Summary: Tallest towers & biggest debt deals warn of next major fall<br> Walgreens Buyout - Does $70 billion seem high?<br> Knowing when to leave - CEO departures hit all time high<br> <br> <br> <br> The McAlvany Weekly Commentary<br> with David McAlvany and Kevin Orrick<br> <br> Pride Comes Before The…?<br> November 13, 2019<br> <br> “I think they’re blind. I think they’re blind with rage to seeing that they are, in fact, misdiagnosing cause, and that the source of excess within the system is being driven by an unelected source. But they can’t bring themselves to acknowledge that it is, in fact, the seen hand of unelected technocratic power which bears responsibility for creating this monster. It is not the unseen hand of the market.”<br> <br> David McAlvany<br> <br> Kevin: We have talked in the past, Dave, about how deliberate your parents were, and especially you and your wife now with your kids. Consequences seem to be an important part. Loving your children is first, but consequences – they have to understand that there is a cause and effect. It is almost like free markets.<br> <br> David: Not to get too philosophical, but the idea of agency and the idea of an individual making choices – the importance of those choices is that there are consequences to our choices.<br> <br> Kevin: Both good and bad.<br> <br> David: Yes. And to line out what are the logical consequences, the good logical, or the bad logical, consequences, makes someone reflect and say, “This is my life, my destiny. Boy, I can make a mess of this or I can make something really neat from this.”<br> <br> Kevin: And one of the greatest ways you can show love to your children is to display that, that there are consequences, and encourage good decisions. I think about what we are seeing in the markets now. We have called them free markets in the past, but it is hardly free when governments intervene, they don’t allow companies to fail, they really don’t suffer the consequences of bad behavior. In fact, companies these days don’t really even have to have a profit to be rewarded.<br> <br> David: What is fascinating to me is, if you look the Chinese exchange, ChiNext, they just changed their requirements for listing as a publicly traded company. So with so many profitless companies listing in the United States and on other exchanges, you had Shenzhen’s technology focused ChiNext exchange – they want to compete. So what do they have to do to compete in a world of profitless companies? You lower the bar to do so, so you can now list through ChiNext – ChiNext is a little bit like New York’s NASDAQ, technology focused. But up until now both Shanghai and Shenzhen, their stock exchanges, have had a multi-year, 2-3 year, profitability requirement prior to going public.<br> <br> Kevin: Well, doesn’t that make sense? If you’re going to go public, shouldn’t you be making some money first?<br> <br> David: There is a sense in which that is intuitive. Yes, it makes sense, to me it does, but the Chinese Securities Regulatory Commission announced that the profitability requirements were going to be scrapped for ChiNext IPOs and they are hoping that brings liquidity to fledgling companies in need of an infusion to move ahead. That’s not all bad, but what you do see, like what we have in the United States, many of the unicorns which have gone public in the last year or so are high-risk propositions, because it is not like they have revenue and sales already in tow. They are ideas, and as long as the ideas become something, as long as the dream becomes reality, that’s fine, but an investor is speculating on a dream, not on a functional operation. So that’s really where the Chinese have, to this point, basically said, “Great. If you are a functional operation, if you have profits, then we will list you. And now they are saying, well, we’re missing out on a lot of listings.<br> <br>
