Because we're all looking inward, we just want to Make <Insert Country Name Here> Great Again.
The world is getting smaller. And it may not be a good thing for multinationals.
Until next time,
A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.
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