### Summary
The upcoming Jackson Hole Symposium is expected to deliver a hawkish but cautious message from the Fed chair, with a focus on the strong US economy, resilient US consumer, and persistent inflation.
### Facts
- 📉 Last year, the markets experienced a major selloff following the Fed chair's unexpectedly hawkish speech at Jackson Hole.
- 💪 This year, the markets are pessimistic due to the strong US economic numbers, including a predicted 5.8% growth for Q3.
- 🎙️ The Fed chair will likely discuss the possibility of a November rate hike but may roil the markets if he mentions further rate hikes.
- 🌐 The slowdown of China's economy is a concern as it is the second-largest economy globally, and reduced outlooks for Chinese GDP are being reported by major institutions.
- 💼 China's high levels of local government debt and shadow banking pose a risk of contagion, with real estate and shadow bank crises being the main focus.
- 📉 A selloff in China could lead to an emerging market selloff, but India may experience a heavier selloff due to the significant amount of money investors have made there.
- 🌍 The opaque nature of China's government and lack of data make it challenging to fully understand the depth of the country's economic issues.
### Summary
The Chinese economy has slipped into deflationary mode, with retail sales, industrial production, and exports all missing forecasts. Shrinking domestic demand and a debt-fueled housing crisis are the main causes behind this slowdown.
### Facts
- 📉 Retail sales in July grew by 2.5% year-on-year, compared to 3.1% in June.
- 🏭 Value-added industrial output expanded by 3.7% y-o-y, slowing from 4.4% growth in June.
- 📉 China's exports fell by 14.5% in July compared to the previous year, and imports dropped 12.4%.
- 💼 Overall unemployment rate rose to 5.3% in July, with youth unemployment at a record 21.3% in June.
- 📉 Consumer Price Index-based inflation dropped to (-)0.3%, indicating a deflationary situation.
- 🏢 China's debt is estimated at 282% of GDP, higher than that of the US.
### Causes of the slowdown
- The debt-fueled housing sector collapse, which contributes to 30% of China's GDP.
- Stringent zero-Covid strategy and lockdown measures that stifled the domestic economy and disrupted global supply chains.
- Geopolitical tensions and crackdowns on the tech sector, resulting in revenue losses and job cuts.
### Reaction of global markets
- The S&P 500 fell 1.2% following the grim Chinese data.
- US Treasury Secretary warns China's slowing economy is a risk factor for the US economy.
- Japanese stocks and the Indian Nifty were also impacted.
- China's central bank cut its benchmark lending rate, but investors were hoping for more significant stimulus measures.
### Global market concerns
- China's struggle to achieve the 5% growth target may impact global demand.
- China is the world's largest manufacturing economy and consumer of key commodities.
- A slowdown in China could affect global growth, with the IMF's forecast of 35% growth contribution by China seeming unlikely.
### Impact on India
- India's aim to compete with China in the global supply chain could benefit if Chinese exports decline.
- However, if China cuts back on commodity production due to slowing domestic demand, it may push commodity prices higher.
### Summary
The global economy is showing signs of decoupling, with the US economy remaining strong and China's economy disappointing at the margin. The recent data suggests that the US economy is resilient, with consumption and other indicators pointing in a positive direction. However, there are concerns about the bear steepening of the US curve and the repricing of the long end of the curve. In contrast, China's economy continues to struggle, with weak data and monetary policy easing. Japan has surprised with positive data, but there are questions about whether the current inflation shift will lead to tighter monetary policy. Overall, there are concerns about a potential global economic recession and its impact on various economies.
### Facts
- 💰 Despite the decoupling of the US and China economies, concerns remain about the negative impact of a China slowdown on global growth.
- 💹 Recent data show that the US economy, particularly consumption, remains resilient.
- 🔒 The bear steepening of the US curve and the repricing of the long end of the curve are causing concerns.
- 🇨🇳 In China, weak data on consumption and investment and declining house prices continue to affect the economy. The PBoC has eased monetary policy.
- 🇯🇵 Japan's 2Q data surprised with strong export growth, but there are concerns about the impact of a potential inflation shift on global yields.
- 🌍 The global economy is at risk of recession, with concerns about the impact on emerging market economies and the US economy.
### Summary
Investors will be watching Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium for clues on the economic outlook and future interest rate hikes. China's property crisis and its impact on the economy, PMI data from the Eurozone and UK, and oil prices will also be key factors to watch.
### Facts
- 🔍 Investors will be looking to Fed Chair Jerome Powell's speech at Jackson Hole for insight into the economic outlook and the future path of interest rates.
- 💹 Markets will be focused on Powell's speech and earnings from chip designer Nvidia to gauge the interest rate outlook and market sentiment.
- 🇨🇳 Expectations are rising for China to cut the loan prime rate amid concerns of a deepening crisis in the country's property sector.
