After all the bad news on China I reported on Monday (and I was not alone), yesterday the Chinese stock market was on an upsurge. Bloomberg figures this is the result of a perception among investors there that the government is back to intervening to support stocks. Others expect another renminbi (people’s currency) devaluation.

This is not what Bernie Saunders means by Democratic Socialism. It is neither socialist (because what stock markets have little importance for socialism) nor democratic (because the market-propping is being done by and for an elite.)

It is only a short hop from socialism to the elite. Yesterday the IPO for Ferrari was priced. Trading will begin Weds. (Today) Our Canada reporter writes:

“My teenager has a friend whose dad makes money selling doubtful ipo’s. He got himself a Ferrari but then couldn’t drive it because like most n. Americans he learned to drive only automatic transmission cars. So he got Ferrari to put in an automatic transmission – which somehow defeats the purpose.”

The ipo price will be on the high side, around $53/share, putting the price of a round lot at $5300, not exactly for the common man. Moreover, the price-earnings ratio is pushing toward 40 times. But since only about 10% of the stock is being floated, the share will have a rarity value like the cars.

For a mere euros 1 mn, you can purchase a Formula 1 car with a hybrid gasoline-electric engine. There is a waiting list of about 2 years and it may not continue to meet US regulations. Only if the Italian firm sells fewer than 10,000 cars here annually, can it escape US fuel-economy rules. Again something for the elite. Better than a Tesla!

Ferrari is a big spender on research & development which accounts for over 20% of revenue spend.

Here is a solution for those stricken with love for Ferrari: buy a watch or sunglasses. Something like 17% of Ferrari’s sales do not come from full-size cars at all, but from model cars for spoiled children, sunglasses, posters, hip flasks for drunk drivers, and other paraphernalia in bright red with the prancing horse on it.

*More on Ferrari. We stand to own ~80% of whatever the racing car ipo total valuation will be when trading starts, because that is the remaining stock of RACE in the coffers of Fiat Chrysler (FCAU). This we own thanks to Guy Spier of Aquamarine Fund who talked me into buying FCAU.

The shares will be spun off to Fiat owners next year, including us. If the scarcity rule holds, the stock should pop once public trading starts tomorrow.

FCAU is not itself a winning racing car. Apart from its United Auto Workers woes, it is also a target for excessive tax avoidance in the European Union, thanks to its incorporation in Luxembourg. The EU competition commissioner, Margrete Vestager, is seeking to craft a precedent for a tax crackdown by targeting FCAU and Starbucks for using tax havens.