Symax Fintech Daily Insights 08.08.23

China’s exports fell for a third straight month in July thanks to weaker global demand, while imports plunged 12.4%. The data point to a sluggish economic recovery. Investors will be looking for more announcements of government stimulus, though that may have to wait until tomorrow’s CPI and PPI data to confirm the deflationary trend. BB

The BOE warned that prices in UK supermarkets may never fall back from their painfully high levels. “Substantial” declines on global food markets may only slow the pace of increases in grocery bills, rather than lead to an outright drop, Chief Economist Huw Pill said. Meanwhile, retail sales rose 1.5% year on year in July, according to BRC and KPMG. BB

JPMorgan’s Marko Kolanovic said the idea of an economic soft landing is far-fetched and maintained his recommendation to avoid stocks. The strategist said multiples look too high and that central banks are unlikely to ease in the near-term. He reiterated his bank’s call to stay underweight on equities and credit, and overweight cash and commodities. BB

Giorgia Meloni’s cabinet approved a surprise tax on banks’ “extra profits” this year to fund tax cuts and support for first-time mortgage borrowers. The levy, which Ansa said could bring in over €2 billion, was slipped into a package of other measures including the grant of additional taxi licenses. BB

Apple has begun testing its highest-end next-generation laptop processor, setting the stage for the release of its most powerful MacBook Pro ever next year. The new M3 Max chip includes 16 main processing cores and 40 graphics cores, according to test logs from a third-party app developer. The processor is at the heart of a high-end MacBook Pro expected to debut next year. The M3 chip marks the first time Apple is shifting to a 3-nanometer production process, which promises to provide better battery life and strong performance gains. The tests come just weeks ahead of the iPhone 15 release.  BB

When China abandoned pandemic restrictions after three years of stringent controls, some economists predicted rapid price gains. Instead, the country is experiencing a rare period of falling prices, in clear contrast to places like the US and other major economies which have been hit with rocketing inflation. Unlike the temporary decline in late 2020 and early 2021, the drop in consumer prices this time around is more cause for concern. People not spending could force businesses to cut prices, eating into revenue and profits and prompting them to curb investment and jobs. Here’s a look at how China’s economists and policymakers are at loggerheads over whether the country needs more stimulus to recover. BB

The downgrade of America’s credit rating by Fitch, which sought to justify the move in part by warning of Washington dysfunction, may end up causing a lot more of it. Fitch concluded that the consequences of gridlock, like the catastrophic default almost triggered by Republicans earlier this year, are further tarnishing America’s economic standing. Now, fresh fiscal brinkmanship is brewing among GOP members that threatens to do more damage. Congress left for an extended August recess without resolving conflicts over spending and social issues, raising the risk of a government shutdown when federal funding runs out after Sept. 30. Fitch’s rating determination has emboldened Republicans to try and demand fresh spending cuts as their price for avoiding a shutdown. One problem, however, is that the Fed will be making a key interest-rate decision in September, and the increased likelihood of a lengthy shutdown could upset its bid for a soft landing. Such a standoff “could make it even more difficult for the Fed,” says Gennadiy Goldberg, senior U.S. rate strategist at TD Securities. “It could lead to the Fed potentially missing a fall pivot point.” —David E. Rovella BB

Banks seeking to sell commercial-property loans are encountering a dried-up market with few options for an easy exit. Lenders including Goldman Sachs and JPMorgan have been trying to sell debt backed by offices, hotels and even apartments in recent months, but many are finding that tidying up loan books is no easy feat when concerns about commercial real estate have surged. BB