- 📊 PMI data from the Eurozone and UK will offer insights into potential interest rate hikes by the European Central Bank and the Bank of England.
- ⛽️ Oil prices declined last week due to concerns over global demand and the worsening property crisis in China.
Note: The use of emojis has been replaced with corresponding keywords.
### Summary
Oil prices rose in Asian trade, unfazed by China's disappointing interest rate cut, as the prospect of tighter supplies supported the outlook.
### Facts
- 💰 Oil prices rose in Asian trade, shrugging off China's interest rate cut.
- 🛢️ Concerns over slowing demand in China and rising US interest rates had driven steep losses in crude prices.
- 📉 China cut its one-year loan prime rate by 10 basis points to 3.45%, disappointing market forecasts for a larger cut.
- 🏢 Lack of changes in the mortgage rate raised concerns over a worsening real estate crisis in China.
- 🌍 Deep production cuts from Saudi Arabia and Russia are expected to limit crude supplies by nearly 70 million barrels over 45 days.
- 🇺🇸 Robust fuel consumption in the US, particularly during the summer season, pointed to tighter markets.
- 📈 Analysts expect oil prices to remain relatively higher for the rest of the year, despite the prospect of higher interest rates affecting US demand.
### Summary
The People's Bank of China is expected to cut interest rates, but may need to take a larger action to calm the uncertainty in the market. Other factors like the US Federal Reserve's Jackson Hole Symposium and the BRICS summit will also impact investor sentiment.
### Facts
- 💰 The People's Bank of China is expected to cut interest rates to soothe market concerns.
- 💼 Bank of Korea and Bank Indonesia are expected to keep interest rates on hold this week.
- 🌍 The US Federal Reserve's Jackson Hole Symposium and the BRICS summit will affect investor thinking.
- 📉 Chinese policymakers' conservative nature may result in more aggressive moves in the interest rate cut.
- 🔒 The currency is already weak and vulnerable, posing a risk to further cuts.
- 📉 Economists are lowering Chinese GDP growth forecasts, doubting the country will achieve its 2023 goal.
- 🏘️ The real estate crisis and the scale of indebtedness raise questions about the stability of the shadow banking system.
- 🔧 Beijing is taking steps to boost confidence, but measures seem insufficient.
- 📉 Chinese blue chip stocks have decreased by 6% in the last two weeks.
- 🌐 Global markets are facing a deteriorating backdrop, with the dollar surging, US Treasury yields rising, and stock markets experiencing instability.
- 🗓️ Key developments on Monday include China's interest rate decision, Thailand's Q2 GDP, and Hong Kong's July inflation.
Foreign banks are lowering their China forecasts due to signs of distress in the property sector, with missed payments by developer Country Garden and trust company Zhongzhi Group contributing to rising concerns.
China's economy is facing a downward spiral due to a crisis in the debt-laden property sector, prompting seven city banks to reduce their growth forecasts for the country; concerns include falling into deflation, high unemployment rates, and the need for more proactive government support.
China's economic slowdown, marked by falling consumer prices, a deepening real estate crisis, and a slump in exports, has alarmed international leaders and investors, causing Hong Kong's Hang Seng Index to fall into a bear market and prompting major investment banks to downgrade their growth forecasts for China below 5%.
Weak manufacturing data in major economies led to a decrease in oil prices, despite a larger-than-expected drop in U.S. crude stocks, while market focus is on Federal Reserve Chair Jerome Powell's speech on interest rate outlook, and Iran's oil output is predicted to increase despite U.S. sanctions.
China's unexpected economic slowdown, driven by excessive investment in the property sector and local government spending, is leading experts to question whether a collapse is imminent, although they believe a sudden collapse is unlikely due to China's controlled financial system; however, the slowdown will have implications for global growth and emerging markets, particularly if the U.S. enters a recession next year.
China's economic slowdown is causing alarm across the world, as it is expected to have a negative impact on global economic growth, leading to reduced imports and trade, falling commodity prices, a deflationary effect on global goods prices, and a decline in tourism and luxury spending.
Forecasters have decreased their growth expectations for China due to deflation, rising youth unemployment, and a property-market crisis, with GDP predicted to rise by only 5.1% in 2023 and 4.5% in 2024.
China's economy will struggle with low growth under 5% through 2024, leading to a "structural hard landing" due to tight monetary policy, disappointing economic reopening, and challenges in real estate and stock markets, according to TS Lombard strategists.
The prospect of a prolonged economic slump in China poses a serious threat to global growth, potentially changing fundamental aspects of the global economy, affecting debt markets and supply chains, and impacting emerging markets and the United States.
U.S. stock futures decline as concerns over China's economy and rising bond yields weigh on global sentiment and equities.
