Weekly Snack with Dave
FOLLOW THE LIQUIDITY SPIGOTS ON THE HIGH ROAD TO CHINA
China has bucked the global inflation trend due to soft domestic demand and government intervention to limit supply bottlenecks. That gives the People’s Bank of China the green light to loosen monetary policy further, in sharp contrast with advanced economies. In this report we assess what such monetary easing could look like and the implications for growth prospects and financial markets in the world’s second largest economy.
CURB YOUR ENTHUSIASM
The Conference Board’s version of consumer confidence dipped to 113.8 in January from 115.2 in December (it was sitting a lot prettier at 128.9 in mid-2021 as the dough was being doled out by Uncle Sam). And the key “expectations” component took a deep dive to 90.8 from 95.4 in December.
BANK OF CANADA WITH A DOVISH SURPRISE (SORT OF)!
The markets were caught off guard by the Bank’s decision not to hike rates, though less than half the economics consensus believed we would actually see a move. And the Bank kept the balance sheet unchanged and said at the end of its press statement that any QT will not come in advance of the interest rate policy tool being deployed. But make no mistake, the BoC does have its finger on the trigger.
领英推荐
MASSIVELY DISTORTED GDP REPORT
U.S. real GDP came in better than expected in Q4 at +6.9% annualized versus the +5.5% consensus expectation. More than 70% of the growth was from inventory accumulation and with demand cooling off, this will swing the other way this quarter. Not to mention that momentum through the current quarter has subsided so much that we have -3% SAAR built into consumer spending for Q1. A big hole.
DURABLES, LIKE GDP, WEAK BENEATH THE SURFACE
Durable goods orders fell 0.9% versus consensus views of -0.6% and the key core capex component (nondefense capital goods ex-aircraft) was flat — consensus here was looking for a +0.4% reading. While the core capex shipments were up 1.3%, remember that these are nominal figures and we know from the GDP data that business spending in real terms was very soft in Q4; and at best, very low single-digit growth in capex in volume terms is being “built in” to the current quarter.
These snippets are from Weekly Buffet with Dave, a Rosenberg Research publication that compiles the best articles of the week from Dave’s daily report, Breakfast with Dave. To access the full report, click here to sign up for a free trial.