Today is a very good day everybody. Take a moment to reflect and enjoy. #rossisfree

Seems like chess moves are being made on multiple boards all over the the place. Hard to keep up to be honest.

The War for TikTok in America - #2 Quid pro quo. While this approach suggested here is something the Chinese side will warmly welcome, it is also a tactic which can very quickly go sideways for the foreign side of any negotiations. The primary issue, and this goes to whatever sort of deal might be struck, is what, exactly, will ByteDance “sell” if a deal were to be agreed upon. The secret sauce, the algo, would be demanded by the American buyer. They’ll need to be careful though. China could simply include an older version of the algo, something like providing iOS 13.5 versus the current 18.1 with the buyer being completely unaware of the fact. More critically though is the issue of assurance that will need to be given to China that Trump and his team won’t change their mind and still move to put on tariffs at a later date. The American side will more than likely need to give up more than is now being discussed. Whenever leverage in a negotiation is predominantly held by the counterparty, the Chinese will work to make certain that up front deliverables – those required at signing – more than compensate the future risks of the counterparty reneging on the deal at a later date. This element looks to be missing at the moment by the Americans. Finally, the American side of the negotiations needs to fully comprehend that China is more than willing for TikTok to “burn to the ground”. From my vantage point, that, too, hasn’t yet hit home with Trump’s team and is even clear from Trump’s own words. “If I don’t do the deal TikTok is worthless. If I do the deal its worth maybe a trillion dollars.” This is a process which is only just beginning. Expect more twists and turns, but for now the advantage still goes to China.

Sure. Why not have there be an earth quake in Taiwan today if all days. That’s not forbidding at all.

The War for TikTok in America Here’s the first bit of insight. Never, ever, signal to the Chinese that there are multiple “interested parties”. Once that become evident, the Chinese will then play the game of divide and conquer pitting every single party against the other. The seeds of dissent are thus sown. At this point I’ve seen no less than six different “parties” stating that they have ten of billions at the ready to deploy to acquire TikTok’s American platform. I’m certain there are a dozen more. There is no need for the Chinese to even start the process of formally engaging. All they need to do is allow these parties to “back channel” and when doing so the Chinese will signal to each party that they are the desired choice. These parties then use that false sense of optimism to cajole other parties which then leads to increased animosity among all of the parties vying for the deal. Divide and conquer. I’ve seen this game plan out of China more times than I can possibly recall. The vultures will end up devouring themselves.

China Morning Missive For those interested in how China “works”, play close attention to the drama set to quickly unfold around TikTok being sold. I might provide a regular update here with my perspectives. For now, I’ll say this. When it comes to negotiations, the more direct you are with the Chinese in your approach the less your position of strength. The Chinese are fully willing to accept a degree of pain in the short term if that improve the overall probability of winning in the end, Once again, the Chinese operate with a low time preference. The Americans …… not so much. This, right here, needs to be better understood in Washington. https://www.reuters.com/technology/tiktok-awaits-trump-reprieve-china-signals-open-deal-2025-01-20/

Um, I realize we are all spending time welcoming the new folks, but we did all just notice the King hit a new ATH on a monster jump. Loving this volatility. It’s like the good ol’ days.

It is really this simple. Maybe not easy, but definitely simple.

Regardless of all the “noise”, my goal is to remain consistent this week with Notes on various #China commentary. China Morning Missive The People’s Bank of China has held 1 and 5 year prime rates in place. Regardless of whatever it is you may have read in the past six months, there’s been no actual “bazooka” stimulus out of Beijing. The Central Bank has been doing all of the heavy lifting. And for those of you new to my various China commentary, you should know that “Keynes is Dead in China” meaning that the central government policy makers fully understand that printing gobs of money doesn’t solve the problem. What has actually been underway, and continues to playout, is an aggressive systemwide deleveraging of the economy. Please remember this every time you see some headline talking about the weakness of the Chinese economy or the “threat of deflation”. These are just the outcomes you are supposed to witness when you starve the world’s secondary largest economy of fiscal liquidity. Will this experiment work? No one knows, but my experience would suggest that it is dangerous to bet against the Chinese policy makers.

Reposting the Note below from last week given the current vibe. I should have added, and will do so here, that new users will gain even more from the Nostr experience by being aggressive with adding “followers”. Have fun and enjoy!! View quoted note →