2023 Aug 21, News
China's smaller-than-expected rate cut again raises the question, is China unwilling or unable to provide more aggressive stimulus? In this case, authorities seem to be trying to protect bank margins instead of offering a more substantial monetary boost.
China urges Brics to become geopolitical rival to G7 - FT, With the upcoming BRICS summit in Johannesburg focusing on a significant expansion, Western media is speculating about the potential outcomes.
IRAN SAYS U.S DEPLOYMENT OF MORE TROOPS TO GULF IS PROVOCATIVE
UBS CUTS CHINA’S 2023 REAL GDP GROWTH FORECAST TO 4.8% FROM 5.2%
DOWNTURN IN GERMAN HOUSING CONSTRUCTION WORSENS IN JULY - IFO
British Foreign Secretary James Cleverly is due to visit China at the end of this month, two sources familiar with the matter said, a long-awaited trip seeking to stabilize a turbulent relationship that has sunk to its lowest point in decades.
IRAN SAYS NO PLANS FOR DIRECT TALKS WITH US
Australia and #China held an annual consular talk and discussed visa issues and crisis preparation. 🇨🇳🇦🇺
Germany where disinflationary forces are intensifying. Producer Prices drop for 1st time since 2020, a good leading indicator for Consumer Prices.
In July, producer prices (PPI) fell by 6.0% YoY, the biggest decline since Oct2009, when the financial crisis has caused prices to collapse. Last year, the prices received by manufacturers for their goods had at times risen at a record rate of 45.8%.
Main driver for this is the impact of energy prices which have gone down 19.3% YoY in July (and 2.5% MoM)
BUT: excluding energy, producer prices at up 2% YoY in July (down 0.4% MoM)
Where did prices continue to rise?
- food (9.2%), especially sugar, processed potatoes, pork, fruit and vegetables
- durable consumer goods (+5.8%) eg furniture, domestic appliances
- capital goods (+5.1%) driven by machinery, and motor vehicles, trailers and semi-trailers
UK HOMEBUILDER SHARES TUMBLE AFTER CREST NICHOLSON CUTS ANNUAL PROFIT OUTLOOK
China lodges complaint over criticisms of it at Camp David
Taiwan calls on Chinese mainland to engage in technical dialogue and resume mango sales as soon as possible.
China 5y Loan Prime Rate lags loan growth by ~3-6 months. That is, the adjustment of LPR reflects lending growth, rather than leading. It’s reactive, rather than proactive. And it’s not unusual that the PBOC adjusting MLF rate and LPR differently to reflect the underlying lending conditions.
As such, it’s not a complete surprise that today’s LPR is cut by 10bps a rather than 15bps. Given weak loan growth, 5bps probably won’t change the big picture. And we should expect rates to continue to come down.
What’s more important is to execute the policy of lowering rates on existing mortgages. It will reduce household burden and increase consumption. But it will also mean commercial banks interest margin will compress. Therefore, deposit rates will come down shortly, without much fanfare.
"GS Research's wage tracker has slowed from a peak of nearly 6% in 2022 to the 4.5 to 5% range now."
Japan to Increase Minimum Pay by Record as Inflation Takes Hold - Bloomberg
China's Shadow Bank Crisis Stokes Fear Of Housing Spillover
THAI Q2 GDP GROWS BELOW FORECAST AT 1.8%, OUTLOOK TRIMMED
This China news is a reminder that old-fashioned stimulus measures are not as obvious/easy a go-to for the government as they used to be. The country's growth challenge is much more complex and comes with debt problems that are becoming more systemic in nature. China needs to revamp its growth model and take a more holistic approach to its debt issues.
M&A
Boaz Weinstein bid over $12 per share for Sculptor (SCU), which already agreed to sell itself to Rithm Capital (RITM) for $11.14 per share in cash, according to The Wall Street Journal
U.K.'s CMA has cleared Broadcom's (AVGO) $69B deal to buy VMware (VMW)
Permian Resources (PR) agreed to acquire Earthstone Energy (ESTE) in a $4.5B all-stock transaction
Goldman Sachs (GS) is exploring the sale of its investment advisory business, FT reports
SentinelOne (S) is working with an investment bank to explore a possible sale, Reuters says
EARNINGS/GUIDANCE
Applied UV (AUVI) reported Q2 and reaffirmed its FY23 guidance
Mueller Water (MWA) reaffirmed its FY23 outlook
SAB Biotherapeutics (SABS) reported Q2 results, with CEO Eddie Sullivan commenting he is "pleased to share the significant progress achieved during the second quarter"
Smart Share Global (EM) reported Q2 EPS and revenue that were higher year-over-year
Greenland Technologies (GTEC) reported Q2 results, with CEO Raymond Wang commenting the results were "strong"
TSMC (TSM) maintained its guidance following "market speculation"
Palo Alto Networks (PANW) higher after reporting quarterly results
Stock News
American Airlines (AAL) pilots approved a new labor agreement [read more]
Wells Fargo (WFC) beat an investor lawsuit over alleged fake job interviews
Hawaiian Electric (HE) knew extreme weather was becoming a larger danger, but did little to strengthen its equipment and failed to adopt emergency plans
Amazon (AMZN) is restarting Amazon Shipping, WSJ reports
Pinterest (PINS) increases after approving Sibermann's transition to non-executive chair
Napco Security (NSSC) declines after announcing it will restate financials for its prior three quarters
Hecla Mining (HL) falls after providing an update on its Lucky Friday mine
Nikola (NKLA) lower after warning of "significant expenses" from a recall
Stocks recovered as a result of a huge tech surge, which outweighed worries over rising Treasury yields just a few days before a speech by Federal Reserve Chair Jerome Powell.
