Two Winds Blowing

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If I mention the name Greece, I know what will spring into your mind: unemployment, debt, a crippled government and a dire outlook.

But it wasn’t so long ago, when the Eurozone crisis raged, that everybody thought all the same things about France. You probably still remember that, even if nobody seems to worry about it anymore.

The thoughts at the time ran something like this: poor old France was too inefficient compared to Germany, her wages too high, and her debts too big. It seemed the only thing the poor Frenchies had going for them was a vault of gold left over from the imperial years.

Perhaps investors need some more romance in their lives, or at least their analysis. Because France has survived the Eurozone crisis and seems to be surviving okay. One reason is that France will always have one thing that no one else does…and it’s paying off.

What is it? She has Paris.

The City of Light is a bit scruffier these days than she was in her heyday. But as Jim Rogers once said about gold, a lot of the glamour is still there, even if there isn’t as much work to do.

But all Paris and the rest of France have to do is be themselves. There’s a reason for this. And that reason is the whole place is in the hearts and dreams of a billion Chinese. And where the heart leads, the head and wallet follows. When it comes to China, that means billions of euros.

That’s why a recent survey by the Financial Times makes for such interesting reading. Here’s a snippet:

France overwhelmingly remains the dream global destination for Chinese tourists, chosen by 31.6 per cent of respondents, well ahead of second-placed Italy (20.9 per cent) and little changed from the 32.5 per cent that cited France as their dream destination in China Confidential’s 2014 survey.

With the number of Chinese visitors to France likely to grow further in coming years, this should continue to provide a significant boost to the French economy.

And what’s true of France is largely true of Europe as a whole. When you look at the graph of the most desirable destinations, what strikes me is how Europe dominates the list.

See for yourself…

I mentioned former hedge fund pioneer Jim Rogers earlier. I actually spoke to Jim recently on the DR podcast. He thinks Chinese tourism is going to be one of the biggest trends of the next twenty years. Jim’s built a multi-million dollar fortune on his ability to find long term secular trends and ride them. Not only that, he’s been doing it for fifty years. So find companies that benefit!

When a couple of hundred million people decide they want to go somewhere, someone’s going to make a lot of money.

Of course, when it comes to big numbers like that, you have to consider where the money isn’t going as well as where it is.

That’s why another notable story this week was the Church of England’s decision to blacklist coal and tar sand investments, citing climate change.

Now, the regular church service isn’t what it used to be. But in the financial stakes, the Church of England still packs a punch. According to the Financial Times, the Church has a nine billion pound portfolio.

Its actual holdings of coal and tar sands stocks that it will sell is only a modest 12 million pounds. But the symbolism is another link in a chain that seems to be getting longer every week.

The FT put it like this:

The Church’s move makes it one of the most prominent recruits to a grassroots campaign that is spreading around the world and is modelled on the 1980s divestment movement to end apartheid in South Africa.

Even more interesting, the paper suggests that Pope Francis is expected to deliver an ‘encyclical’ letter that will ‘urge the world’s 1.2bn Catholics to consider the risks of climate change.’ I’m not Catholic, but the FT says the letter is apparently the most important form of teaching by a Catholic pontiff.

What the Pope’s urging will lead to in the world or the investment markets, I have no idea. But it does make you wonder what’s coming and whether you want to stand in front of a herd more than one billion strong.

Your Weekend Daily Reckoning has reported on the fossil fuel divestment trend before. If the Catholic Church decides to sell its holdings, that’s a hell of a lot of selling pressure. Don’t say you weren’t warned.

Regards,

Callum Newman+,
Editor, Weekend Daily Reckoning

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Callum Newman

Callum Newman

Callum Newman is the editor of The Daily Reckoning and Associate Editor of Cycles, Trends and Forecasts. He also hosts The Daily Reckoning Podcast. Originally graduating with a degree in Communications, Callum decided financial markets were far more fascinating than anything Marshall McLuhan (the ‘medium is the message’) ever came up with. Today Callum spends his day reading and researching why currencies, commodities and stocks move like they do. So far he’s discovered it’s often in a way you least expect. To have Callum’s thoughts and insights on the current state of the currency, commodities and stock markets delivered straight to your inbox, take out a free subscription to The Daily Reckoning here.
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