Demographics is becoming a serious issue for US growth
As shown on the chart below, US population growth has collapsed, reaching levels near 0% indicating almost NO growth. This is actually the worst population growth setup seen in over 100 years of US history. Current levels have NEVER been seen in 100+ years. Even during the Great Depression, population growth bottomed out at around 0.5% Source: Game of trades
A very interesting chart highlighted by Tavi Costa
This is the largest number of workers on strike in the history of the data. As corporate profit margins remain comfortably above their typical averages, it leaves room to absorb increased labor costs. This could contribute significantly to inflation. Source: Tavi Costa
Morgan Stanley industrial team runs through their conclusions coming out of a choppy earnings season
A double-digit short-cycle slowdown is getting priced in, but ongoing inventory and incremental capex pressures are not. Source: MS, TME
For now, the monetary policy transmission route of tightening US financial conditions are NOT reaching the economy...
Indeed, an avalanche of US macro data on Thursday presented a positive blend of updates across growth (better), inflation (lower), and labor markets (looser/worse). - Economic Growth: Real GDP rose 4.9% in 3Q (consensus 4.5%) driven by strong demand across consumer and federal/state government, and inventories. However, a major contribution from inventories could in turn weigh significantly on growth in 4Q - Manufacturing: Orders for Durable and core capital goods also grew by more than expected... thanks to a massive surge in non-defense aircraft orders (so don't expect it to last). - Housing: Pending home sales rose 1.1% month over month in September, above expectations for a decline... but brace for October to be a bloodbath as mortgage rates re-accelerated. - Inflation: Core PCE prices component of the GDP report rose less than expected. - Labor: Initial and continuing jobless claims both increased by more than expected -- a positive for markets which are focused on labor market re-balancing (i.e., could benefit from less wage inflation).
Where do we stand in terms of percentile each year for the below aggregates in the US:
- US Government Debt to GDP = 98th percentile - SP500 Cyclically-adjusted-PE ratio = 99th percentile - US Consumer Price Index YoY change = 88th percentile Sounds like an interesting trifecta... Source: Crescat Capital
Italy budget deficit by Robin Brooks ->
Monthly data on Italy's fiscal balance are volatile, but the September 2023 budget deficit is the largest ever...
China shows signs of stabilization after a long period of slowdown and disappoitning data over the spring
China’s Q3 growth exceeds forecast, buoyed by consumer spending and industrial production. China posted 4.9% growth in the July to September quarter from a year earlier, stronger than the median forecast for 4.6%. Quarter on quarter, China’s GDP grew 1.3% in the third quarter, helped by a downward revision for Q2 from +0.8% to 0.5%.
Italy 10y risk spread over German 10y bunds back >200bps as budget day arrives
Italy PM Meloni to unveil tax-cutting 2024 budget today amid debt worries. Source: Bloomberg, HolgerZ
