DEFAULT AVERTED
GRIT
05 Sep
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Good Morning!
Good Morning Everyone! We’re talking Chinese property giant dodging default, China's slowing race to beat U.S. GDP, Goldman's recession U-turn and McKinsey's $1.3T real estate ticking time bomb prediction. First time reading? Sign-up here.
Let’s get into it!
CHINA: DEFAULT AVERTED
Source: New York Times
Country Garden, one of China’s largest property developers, has avoided default by paying $22.5 million in interest on two bonds. This payment gives the struggling company a bit more time. They owe $187 billion and need to pay back $2 billion of it this year. Investors are skeptical about payback since the company's shares are trading like a penny stock and its debt sells for pennies on the dollar.
What isn’t helping is the slow growth in China. Their services sector posted the slowest growth this year in August. Their PMI dropped to 51.8 in August from 54.1. The number is still above 50, which means they're still growing, but barely.
GRIT TAKE: China's economy is hitting the brakes. Spending, borrowing, and investing are all down. So much in fact, Bloomberg now says China is no longer set to takeover the U.S as the world’s biggest economy anytime soon (not until 2040). With a record selloff in Chinese stocks by global funds. Stay away for now.
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GOLDMAN CUTS RECESSION ODDS
Source: Bloomberg
Goldman Sachs lowers U.S. recession odds to 15% from 20%, disagreeing with Bloomberg's 60% estimate. They think the FED won't need to raise rates as inflation cools. They base this on strong job markets boosting income in 2024 and disagree that monetary policy lags will cause a recession.
Goldman thinks the FED will only loosen conditions (cut rates) if growth slows more than they forecast. They expect “only very gradual cuts of 25-bps per quarter starting in Q2 2024.”
GRIT TAKE: U.S. consumers have nearly drained their pandemic savings (about 90%), and credit card debt is soaring (and interest on credit card debt is at a record high). Late payments on cars and credit cards are at a decade high, and buy-now-pay-later use jumped 40% early this year. Even Macy's reports rising card delinquencies. We're more bearish than Goldman on recession odds.
Stem Cell Sector Set to Reach New Heights
Sponsored By: Stemtech Corporation
Combating aging, increasing longevity and helping anyone find new sources of income are what Stemtech is all about.
It’s an innovative direct sales marketing company bringing science-based products to support the wellness of millions. With the Stem Cell Therapy market expected to hit $25.8 billion by 2027, Stemtech is leveraging its early leadership position as the pioneer of Stem Cell Nutrition, supported by a diversified portfolio of patented, all-natural, adult Stem Cell products.
With 1 in 6 people globally set to reach 60 or older by 2030, StemTech is on a mission to reverse the impacts of aging.
Unlock Aging. Click here to learn more!
*This is PAID advertising content and the disclaimer at the bottom of this email MUST be read carefully.
EMPTY SPACE: $1.3 TRILLION TIME BOMB
Source: Yahoo
One-third of global desks are empty. According to a new study by XY Sense, office use is just half of pre-COVID levels, with Asians and Europeans returning faster than Americans. Big firms like Google and Amazon push for office returns, claiming Zoom can't replace collaboration. Yet, 80% of office space is for solo work (individual desks), leaving just 20% for teamwork.
GRIT TAKE: McKinsey warns empty offices and hybrid work could slash $1.3T from big-city real estate by 2030. Despite the gloom, Bloomberg's Office Property Index is up 25% from its May low. Back then, the dividend yield spread (perceived risk measure) nearly hit post 2008 peak levels. Things are getting better, for now.
Coming Up This Week…
Get ready for a data party! This morning, we're unwrapping Factory and Durable Good Orders. Tomorrow, it's a triple treat with PMI, ISM data, and the FED Beige Book!
Headlines You Need To Know:
China is avoiding using ‘bazooka” to spur economy
Zelensky fires Ukraine Defense Minister
Delta is number one domestic airline
Putin and Kim Jung-Un plan to meet to discuss arms deal
Diamond prices are in free-fall in one key corner of the market
Jimmy Buffett built a massive business empire
Biden visits Florida to see Hurricane damage
Huawei’s new phone shows China chip breakthrough
Burning Man lifts lockdowns, says mass exodus is underway
Debt crisis threatens to engulf China’s developers
Mercedes and BMW want to take on Tesla.
Putin says he won’t renew the grain deal until demands are met
Just for fun…
Taylor Swift releasing a concert film of her New Era’s tour
Source: CNN
Taylor Swift is releasing a concert firm of her New Era’s tour that has brought in over $1 billion in revenue. The film will document her tour and the wild success that has come from this historic event. The movie will come out on Friday, October 13th on the same day as The Exorcist which has social media buzzing with the hashtag #ExorSwift. The film has already earned over $26 million in pre-sale tickets.
The Financial Ally You’ve Been Waiting For
Sponsored By: Hank Payments
It's not everyday you find a company helping consumers lead better financial lives while ensuring debt holders and bills get paid.
Having processed +$1 billion in payments since 2018, Hank is reducing financial worry with a scalable, high-margin platform and attacking a $5.6 billion opportunity. The company's solutions make it easy for consumers and businesses to manage cash flow predictably and stress-free.
Hank’s intelligent automation orchestrates the collection, storage, and payment of bills, so that payers reduce interest expense, and build equity faster. Managing bills sucks but Hank is the financial ally looking out for your cash flow.
Want to Meet Hank? Click here to learn more!
*This is PAID advertising content and the disclaimer at the bottom of this email MUST be read carefully.
3 Most Important Charts Right Now
US Home Prices Are on the Rise Again
After months of declining home prices, prices have started to increase again.
Source: RedFin
Total debt balances
The total United States debt balances have soared in recent years
Source: Insider, Madison Hoff, Federal Reserve Bank of New York
Homebuilder stocks vs S&P 500
Homebuilder stocks have performed well against the S&P 500 this year
Source: FactSet
TWEET OF THE DAY
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