In this briefing:
- Real Numbers on China’s Real Estate
- Uncertain Global Economic Outlook Produces Corporate Profit Expectations of Varying Credibility
1. Real Numbers on China’s Real Estate
Discussing real estate in China offers important insight into China economy. There is a lot of granular data that when examined can give us a solid picture what of if going on China’s economy on a macro level. To that end today’s newsletter has more graphs than we typically include, but we wanted to really cohesively lay out the Chinese real estate market. Some graphs we have included with commentary, others without comment.
2. Uncertain Global Economic Outlook Produces Corporate Profit Expectations of Varying Credibility
Despite elevated uncertainty and lowered growth expectations for 2019, the International Monetary Fund (IMF) still expects continued global economic expansion, thereby potentially placing it at variance with the expectations embedded in financial markets.
The remaining efficacy of monetary policy in the Eurozone is being undermined by the conspicuous absence of an interest rate buffer that could ultimately be detrimental to any future attempts to support aggregate demand.
Meanwhile, the Bank of Japan will continue its ultra-accommodative policy stance due to downside risks to medium and long-term inflationary expectations, but low corporate profits growth expectations limit downside equity market risks.
Current expectations for corporate profits growth in the Eurozone and China require downgrading due to their respective economic outlooks, implying downward pressure on equity prices.
Crucially, US corporate profit expectations have been scaled back to match revenue expansion, thereby indicating that analysts have finally embraced a more realistic approach towards the future path of operating margins.
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