We're only 9 months away from a US election. Trump is the only likely candidate for the Republicans. Biden and Yellen's irresponsible fiscal spending has resulted in US$34T debt and an exploding budget deficit. And America needs a change.
Even hard men like Putin and Xi must be wondering what's in store, with a re-energised Trump.
The Russian initiative to finish the war in Ukraine with new territories for Russia, is timely because Putin won't want a war with someone as unpredictable as Trump.
Astonishingly Xi is in no condition to help Putin. He's far too busy putting out fires at home.
Deflation arrives in China.
China CPI / PPI January 2024
Here's why this is really bad for the second biggest economy in the world. From Investopedia
KEY TAKEAWAYS
The last point hits the nail on the head
Xi Set to Discuss China Stock Market With Financial Regulators [bloomberg]
Shanghai Composite Daily.
A good volume to inflows into Chinese markets helped stabilise them. Much of these flows will have come from publicly owned Chinese companies abroad, per the stabilisation fund message, and short covering in front of official intervention.
China is shut for a week as it's their New Year.
China’s Property Crisis Is Starting to Ripple Across the World [Bloomberg]
I'd almost forgotten about the Chinese real estate crisis. It's been eclipsed by their stock markets crashing and the deflationary spiral now taking place. But it's real estate that started it. And now we're seeing forced selling by Chinese owners globally.
Even though hot money is escaping from China and has powered insane US and Japanese stock markets moves, Chineses owners of commercial real estate abroad are being forced to take massive haircuts on their investments.
It's coinciding with the US CRE collapse and subsequent liquidity problems for US regional banks and non-bank lenders.
Yellen Eyes Nonbank Mortgage Lenders, Warns of Potential Failure [Bloomberg]
And the NYCB story continues as it gets sued by it's own shareholders and now downgraded to junk status by Moodys.
It's stock price may be still $5, down from $35, but those of us that have seen this movie before, know a forced takeover is on the way. It's bankrupt.
New York Community Bancorp is sued by shareholders as stock tumbles {Reuters]
Moody's cuts NYCB ratings to junk, warns of more downgrades [Reuters]
And here's another bank we've never heard of
Deutsche Pfandbriefbank AG
Deutsche Pfandbriefbank AG Share Price Daily
An office building just sold at a shocking 73% 'discount' to what it sold for just 2 yrs ago [X]
Following last week's suggestion by News Corp that Michelle Obama is being prepared to take over from Biden before the election in November:
Biden defends his mental acuity after damaging DoJ report [FT]
With a resurgent Trump, who wasn't on the ballet paper in Nevada, Republicans decided to vote for "None of the candidates on the ballet paper"
Amusing as this is, the world, as Christine Lagarde said, needs to Trump-proof its' economies.
Despite a strong rebound in German Factory Orders in December, strong deflationary forces prevail.
Particularly worrisome is a good, solid German trade balance but exports down 4% and imports down 6% month on month.
Retail sales and industrial production suggest EU economies are contracting sharply now.
German Trade Balance December 2023
EU PPI December 2023
EU Retail Sales Dec 2023
German Industrial Production December 2023
German Factory Orders December 2023
We started the week started with Jerome Powell on 60 Minutes.
Jay Powell says Fed expects to make three rate cuts this year [FT]
Unsurprisingly it's the same message that came from the FED presser a week ago. 3 rate cuts this year but not yet.
He also doubled down on the message to congress regarding unsustainable fiscal debt.
Surging stock markets and over a trillion dollars of US credit card debt suggest a bad ending is near. Stock markets are anticipating rate cuts which make running businesses easier. But the need to cut aggressively suggests something else entirely.
S&P 500 Daily
30-Year Government Bond Sees Solid Demand
This week the RBA kept rates unchanged
Points to mention
There's no strategy and an assumption of a perfect ending.