China's property giant soars +83%

GRIT
06 Sep

Good Morning!

Good Morning Everyone! Today we’re talking: oil supply shock🛢️, the FED's GDP double-take for 2023 📈, and China's property giants going full meme stock 🚀.

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Let’s dive in!

SAUDIS SPARK OIL SQUEEZE

Source: Investopedia/U.S EIA

Oil shot up to $90/barrel as OPEC+ leaders, mainly Saudi Arabia and Russia, extended supply cuts. They're keeping 1 million fewer barrels per day on the market for another three months. This could nearly double the expected supply shortage for year-end according to the IEA.

Bad timing, too. Summer saw record global oil demand, driven by air travel and China's consumption. Meanwhile, U.S. oil reserves are at a 40-year low. Unlike last year, when the U.S. tapped reserves to offset Russia's Ukraine invasion, there's no quick fix this time.

GRIT TAKE: In 2008, oil soared to $140/barrel with U.S. reserves full and a financial crisis underway. Now? Low reserves, sky-high demand, and inflation haunting us. And guess what? Gas prices are climbing again. Now higher than at this time last year and the second-highest on record for this time of year going back to 1994. Upside? Potentially big. We're bullish on energy stocks.

CHINA’S EVERGRANDE SOARS +83%

Source: Bloomberg

Chinese builder’s surged nearly 10% as investors bet the government will step in to stabilize the heavily indebted sector. Evergrande, once China’s second largest property developer soared +83% - it’s biggest jump since 2009. This comes a day after Country Garden just dodged a default.

The rally? Probably a short squeeze, especially hitting smaller, volatile developers. But hang tight, more could be coming. China's Securities Times is urging the government to keep easing rules on buying property in less popular cities.

GRIT TAKE: Lately, China's been boosting its housing market—like it did in '08—by slashing down payments and dropping mortgage rates. We think more action's needed. Fingers crossed this isn't China's Lehman disaster. Our thoughts? Stay on the sidelines for now.

Track and offset your climate impact

FED’s BIG GDP DOUBLE UP

Source: Yahoo

Bloomberg's buzzing that the FED's set to double its 2023 GDP growth projection. Why? The economy's killing it—big spending, retail sales, factory action, and a hot housing market.

Just three months back, after two good GDP quarters (Q1: 1.8% and Q2: 2.5%), folks thought we'd hit a speed bump. Not anymore. The Atlanta FED's now eyeing a huge 5.6% Q3 growth, way up from the FED's old 1% call for 2023. Watch out for the FED’s new number at the Sept 19-20 meeting—bet it's going up.

GRIT TAKE: GRIT TAKE: Odds of a U.S. recession in the next year? Still 60%. Chance the FED hits pause on rate hikes this September? A whopping 90%. Don't get too comfy with the rosy economic numbers—they're old news. Rate hikes take time to kick in. Expect the market to tread water till we get the rate hike lowdown. Watch Canada today—they hit pause on rate hikes in January, then hit play in June when inflation spiked. Keep your eyes peeled! 🇨🇦👀

Coming Up Today…

Hitting the tape this morning: U.S. mortgage applications just tanked 2.9% to a 27-year low—good luck buying a house with 7% rates! On deck today: PMI, ISM, and the FED Beige Book. Stay tuned! 🚀

Headlines You Need To Know:

United Airlines lifts nationwide ground stop
Apple, Google, Nvidia are open to buying ARM shares
Bitcoin ETF Grayscale urges U.S. SEC to approve bitcoin ETF
Rate hikes curb output for at least a decade, SF Fed study says
FTC Antitrust suit against Amazon set for this month
North Korea finds new leverage in Ukraine war
Leader McConnell's health episode shows no signs of stroke
Facebook is getting rid of the news tab in Europe
IRS slows refund payments pandemic-era tax break
Proud boys leader sentenced to 22 years in prison for Jan. 6th
Biden tests negative for covid-19 following First Lady diagnosis
China launches $40 billion state fund for semi-conductors

Just for fun…

Michael Jordan scores BIG each year with Nike

Source: ESPN

Michael Jordan revolutionized the shoe industry in 1984 due to a royalty clause in his contract. He receives 5% of all Air Jordan sales from Nike. In 2022, it was reported that Air Jordan made Nike $5.1 billion. This means that Nike wrote Michael Jordan a $250+ million check in 2022.

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📱🤖 Welcome to the future where the power of AI becomes your personal wealth wizard, available 24/7. Hold onto your seats, because thrilling times are ahead, folks!

🗓️ Mark your calendars for a fun and insightful talk with Genevieve at the Money Show on Friday, September 8th, 10:30 AM ET.

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3 Most Important Charts Right Now

Monthly average performance of the S&P 500

September is the worst performing month of the year

Source: CFRA

Stocks and Bonds rising together

Stocks go up most years, but when they don’t? Bonds usually do.

Source: Josh Brown, Ben Carlson

Price-To-Rent Per Country

New Zealand and Canada have seen the highest increase since 2000.

Source: BCA Research

BaaS is about fintech, not fish. Having processed $1 billion+ in payments since 2018, Hank is helping businesses and consumers worry less about paying bills through an intelligent Baas platform.

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*This is PAID advertising content and the disclaimer at the bottom of this email MUST be read carefully.

TWEET OF THE DAY

We’re working on landing humans on Mars but we can’t refill U.S oil reserves?
It’s at the lowest level since the 1980s.
— Genevieve Roch-Decter, CFA (@GRDecter)
Sep 5, 2023

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