DHUnplugged #664 – Ghost Economics

Economy on fire in the US - while China sinks to new lows. Housing market sentiment slows - hit by high mortgage rates. Big break for big insurers. The Closest to The Pin Winner! PLUS we are now on Spotify and Amazon Music/Podcasts! Click HERE for Show Notes and Links DHUnplugged is now streaming live - with listener chat. Click on link on the right sidebar. Love the Show? Then how about a Donation? Follow John C. Dvorak on Twitter Follow Andrew Horowitz on Twitter Warm Up - Musk/Zuck cage-fight news (AGAIN) - FITCH - at it again - M&A in Steel industry - China eco spooks markets (Ghost Economics hits) - Impact of Maui Fires - Focus on A Utility Company Market Update - Sentiment shifting - AI craze dulls some tech selling off - Housing index drops - (builder sentiment) - 7% mortgage rates hit hard - EV price wars - led by Elon (beat them and bury them) - Disinflation is slowing ( Confusing?) Inflation - PPI comes out hot - Concern rising that there is commodity inflation returning - Talk of one more hike this year then cuts mid-2024 (Goldman Sachs Update) - Meanwhile - rates movin' up 10's Moving Yield Curve - Getting Crazy! 2/10's Earnings Season - Almost ending - The blended year-over-year earnings decline for the second quarter is -5.2% today, compared to an earnings decline of -7.4% last week and an earnings decline of -7.0% at the end of the second quarter (June 30). - If -5.2% is the actual decline for the quarter, it will mark the largest year-over-year earnings decline reported by the index since Q3 2020 (-5.7%). It will also mark the third straight quarter in which the index has reported a year-over-year decrease in earnings. - Big mega-cap numbers helped over last week Fitch - Another Warning - Discussed the rationale with Moody's last week - A Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase. - Another one-notch downgrade of the industry's score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers Yen - Intervention - Yen hits 145 - level that has had BOJ intervention previously - Weakening due to easy monetary policy while everywhere else is tightening Yen Japan - 6% GDP (annualized) - expectations were for 3.1% - How do you keep rates at historic lows? China - Just bad news after bad news - So bad they announce a surprise rate cut last night - Discontinued reporting on unemployment of young people - (was record level of  21%+ last month) - Retail sales rose by 2.5% in July from a year ago, below expectations for a 4.5% increase, - Industrial production rose by 3.7% in July from a year ago, below the 4.4% increase analysts had expected - Fixed asset investment rose by 3.4% for the first seven months of the year from a year ago, below the 3.8% forecast - The urban unemployment rate ticked up to 5.3% in July from 5.2% in June More China - One of China’s largest private wealth managers has triggered fresh anxiety about the health of the country’s shadow banking industry after missing payments on multiple high-yield investment products. - Zhongzhi is among the biggest players in the country’s $2.9 trillion trust industry, which combines characteristics of commercial and investment banking, private equity and wealth management. - Firms in the sector pool savings from wealthy households and corporate clients to offer loans and invest in real estate, stocks, bonds and commodities. Russian Ruble Woes - Ruble hits 17 month low - discussion that this is because Russia losing the war? - Russia's central bank on Tuesday hiked interest rates by 350 basis points to 12% at an emergency meeting Cage Fight - Done - Zuck: "I think we can all agree Elon isn't serious and it's time to mo...