The challenge of high-quality growth in China
When China finally lifted Covid restrictions last year, policymakers and businesses hoped it would help lift the global economy out of its post-pandemic doldrums. But data released on Monday show that a hoped-for recovery in the world’s second-largest economy has yet to materialize, raising broader questions about global growth, and the implications for international business and China’s dealings with the outside world.
Gross domestic product grew by just 0.8 percent In the second quarter, compared to the first three months of the year, according to official statistics, as the decline in exports, weak consumer spending, and the faltering of the real estate sector hurt the economy.
Disappointing data hit commodities and equities this morning, with Brent crude dropping to a one-week low, and shares in China-dependent luxury groups LVMH and Richemont opening sharply lower. Soon after, Morgan Stanley and Citigroup Lower growth forecasts for the full year For China.
The real story behind the address numbers is found. Monday’s data reveals that trade last month saw its worst year-on-year decline since the start of the pandemic, in part because Western consumers cut back on buying as central banks raised interest rates. This has added pressure on manufacturers as companies look to shift their supply chains away from China amid geopolitical tensions and talk of “risk reduction”.
“If China can’t change its development model, it won’t change the constraints on the economy or living standards,” George Magnus, a fellow at the University of Oxford’s China Center and former chief economist at UBS, told DealBook. “The focus has shifted to the quality of growth rather than the quantity, but here also Xi Jinping’s China comes up very short.”
Will this make China more willing to deal with the West? Beijing is sending mixed messages. Senior officials have embarked on a witch-attack targeting international business leaders in recent months. But the Chinese state media last week Goldman Sachs criticized After the Wall Street Company recommended selling shares in local banks due to exposure to risks in the local economy.
What then? A group of 20 central bankers and finance ministers are This week’s meeting in India, with this data adding to their concerns about the state of the global economy. Some pessimists say the Chinese economy has done just that peaked A major slowdown is coming. However, Chinese policymakers often point out that it took about a year post-Covid for a recovery in the West to begin to show, so there is still a chance that things will turn around this year, Michael PettisProfessor of Finance at Peking University, for DealBook.
But, Mr. Pettis added, 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 story of China is over and it appears to be a more normal economy. Some sectors will do well, others will do awful.”
Here’s what happens
Russia withdraws from the Ukrainian grain export deal. Moscow’s move to suspend participation in the deal, which allows Ukrainian wheat to flow out of the country despite a wartime blockade, could roil global food prices again. Russia complained that the deal, which was due to expire on Monday, was too favorable for Kiev.
Microsoft agrees to a truce with Sony over its acquisition of Activision Blizzard. Microsoft agreed to keep Call of Duty Available on Sony PlayStation for 10 years After the US company finalized its $70 billion acquisition of Activision Blizzard, resolving one of the biggest disputes over the deal. It’s Microsoft’s latest victory, after a federal judge last week refused to delay its ability to complete the deal.
United Airlines reaches a $10 billion agreement with its pilots. The four-year agreement calls for Pilot salary increase Up to 40.2 percent over the term of the contract, plus improvements in work rules, job security, and more. It is the richest charter job ever in a US airline.
Teamsters boss asks President Biden not to interfere with UPS labor talks. Sean O’Brien, the union leader, said he asked the White House Stay out of her fight with the logistics giant after talks broke down this month. The current contract expires on July 31; Sticking points include proposed pay increases for part-time drivers.
The political donor dilemma for 2024
As the presidential race heats up, many wealthy Democrat supporters have expressed discontent with a lack of enthusiasm for President Biden. But the Biden campaign recently announced that it raised more than $72 million in the second quarter — far exceeding what Donald Trump and other Republican candidates have raised.
Democratic officials pointed to the news as a sign of the donor class joining the party. But some in politics are wondering if Biden has done so well only because there is no clear alternative to Trump yet to emerge.
Mr. Biden has received a lot of support from major donors. Ten gave $500,000 or more to the Biden Victory Fund, including Jeffrey Katzenberg, the Hollywood mogul and co-chair of his re-election campaign; Reed Hoffman, co-founder of LinkedIn; and Stuart Bynum, a hotel magnate. Other major recipients include Twilio founder John Wolthuis ($300,000) and OpenAI president Sam Altman ($200,000).
