11:30pm Big Mac

So I ran 22K today… what to do when it is 11:30 at night and you’re still hungry?  How about a visit to your friendly local Macdonalds.   Got my first Big Mac in over 5 years.  Here it is, what 14.8HKD buys you.

This was a really cheap meal.  Take a look the recent Big Mac Index published by the Economist.  You can see that HK’s Big Mac is the cheapest in the world. Go figure.  China’s Big Mac is also very cheap.  An old classmate of mine who works at an investment bank didn’t understand why I thought the Chinese RMB was undervalued and needed to continue appreciating. This simple analysis illustrates my reasoning.  Of course, you can’t just use a price index like this one alone.  Local costs are lower in China and other developing countries which explains part of the gap.  Still, the 40%+ seems a little extreme. Conclusion, RMB clearly undervalued.  Long RMB, Short Euro.
 

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