In today’s briefing:
- China Property: Policy Announcement Alert
- The Weekly Market Monitor – One Strike, Two Strikes, …
- Jackson Hole Nugget: Who cares about shelter? Powell does
- New Indicator Shows China’s Consumers Are Spending — on Services
- Portfolio Watch: Waiting for Godot, Powell and 7.30
- German Ifo Nugget: Any comfort in the detail?
- The Benefits of 30-Year Mortgages
China Property: Policy Announcement Alert
- A new policy easing focused on homebuyers was released, building on July announcements, and now an option for all cities
- More homebuyers will be able to get preferential terms for mortgages as first-time buyers
- A joint notice from the Ministry of Housing and Urban-Rural Development, the People’s Bank of China, and the State Administration of Financial Supervision
The Weekly Market Monitor – One Strike, Two Strikes, …
- We scrutinize market dynamics following the blowout earnings report of the world’s hottest stock, NVIDIA. Something definitely changed.
- Incoming PMI data from the Eurozone seriously questions the ‘soft landing narrative,’ which we think should force the end of the global central bank tightening cycle.
- China’s economic woes continue to grow, and the focus has now shifted to ending the stellar depreciation of the Yuan.
Jackson Hole Nugget: Who cares about shelter? Powell does
- Our short and sweet observations from the Jackson Hole opening remarks from Jay Powell.
- To us, hopes of an explicit pause have been postponed further down the road after this speech.
- A few highlights:1) Data dependency is still the name of the game – NO promises for further meetings, meaning that consensus does not exist 2) Shelter costs are highlighted, which to me can be seen as a sign that Powell needs an excuse to hike further 3) The Fed is attentive to the risk of the economy running above trend still and monitors the housing rebound closely 4) The lack of spill-overs from the slide in job openings to the unemployment rate puzzles the Fed and they want more data.
New Indicator Shows China’s Consumers Are Spending — on Services
- Amid the gloom of China’s economic slowdown, there are some bright spots. A new data series released by the National Bureau of Statistics (NBS) on Tuesday showed that in the first seven months of the year, consumer spending on services like education and leisure rose at almost triple the pace of overall retail sales.
- Retail sales of services jumped 20.3% year-on-year in the January to July period compared with 7.3% growth for overall retail sales, NBS data show.
- The bureau did not provide a monetary amount for retail sales of services and did not provide a breakdown of growth by month, but cumulative growth data will be published from now on, NBS spokesperson Fu Linghui said at a press briefing on Tuesday.
Portfolio Watch: Waiting for Godot, Powell and 7.30
- We have added a few Europe skeptical bets to our portfolio lately with short GBP/USD and EUR/KRW based on the logic that the Asian malaise will spill-over to Europe with a time lag of 2-3 months.
- After all, Europe is still the region (ex. Oceania) with the largest relative export-ties with China.
- The USD wrecking ball has mostly terrorized Asian FX so far, while European FX has remained more resilient. We see this as one of the best relative value trades in macro terms right now and find EUR/KRW shorts attractive accordingly.
German Ifo Nugget: Any comfort in the detail?
- Industrial production in Germany suffered greatly towards the end of Q1.
- Meanwhile, the unemployment rate is up >0.5% since the bottom in 2022.
- All things considered, we think it’s fair to say that Germany already is in some sort of recession – not a massive or deep one – but a recession.
The Benefits of 30-Year Mortgages
- UK House prices are back in the news because they have been coming under pressure.
- Unsurprisingly, that has sent the housebuilding stocks downwards, some more than 50%.
- That appears to be a painful correction, given how shallow this fall in house prices has been thus far.
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