China’s challenge to quality growth
When China finally lifted its COVID-19 restrictions last year, policymakers and businesses hoped it would help the global economy emerge from its post-pandemic slump. But data released on Monday showed the hoped-for recovery in the world’s second-largest economy has yet to materialize, citing global growth, the impact on international business and China’s external response. raises wide-ranging questions about
Gross domestic product grew by just 0.8% The second quarter was better than the first three months of the year as declining exports, weak consumer spending and a sluggish property sector hit the economy, according to official data.
This morning’s disappointing data hit commodities and stocks, with Brent oil dropping to a one-week low and shares of China-dependent luxury groups LVMH and Richemont starting sharply lower.Shortly after, Morgan Stanley and Citigroup Downgrade full-year growth forecast for China.
The real story lies beyond the headline numbers. Monday’s data showed the worst year-on-year decline in trade value since the start of the pandemic last month, partly as Western consumers cut back on purchases as the central bank raised interest rates. This has further increased the pressure on manufacturers as companies seek to move their supply chains out of China amid geopolitical tensions and talk of “risk aversion.”
George Magnus, associate professor at the University of Oxford China Center and former chief economist at UBS, told Dealbook: “If China fails to change its development model, the negative impact on the economy and living standards will remain the same.” rice field. “The focus has shifted to quality rather than quantity of growth, and here too Xi Jinping’s China is sorely lacking.”
Will this make China more willing to engage with the West? The Chinese government is sending mixed messages. In recent months, government officials have embarked on a charm offensive targeting international business leaders.But last week, Chinese state media said Blame Goldman Sachs After recommending that Wall Street firms sell their stakes in local banks, citing them as being at risk to the domestic economy.
what next? The central bank governors and finance ministers of 20 countries and regions meeting in India this week, the data further raised concerns about the state of the global economy. Some pessimists say China’s economy is in decline. peaked And a significant slowdown is approaching. But Chinese policymakers often point out that it took about a year after COVID-19 for the recovery in the West to begin to take hold, so things could still turn around this year. Michael PettisA finance professor at Peking University told DealBook.
But Pettis added that international investors need to look at China differently than they once did. “When China was growing at double-digit rates, even the poorer parts of the economy were growing,” he said. “Now the China story is over and it looks like a more normal economy.
what is going on here
Russia withdraws from Ukraine grain export deal. Russia’s move to withdraw from a deal that would allow Ukrainian wheat to flow out of the country despite the wartime blockade could again disrupt global food prices. Russia complained that the deal, which was due to expire on Monday, was too favorable for Kiev.
Microsoft has agreed to a ceasefire with Sony over its acquisition of Activision Blizzard. Microsoft agrees to keep Call of Duty alive Available for 10 years on Sony’s PlayStation After the US company completed its $70 billion acquisition of Activision Blizzard, resolving one of the biggest disputes surrounding the deal. It’s the latest win for Microsoft after a federal judge last week ruled out further delays in closing the deal.
United Airlines signs $10 billion deal with pilots. The four-year contract requires: pilot pay raise In addition to paying up to 40.2% of wages over the entire contract period, work rules and employment security will be improved. This is the richest collective bargaining agreement in American airline history.
Teamsters representatives urged President Biden not to intervene in UPS labor negotiations. Trade union leader Sean O’Brien said he had asked the White House to: stay away from the fight After talks broke down this month, negotiations with the logistics giant ended. His existing contract expires on July 31st. Problems include the proposal to raise the wages of part-time drivers.
Political Donor’s 2024 Dilemma
As the presidential race heats up, many well-heeled Democrats are frustrated by a lack of enthusiasm for President Biden. But the Biden campaign recently announced it raised more than $72 million in the second quarter, far more than Donald Trump and other Republican candidates have raised.
Democrats said the news was a sign that the party’s donor base was on board. But some in politics wonder if Mr. Biden did so well simply because no clear winner has yet emerged to replace Mr. Trump.
Biden had ample support from big donors. Ten people donated more than $500,000 to the Biden Victory Fund, including Hollywood mogul and re-election campaign co-chair Jeffrey Katzenberg. Reed Hoffman, LinkedIn co-founder. Hotel tycoon Stewart Bynum. Other major backers include Twilio co-founder John Wolfhuis ($300,000) and his OpenAI head Sam Altman ($200,000).
