Past evidence suggests that this should be about it for the 10y in the case of a soft landing. But who knows, the Fed put is back ATM..

📉😬 Looks like China's M1 is waving a big red flag for a recession! If money's drying up, we might be in for a rollercoaster ride. Buckle up, folks! 🌍💸 #RecessionVibes #ChinaEconomy

Still seeing a lot of COPE on here about the Fed, so let's remind ourselves of the main takeaway from Jay Powell this week: "this is a commitment not to fall behind the curve". Until there is clear evidence to the contrary, that is bullish risk assets.

Summarizing the #DraghiReport as “Germany should pay for others” is absurd and ignores basic data. Germany would be a top beneficiary of the plan. Charts from my note earlier this week👇1/n

Unlike in the past, structural headwinds now affect Germany more than the EA 'periphery' because of Germany’s overexposure to manufacturing and exports. First, China turned from key export market into fierce industrial rival in the auto sector and across advanced industries. 2/n

Second, energy cost-competitiveness is now a major factor threatening the existence of a large share of the German manufacturing base – ~10% of Value Add and 8% of total employment, roughly equivalent to the car manufacturing sector. 3/n

Third, Germany needs strong EU demand more than ever, as US protectionism rises. Strong US demand after Covid has helped German exporters to partly pivot away from China. But US tariffs risk crushing German manufacturers in a deadly pincer movement. 4/n

Meanwhile, also to compensate for lost UK demand after Brexit, Germany has been fighting with CEE countries for market share in the EU, which remains its top export destination. Helping sustain investment and demand in the EU is in the interest of Germany itself. 5/n

Fourth, German demographic trends point to a faster decline in population by 2050 than for the EA average. Rapid demographic decline will compound the already big labour (largely skill) shortages. Investing to boost skill upgrades and revive productivity is key. 6/n

But financial benefits for Germany would also be TANGIBLE: The EU defence industry is largely Franco-German: new military procurement rules that favor EU suppliers and any new joint effort to coordinate and scale up investment would make money flow to German firms. 7/n

There is more: Germany is consistently the largest recipient of EU funds to research (Horizon Europe) and it’s the place where innovative research is most concentrated (e.g. AI patents). Scaling up investment in innovation would naturally benefit Germany and the EA 'core'. 8/n

Germany scores terribly on public investment. On average in 25 yrs public capex growth has been virtually ZERO, net of depreciation! Depleted transport infrastructure is a top reason for firms to hold back capex. Germany looks like should be a net RECIPIENT of EU transfers😉9/n

ECB, you're lucky to have another meeting soon! - PMIs miss across sectors (Olympics boom obliterated) - Layoffs accelerate (German services👀) - Output prices fall further - Fed cut 50 with 50+ to go by yearend - China slowdown intensifies Any idea what to do?😉

BROKEN CHINA. Today's stimulus will not be enough. Recession incoming Freya Beamish Rory Green with a high conviction call last week. "Alarm bells in China are ringing – This is the worst we've seen it for over 20 years." We project a nominal...

This is a tectonic shift, impacting many economies in Asia and Europe. The implications are way underreported. Ht GlobalData.TSLombard

BoE issues a (subtle) warning on private equity in the UK. These companies have a bigger economic footprint than many commentators realize, and they are more likely to default bankunderground.co.uk/2024/09/25/shi… via @boe_research