FX Empire (October 26)
The IMF’s latest forecast counteracted any hope attached to China’s stimulus policy. “Markets reacted positively” when the People’s Bank of China “cut 1-year and 5-year loan prime rates (LPR) by 25 basis points” since “lower borrowing costs could drive credit demand and consumption.” In contrast, “the IMF’s latest growth projections… called for caution,” with 2024 growth forecast for China lowered from 5.0% to 4.8%.” Moreover, the IMF pointed out that “Beijing’s maneuvers may not be enough to support an economic recovery.”
Tags: 25 bp, Borrowing costs, Caution, China, Consumption, Credit demand, Economic recovery, Forecast, Growth projections, IMF, Markets, PBOC, Rates, Reacted, Stimulus
South China Morning Post (October 6)
Amid prospects of a stimulus led recovery, China’s travel industry is facing a “reality check” as it confronts what many claim is the “‘worst ever” season. China’s travel data may paint “an optimistic picture,” but consumers “are reluctant to spend amid broader economic anxieties.” Operators are “lamenting” the “Golden Week” season with some travel businesses actually “faring worse than during the darkest days of the coronavirus pandemic.”
Tags: China, Confronts, Economic anxieties, Golden Week, Operators, Prospects, Reality check, Recovery, Spend, Stimulus, Travel industry, Worst ever
Wall Street Journal (September 29)
Hedge fund veteran Mark Spitznagel “previously said markets would rally as the Fed eases in a Goldilocks phase, but has also warned a recession is coming and that rate cuts are also the opening signal for big reversals down the line. In the current environment, that means in the biggest market bubble in history will soon pop, eventually prompting the Fed to ‘do something heroic’ but doom the economy to stagflation.”
Tags: China, Consuming, Deflationary hole, Long term, Short run, State support, Stimulus
Reuters (September 28)
“Treasury yields and the dollar fell while the Dow registered a record closing high on Friday as a subdued U.S. inflation report lifted expectations of an outsized interest rate cut at the Federal Reserve’s November policy meeting.” On top of that, “a global stock index also reached a record high, helped by China’s stimulus boost, and European shares posted an all-time high close.”
Tags: China, Dollar, Dow, Europe, Expectations, Fed, Global stock, High, Index, Inflation, Interest rate, Policy meeting, Record, Stimulus, U.S., Yields
Financial Times (September 27)
China’s biggest stimulus package since the pandemic has “supercharged markets, putting Chinese stocks on track for their best week since 2008.” The massive package boasts “billions of dollars from the central bank to support the stock market, policy rate cuts, measures to boost bank liquidity and efforts to stabilise China’s prolonged property crisis, including a 50-basis point interest rate cut for mortgage holders.” Nevertheless, it may not be enough “to reignite consumer confidence in the world’s second-largest economy.”
Tags: 2008, Central bank, China, Markets, Mortgage, Pandemic, Property crisis, Rate cuts, Stimulus, Stock market, Stocks, Supercharged
Bloomberg (September 15)
“China’s economy picked up steam in August as a summer travel boom and a heftier stimulus push boosted consumer spending and factory output, adding to nascent signs of stabilization…. Optimism is slowly building among some investors that Beijing’s recent efforts to boost the economy and financial markets are starting to bear fruit. Even so, it’s early days — and a single month of data isn’t enough to confirm a sustained recovery trajectory.”
Tags: August, China, Consumer spending, Economy, Factory output, Investors, Nascent, Optimism, Stabilization, Stimulus, Travel boom
Irish Times (September 10)
Some are hoping government stimulus will jumpstart the Chinese economy. “The more likely scenario is continued weak growth.” What remains to be seen is “is how quickly the government will shift away from stimulus measures to a faster fundamental overhaul of its growth strategy.” China needs to tackle “more persistent and structural growth challenges,” which have resulted from “an economic strategy that has historically over-relied on real estate, high local debt, inefficient state-owned enterprises, lower-end manufacturing, and domestic consumer internet platforms.”
Tags: Challenges, China, Economy, Government, Growth strategy, Inefficient, Jumpstart, Manufacturing, Overhaul, Persistent, Real estate, State-owned enterprises, Stimulus, Structural, Weak
Reuters (November 11)
“Signs of weakness are emerging” across the Chinese economy where “exports fell; inflation slowed; new bank lending tumbled…. Despite the authorities bucking the global trend… and deploying monetary and fiscal easing this year.” The “unexpectedly weak run of Chinese economic data” raises “the heat on policymakers to deliver more stimulus measures, but it also shows the limited effect more monetary easing and infrastructure spending can have.”
Tags: Bank lending, Economy, Emerging, Exports, Fiscal, Global trend, Inflation, Infrastructure spending, Limited effect, Monetary easing, Signs, Stimulus, Tumbled, Weak, Weakness
American Banker (June 21)
“The Federal Deposit Insurance Corp. plans to hike deposit insurance assessment rates next year — a move that would increase costs for banks as they continue to see high deposit growth more than a year after the last round of pandemic stimulus.” On Tuesday, “the FDIC voted to issue a notice of proposed rulemaking that would raise deposit insurance assessment rates by 2 basis points for all insured depository institutions.”
Tags: Assessment rates, Banks, Costs, Deposit growth, Depository institutions, FDIC, Increase, Insurance, Pandemic, Rulemaking, Stimulus
New York Times (November 4)
Fed Chairman Jerome Powell announced a tapering of stimulus programs, but he did not “lay the groundwork for higher rates.” That doesn’t mean “the era of near-zero rates will last anything close to as long as it did after the global financial crisis,” but if the current inflation surge “proves something other than temporary, Mr. Powell’s decision to stick to his guns” on interest rates “will loom as a missed moment to join other English-speaking countries in using monetary policy to try to stamp it out.”
Tags: Fed, Global financial crisis, Inflation, Interest, Monetary policy, Near-zero, Powell, Rates, Stimulus, Surge, Tapering