After its longest stretch of weekly losses since February, the S&P 500 increased. The Nasdaq 100 gained almost 1.5% as Tesla ended a six-day losing streak. Nvidia increased by more than 8%, contributing to the artificial intelligence craze that has powered this year's stock market advance. According to information gathered by the newswires, the chipmaker's revenue is expected to increase 65% from a year ago as it prepares to release its results on Wednesday.
Bonds started to decline again as wagers on still-high rates gained support from positive economic indicators. For the first time since 2009, the yield on 10-year inflation-protected Treasuries momentarily surpassed 2%. The yield on 10-year notes without that protection quickly rose to a level last seen in late 2007.
𝗗𝗢𝗪𝗡𝗧𝗨𝗥𝗡 𝗜𝗡 𝗚𝗘𝗥𝗠𝗔𝗡 𝗛𝗢𝗨𝗦𝗜𝗡𝗚 𝗖𝗢𝗡𝗦𝗧𝗥𝗨𝗖𝗧𝗜𝗢𝗡 𝗪𝗢𝗥𝗦𝗘𝗡𝗦 𝗜𝗡 𝗝𝗨𝗟𝗬 - 𝗜𝗙𝗢
Australia's economy is projected to grow more slowly over the next 40 years as an aging population and slower population growth shrink the workforce, according to long-range economic forecasts set to be published by the government on Thursday.
MICRON - UNITS SUBMITTED FULL APPLICATIONS TO U.S. DEPT OF COMMERCE'S CPO IN RESPONSE TO NOTICE OF FUNDING OPPORTUNITY FOR SEMICONDUCTOR MANUFACTURING
US housing affordability is worse today than the peak of the last housing bubble. The median American household would need to spend 43% of their income to afford the median priced home.
𝗦𝗛𝗜𝗣𝗣𝗘𝗥𝗦 𝗕𝗘𝗧 𝗢𝗡 𝗚𝗥𝗘𝗘𝗡 𝗠𝗘𝗧𝗛𝗔𝗡𝗢𝗟 𝗧𝗢 𝗖𝗨𝗧 𝗘𝗠𝗜𝗦𝗦𝗜𝗢𝗡𝗦, 𝗦𝗨𝗣𝗣𝗟𝗬 𝗟𝗔𝗚𝗦
MS: "China's debt challenge is facing renewed scrutiny from investors"
YouTube starts Music AI incubator with Universal Music as partner
YouTube is launching an incubator to work with artistes and musicians to explore the use of artificial intelligence in music, according to its blogpost on Monday.
The Alphabet unit has signed up Universal Music as its first partner for the Incubator, and will work with artistes including Anitta, ABBA's Björn Ulvaeus, and Max Ricther.
"The incubator will help inform YouTube's approach as we work with some of music's most innovative artists, songwriters, and producers across the industry," YouTube CEO Neal Mohan said in the blog.
The group "will help gather insights on generative AI experiments and research that are being developed at YouTube," said Mohan, adding that YouTube would bring on board more partners.
Generative AI is artificial intelligence capable of generating text, images, sounds and other data.
With the launch of ChatGPT late last year, the technology has been adopted in a range of industries and use-cases even as lawmakers deliberate rules that prevent its misuse including copyright infringement and spam.
YouTube said it will further invest in AI-powered technology, including evolving its copyright management tool, Content ID, to protect viewers and creators.
US 10-YEAR TREASURY YIELD RISES TO 4.34%, THE HIGHEST SINCE 2007.
US urges its citizens to depart Belarus immediately. *
AI-GENERATED ART CANNOT RECEIVE COPYRIGHTS, US COURT SAYS
Missed Car Payments A Menacing Sign for New Car Market
Severe delinquency for auto loans, based on seasonalized rates, is at the highest since at least 2006, and the trend could be an ominous sign. With the average price of a new General Motors vehicle at $52,000 and new car loans with an interest rate of 9.5%, many consumers are struggling to keep up with their payments, The Wall Street Journal reports. The squeeze faced by borrowers might soon ratchet tighter, with a payment holiday for student loans set to expire at the end of the month. According to credit-reporting agency TransUnion, more than a third of consumers with student loans took on new auto loans during the pandemic. The trend may also mean a slow down in auto sales, particularly among the pricey vehicles that have been generating most of the industry's profits.
JPMorgan's analysts added that the fundamental conditions in the Japanese economy had been improving since the last time the MoF intervened to lift the yen last year. "Intervention needed is not as acute as in the September and October intervention cases," they said.
Some China Cities Owe 1b-2b Yuan Each to Developers: Economic Observer
Semiconductor inventories are still near record highs.
Container shipping market still challenged:
"high inventory levels built over 2021 & 2022 & continued concerns over economic growth have caused importers to be cautious & limit any meaningful renewal of inventory...destocking seems to have been prolonged into 2024" - $ZIM CFO
BRAZIL PULPMAKER KLABIN WILL RAISE PULP PRICES TO CHINA BY $20/T, WHILE IN EUROPE AND AMERICAS IT WILL RAISE BY $50/T, STARTING IN SEPTEMBER
SOFTBANK'S ARM HOLDINGS FILES FOR IPO