Forecasts for China's economic growth in 2023 and 2024 have been cut, potentially hindering the country's goal of becoming a "medium-developed country" by 2035 and surpassing the US as the world's No.1 economy.
China's economy is showing signs of slowing down, including a decrease in GDP growth rate, declining exports, deflationary consumer price index, high youth unemployment, a weakening yuan, and a decrease in new loans, which could have global implications.
China's economic growth has slowed but has not collapsed, and while there are concerns about financial risks and a potential property crisis, there are also bright spots such as the growth of the new energy and technology sectors that could boost the economy.
Analysts have lowered their short-term forecasts for the Canadian dollar due to China's weakening economy and the widening yield gap between the US and Canada, but still project the currency to strengthen in the long term.
China's property shares are declining and tech shares are underperforming, leading to a slide in the Asian market, while the European market waits for monetary policy decisions from the ECB and the Bank of England.
Several international financial institutions have lowered their growth forecasts for China's economy below the government's target due to weak exports and a property crisis, posing a challenge despite Beijing's optimistic rhetoric.
China's economy is expected to grow less than previously anticipated due to struggles in the property market, leading economists to predict further downgrades and posing risks to both the domestic and global economy.
China's economic model is in decline and will have a significant impact on global markets, according to veteran investor David Roche, who predicts long-term struggles for manufacturing-based economies and warns of potential social unrest and geopolitical problems.
The OECD forecasts that a stronger U.S. economy will help offset the global slowdown this year, but a weakening Chinese economy will have a bigger impact next year.
The Asian Development Bank has lowered its growth forecast for developing Asia due to high interest rates and the property crisis in China, posing risks to the region's economies.
The outlook of U.S. companies on China's markets in the next five years has hit a record low due to factors such as political tensions, tariffs, slow Covid recovery, and issues in the real estate market; however, complete decoupling between the two economies is unlikely.
The Organisation for Economic Cooperation and Development (OECD) has lowered its forecast for global economic growth in 2024 to 2.7%, while predicting inflation to remain above central bank targets despite interest rate hikes; fears of a slowdown in China and reduced growth in the US contribute to the pessimistic outlook.
China's economy is on the brink of a potential "apocalyptic" collapse that could have disastrous effects on global stock markets, as the country's economic indicators continue to plummet and financial experts warn of an imminent crash.
The World Bank has lowered its growth forecast for developing East Asia and the Pacific, citing a sluggish China, dampened trade, and high debt levels as factors contributing to the downgrade.
Summary: The U.S. stock market had a bad quarter, with all indexes falling, while the World Bank lowered its growth forecast for developing economies in East Asia and the Pacific, and China's demand for commodities continues to grow despite the downgrade. Additionally, a last-minute spending bill was passed to avoid a government shutdown, and this week's focus will be on the labor market.
China's growth is expected to slow down in 2024, with the World Bank attributing the gloomy outlook to a slowdown in China, weak indicators, stagnant house prices, increased household debt, and trade tensions with the US.
The World Bank predicts a growth rate of 5.1% for China's economy this year, but has downgraded its growth forecast for 2024 due to China's faltering post-COVID bounce, elevated debt, weakness in the property sector, and structural factors.
The US economy is predicted to slow down by mid next year, which will have a negative impact on global GDP, according to Neelkanth Mishra, Chief Economist for Axis Bank. Mishra also mentioned that China will grow slowly but not collapse, while India will be affected through various pathways such as a decline in services growth, goods demand, dumping of products, and financial market volatility. However, he believes that India's trajectory looks good in the next 5-7 years.
Germany has revised its economic forecast for 2023, projecting a 0.4% decline in GDP due to the energy price crisis, inflation concerns, and weakening global economic partners, such as China.
China's economic growth forecast for next year has been downgraded by the World Bank due to persistent difficulties such as elevated debt, property weakness, and an aging population.
Chinese GDP growth beats forecasts at 4.9% in Q3, retail sales and industrial output for September also surpass expectations, but concerns over widening conflict in the Middle East and the Gaza hospital blast overshadow positive economic data.
The IMF downgraded its growth forecasts for China, citing a weakening property sector and expects China's GDP to decline by as much as 1.6% relative to the baseline by 2025, while world GDP would decline by 0.6%.
Investors remain pessimistic about the Chinese economy as China-exposed stocks continue to decline, despite signs of improvement.
China's economic growth forecast for next year has been downgraded by the World Bank due to the ongoing slowdown in the country's real estate market, which is expected to put pressure on global growth.
The consensus world economic and market view for 2024 suggests weaker growth and a possible U.S. recession, leading to a strong bond rally; however, recent economic indicators from the United States and China point to the possibility of a different outcome with revving up economies and accelerating momentum.
World shares and oil prices are declining ahead of an update on the US economy, with high interest rates taking a toll on stocks and the housing market, and uncertainty over the economic outlook impacting global markets.