There are a few reasons for Mr. Biden to be concerned. Small donors—which are crucial to the campaign’s success, as larger donors can hit their giving limits fairly quickly—have fallen behind with their donations. and Senator Joe Manchin, the West Virginia Democrat who has clashed with Biden over climate policy, He heads to New Hampshire on Monday In a town hall organized by No Labels, a group scouting for a third-party presidential candidate.
Also, DealBook continues to hear concerns from wealthy potential donors about Biden’s lifespan and grumbling about his administration’s occasional cold shoulder toward Wall Street, which has been slow to support him in 2020 as well.
(Though financiers have expressed discontent with parts of Mr. Biden’s economic approach, including his adoption of tougher antitrust enforcement, they may be heartened by lower inflation and a reduced likelihood of a recession.)
Compare that to the Republican field:
It was painted by Florida Governor Ron DeSantis Heavyweight donor support Including financier Paul Tudor Jones, industrialist Dick Oehlin, and venture capitalist Joe Lonsdale.
Other Republican candidates who have their big supporters Among them are Vivek Ramaswamy (Bill Ackman, Glenn Dubin and Ed Hyman of Evercore ISI), Nikki Haley (Cliff Essence, Tim Draper), Chris Christie (Louis Eisenberg) and Senator Tim Scott (Larry Ellison).
But aside from Mr. DeSantis, who raised $20 million during the quarter, none came close to the $35 million Mr. Trump raised during that period; She also follows him closely in public opinion polls. Mr. DeSantis faces other issues: His campaign has moved to shed staff amid big spending, and many donors are already maxing out what they can give.
It is not clear where the donors will go. Rupert Murdoch privately told aides that he wished Glenn Youngkin of Virginia would run for Gov. Glenn Youngkin, despite Mr. Youngkin’s support for severe restrictions on abortion It may hurt his appeal among some major donors.
And while some moguls have flocked to Robert Kennedy Jr., who is challenging Mr. Biden for the Democratic nomination, his divisive views on vaccines and the coronavirus — most recently expressed in a bigoted, conspiracy-laden rant — may make him political kryptonite.
The increasing costs of severe weather
This summer’s weather is shaping up to be particularly dramatic, and sometimes deadly, with record temperatures and violent storms logging much of the planet. This can have devastating consequences for both people’s lives and livelihoods.
July has already set a world record for the hottest day on record. With no relief in sight. New heights can be reached at multiple points around the world, from ca to Phoenix south of Europe And beyond. Much of this has been attributed to the return of El Niño weather.
It’s not just excessive heat. A severe typhoon warning forced the Hong Kong stock exchange operator to do so I stop trading this morning. Heavy rains devastated the US Northeast again this weekend, as flash floods outside Philadelphia killed five people, and flight cancellations, power outages and flooded roads forced New Jersey to declare a state of emergency.
economists warn about the weather, Given that Small business hit 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 warned tourists not to. Avoid visiting hot places Like the Colosseum in Rome.
“The common theme across El Niño events is further inflationary pressures as a result of higher commodity prices,” Henry Allen, a strategist at Deutsche Bank, wrote in a note to investors last month. Rising food prices could make central bankers’ fight against inflation more difficult.
In other climate news: Hank Paulson, former Treasury Secretary, warned that efforts to combat climate change, including through increased use of solar and wind power, should not lead to what he called ” Global decline of biodiversity. “
Federal Reserve officials are going through a quiet period ahead of next week’s big rate-setting meeting, but there are plenty of other developments on the calendar. Here’s what to expect.
Tuesday: Bank of America, Morgan Stanley and Charles Schwab report their earnings. Also, retail sales data for the month of June is due out.
Wednesday: ASML, Goldman Sachs, Netflix, Tesla and United Airlines disclose results. Britain, which has been suffering from particularly high inflation, will release price data for June.
Thursday: American Airlines, Johnson & Johnson and Truist Financial, one of the regional lenders hit by the Silicon Valley bank meltdown, are all set to report earnings.
investors have Withdraw 717 million dollars Over the past year from a major index fund run by Cathy Wood, a financier whose focus on stock growth has sent her returns soaring — and then crater — in recent years. (Wall Street Journal)
Citadel, the financial giant run by Ken Griffin, wants it $10 trillion market crash trading in US corporate bonds. (foot)
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