Macro Outside of the US, investors focus remains on changes taking place in the second largest economy. China has heavy debt burden while it’s population is shrinking and its productivity gains are slowing. Chinese cash reserves are expected to decline, as aging population will start spending their savings. Urbanization rate has slowed significantly, and the real estate market is in decline since last year (and for the first time since…
Macro US GDP seasonally adjusted growth was at 4.9% annualized in the July-through-September period; biggest gain since Q4 2021. This unexpectedly strong reading is supported by increases in inventories, exports and governemnt spending, but most importantly by increase in the consumer spending. Consumer’s went on the shoping spree in the last months of summer which had an outside impact, as consumer was responsible for about 68% of GDP in Q3.…
MACRO Investors observe generally weakening global economic backdrop. This is a reflection of the rapid tightening cycle, which continues despite the softening global growth. There are fiscal concerns around growing deficits and increasing debt servicing costs caused by the higher rates, as they may lead to the financial instability. Simultaneous quantitative tightening (QT) and increased issuance absorbs most of the available liquidity, and pushes funding costs higher which adds further…
MACRO On the inflation front, we see overall more downward pressures. Over many months increases in rents had a significantly impact on the core inflation, given it’s over 40% weights in the index and steady increase of its contribution since mid 2021. With recent stabilization of the US housing and rental market, there should be smoothing impact on the core inflation estimate. Also prices of core goods (ex food and…
Macro Equity and bond prices took a hit on Tuesday, after reporting hot JOLTS data (Job Openings and Labor Turnover Survey). Available positions rose to 9.6m from under 8.9m (revised) in July, with little change to hirings (5.9m) and quit rate (2.3%). The good news “ongoing strength in the US labor market” was interpreted as bad news for equities, because it increased odds that the FED will hike again. Some…
MACRO Economy remain resilient but majority of economists are expecting things to start turning over. Financial conditions index has declined significantly, driven by higher yields, stronger dollar and increase in oil and energy costs. Discomfort is mostly caused by rates being over 5% and lags in the economy to fully reflect their impact. In addition economists worry about weakening consumer with depleting savings and moving up delinquencies rates. They point…
