McKinsey released a contrarian economic view on China. The party ended for U.S. and European corporations that once had an advantage there. McKinsey gets paid seven figures to tell you what happened six months ago.
The consulting firm noticed something. Western companies lost their edge in China. This cost McKinsey roughly eleven minutes of analysis and three PowerPoint decks with circles on them.
Retail traders read this newsletter. They nodded along. They agreed the party ended. They bought more Alibaba anyway because a guy on Twitter said Jack Ma was coming back. Jack Ma is not coming back.
McKinsey's contrarian view arrives after every pension fund and hedge fund already repositioned. The view is contrarian the way a weather report for yesterday is contrarian. It contradicts nothing except the portfolio you liquidated in March.
CNBC published this in a newsletter called The China Connection. The newsletter exists so executives can forward it to other executives who also will not read it. Everyone will reference it in meetings. Nobody will change a single position based on it.
The corporations that lost their advantage spent decades building factories and supply chains in China. They hired McKinsey to explain why that was smart. Now they are hiring McKinsey to explain why it was not smart. McKinsey will bill both projects at the same rate.
Some retail trader in Ohio read this headline and decided it was time to go long on Chinese small-caps. He is currently down 23% and telling himself it is a contrarian play. It is not a contrarian play. It is called being wrong with extra steps and a consulting firm's logo attached to your mistake.
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