Biden has several reasons for concern. Small donors (considered critical to the success of the campaign, as large donors can hit the donation limit quickly) are late in donating. And West Virginia Democratic Senator Joe Manchin, who is at odds with Biden over climate change policy, said: Heading to New Hampshire on Monday For City Hall, sponsored by No Labels, a group seeking third-party presidential candidates.
DealBook also reported concerns from deep-pocketed potential donors about Biden’s age concerns and complaints about the administration’s occasional snubs on Wall Street, where Biden’s support was slow even in 2020. I still hear
(Financial players have been unhappy about some of Biden’s economic approaches, including allowing for increased antitrust enforcement, but receding inflation and a lower likelihood of a recession have encouraged them.) may be.)
Compare this to the Republican field.
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Painted by Florida Governor Ron DeSantis Support from leading donors These include investor Paul Tudor Jones, businessman Dick Ueline and venture capitalist Joe Lonsdale.
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Other Republican candidates their own great patron Vivek Ramaswamy (Bill Ackman, Glenn Dubin, Ed Hyman of Evercore ISI), Nikki Haley (Cliff Asnes, Tim Draper), Chris Christie (Lou Eisenberg), Senator Tim Scott (Larry Ellison) are included.
But apart from DeSantis, who raised $20 million during the quarter, no one came close to Trump’s $35 million in the same period. They are well behind him in the polls. DeSantis also faces another problem. His campaign is cutting staff against the backdrop of heavy spending, and many donors have already run out of money to donate.
It’s unclear where the other donors will go. Rupert Murdoch told people privately that Virginia Governor Glenn Youngkin supports him but wants him to run. strict restrictions on abortion His appeal among some large donors could be tarnished.
And while some moguls flock to Robert Kennedy Jr., who is challenging Biden as the Democratic nominee, his opinions on vaccines and coronavirus are polarizing, most recently with a rant full of bigoted conspiracy theories. has been expressed, potentially making him a political Kryptonist.
Increased costs due to extreme weather
With record temperatures and violent storms hitting much of the globe, this summer’s weather is becoming particularly dramatic and sometimes deadly. It can have equally dire consequences for people’s lives and livelihoods.
July has already set a record for the hottest day in world history. With no salvation in sight. New highs are likely to be reached at multiple points around the world. from california to phoenix southern europe from. Many of the causes are thought to be due to the recurrence of the El Niño phenomenon.
It’s not just excess heat. Severe typhoon warning prompts Hong Kong stock exchange operator stop trading this morning. Torrential rains continue to wreak havoc on the northeastern United States this weekend, with flash flooding outside Philadelphia killing five and forcing New Jersey to declare a state of emergency after canceled flights, power outages and flooded roads. .
Economists have warned about the weather, if that is so attack small businesses difficult. In tourism-dependent Italy, the country’s Health Minister Orazio Schillacci has warned Italians to stay indoors during the hottest hours of the day and also warned tourists to: Avoid visiting hotspots Like the Roman Colosseum.
“A common theme in El Niño events is increased inflationary pressure from higher commodity prices,” Deutsche Bank strategist Henry Allen said in an investor note last month. Rising food prices could make the fight against inflation even tougher for central bankers.
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In other climate news, former Treasury Secretary Hank Paulson warned that efforts to combat climate change, such as increased use of solar and wind power, should not lead to what he called a “recession.” . Global decline in biodiversity”
next week
Fed officials are in a period of silence ahead of next week’s big interest rate meeting, but there are plenty of other moves on the calendar. Here’s what you can expect:
Tuesday: Bank of America, Morgan Stanley and Charles Schwab report earnings. Retail sales data for June will also be released.
Wednesday: ASML, Goldman Sachs, Netflix, Tesla and United Airlines have disclosed results. Britain, which has suffered particularly high inflation, will release price data for June.
Thursday: American Airlines, Johnson & Johnson and Trust Financial, one of the regional financial institutions hit by the Silicon Valley bank failure, are set to report results.
speed reading
Information of sale
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the investor Withdrew $717 million Kathy Wood is an investor whose earnings have skyrocketed in recent years by focusing on growth stocks and then soared. (WSJ)
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Citadel, a giant financial company run by Ken Griffin, Destroy the $10 Trillion Market In trading US corporate bonds. (FT)
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