In today’s briefing:
- CX Daily: New Battle Lines Emerge in China’s Shifting NEV Market
- A Tale of Two Systems
- EA: Inflation Impulses Diverge in Aug-22
- UK: Post-Prime Retail Sags
CX Daily: New Battle Lines Emerge in China’s Shifting NEV Market
NEVs / In Depth: New battle lines emerge in China’s shifting NEV market.
Foreign affairs / Xi and Putin vow to have each other’s back.
Drought / Central China’s Hunan province faces severe drought.
A Tale of Two Systems
- Central to Market Thinking is the notion that there are Three Tribes at work in markets – the short term leveraged traders, the medium term asset allocators and risk managers and the long term investors.
- Sometimes they all move in harmony, making for powerful momentum markets, but more often they move in some form of discord.
- Understanding which of the tribes is driving markets at any time is thus central to Market Thinking.
EA: Inflation Impulses Diverge in Aug-22
- EA HICP inflation was revised up by 6bps in the final print for Aug-22, although that was masked in the rounding at 9.14%, unlike the surprise HICPxT rise to 9.3%.
- Underlying inflationary impulses diverged in August as France surged ahead of slowing Germany. Meanwhile, Italy picked up, and Spain eased.
- Fiscal support should help truncate the upside in EA inflation, allowing base effects to work through. Still, the ECB hawkishly faces a worryingly resilient core pressure.
UK: Post-Prime Retail Sags
- Payback was brutal in August after retail sales relied on Amazon Prime Day sales for buoyancy in July. All the main sectors fell m-o-m for the first time since Jul-21.
- The underlying trend decline remains intact and has now broadly reversed the rotation from covid, but with sales volumes still collapsing at about a 5% annualised pace.
- High inflation and rates are continuing to crush real incomes and sales volumes. More forceful rate hikes risk driving a recession as bleak as consumers already feel.
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