PPCC - Pisitófilos Creditófagos - HoT SuMMeR 2021

[sudden and sharp]

Y aquí no hay Brexit... hum...

Largest US Food Distributor Having Trouble Keeping Shelves Stocked; Price Shock Imminent
https://www.zerohedge.com/markets/largest-us-food-distributor-having-trouble-keeping-shelves-stocked-price-shock-imminent

 

[Derby]

https://www.standard.co.uk/news/uk/cooperative-group-subway-times-brexit-road-b952255.html

Food shortages at worse level than I have ever seen, says Co-op boss

Co-operative Group chief executive Steve Murrells said the retailer has significantly reduced its range of some products.

[Derby]

https://www.reuters.com/article/china-stocks-midday/hong-kong-china-stocks-fall-on-tech-retreat-evergrande-profit-warning-idUSL1N2PX09D

Hong Kong, China stocks fall on tech retreat, Evergrande profit warning

SHANGHAI, Aug 26 (Reuters) - Hong Kong and China stocks pulled back on Thursday as a sharp rally in tech shares petered out, and China Evergrande Group’s profit warning knocked down property developers and banks, which are heavily exposed to the sector.(...)

https://finance.yahoo.com/news/evergrande-ev-unit-loses-80-040432063.html

Evergrande EV Unit Loses $80 Billion in World’s Worst Stock Rout



(Bloomberg) -- Shares of China Evergrande Group’s electric vehicle unit are collapsing in Hong Kong, wiping about $80 billion from what was the property developer’s most valuable listed asset.

China Evergrande New Energy Vehicle Group Ltd. sank as much as 22% Thursday after its parent said the unit will post a net loss of 4.8 billion yuan ($740 million) for the first half. The EV business was worth about $87 billion at its April 16 peak, more than Ford Motor Co. and almost four times more valuable than China Evergrande itself at the time. Its shares are now down 92% since, the worst performance in the Bloomberg World Index and lagging even China’s tutoring stocks.

Evergrande’s subsidiaries are being punished on concern the world’s most indebted developer will need to sell assets at a steep discount amid mounting pressure from Beijing. Shares of listed businesses -- including the 65% stake it owns in Evergrande NEV -- are the most liquid if Evergrande needs to generate cash quickly. Evergrande in May raised $1.4 billion from the unit in a heavily-discounted share sale.

Evergrande said earlier this month it was in talks with “several independent third-party investors” to sell stakes in the electric vehicle and property services subsidiaries. It’s selling a Hong Kong development project at a loss, people familiar with the matter said this week.

More than 66 million China Evergrande NEV shares had changed hands as of 11:46 a.m. on Thursday, about five times this year’s average for a full day.

[Derby]

Más sobre la "common prosperity"

https://www.reuters.com/world/china/chinas-push-common-prosperity-does-not-mean-killing-rich-official-2021-08-26/

China's push for common prosperity does not mean 'killing the rich' - official

BEIJING, Aug 26 (Reuters) - China's push for "common prosperity", as President Xi Jinping aims to decrease inequality in the world's second-largest economy, does not mean "killing the rich to help the poor", a ruling Communist Party official said on Thursday.

China must also "guard against falling into the trap of welfarism", Han Wenxiu, an official at the central financial and economic affairs commission, said at a briefing in Beijing.

Those who "get rich first" should help those behind, but hard work should be encouraged, he said.

"We cannot wait for help, rely on others for help, or beg for help. We cannot support layabouts."

China has said it will protect legal income but "rationally adjust excessively high" incomes, according to a meeting chaired by President Xi earlier this month. High income groups and firms are also being encouraged to contribute more to society.

Charitable giving should be incentivized through taxation policy and can improve the "distribution structure", Han said. Donations are "not compulsory", he added.

The policy shift comes amid rising scrutiny and regulatory crackdowns directed toward big business, particularly China's giant tech firms.(...)

[el malo]

Más sobre la "common prosperity"

https://www.reuters.com/world/china/chinas-push-common-prosperity-does-not-mean-killing-rich-official-2021-08-26/

China's push for common prosperity does not mean 'killing the rich' - official

BEIJING, Aug 26 (Reuters) - China's push for "common prosperity", as President Xi Jinping aims to decrease inequality in the world's second-largest economy, does not mean "killing the rich to help the poor", a ruling Communist Party official said on Thursday.

China must also "guard against falling into the trap of welfarism", Han Wenxiu, an official at the central financial and economic affairs commission, said at a briefing in Beijing.

Those who "get rich first" should help those behind, but hard work should be encouraged, he said.

"We cannot wait for help, rely on others for help, or beg for help. We cannot support layabouts."

China has said it will protect legal income but "rationally adjust excessively high" incomes, according to a meeting chaired by President Xi earlier this month. High income groups and firms are also being encouraged to contribute more to society.

Charitable giving should be incentivized through taxation policy and can improve the "distribution structure", Han said. Donations are "not compulsory", he added.

The policy shift comes amid rising scrutiny and regulatory crackdowns directed toward big business, particularly China's giant tech firms.(...)

China se ha dado cuenta de que no tiene sentido tener a un Bezos con una fortuna capaz de comprarse países enteros, mientras tiene que dar subsidios a la clase obrera para poder pagar un alquiler.

Si hace 5 años me hubieran contado que China iba a dar lecciones de capitalismo al mundo..

[Yupi_Punto]

No soy muy dado al salseo inmobiliario, pero esta noticia me ha llamado fuertemente la atención:

Gracias a su perro logró comprar la casa que quería: la polémica práctica para adquirir una propiedad en EEUU
https://es.finance.yahoo.com/noticias/pueden-las-cartas-personales-de-los-compradores-inmobiliarios-perpetuar-el-racismo-un-estado-cree-que-si-075405616.html
[...]
Oregón es el primer estado en prohibir esta práctica. A partir de enero, los agentes de bienes raíces deben rechazar cualquier comunicación que revele la raza, color, religión, género, orientación sexual, nacionalidad, estado civil o estado familiar del comprador, de acuerdo con la nueva ley.

“No coartamos la libertad de expresión oral o escrita. Limitamos la transmisión de mensajes que no son relevantes y que potencialmente podrían violar la ley de vivienda justa”, dijo a USA TODAY el representante demócrata Mark Meek, el legislador de Oregón que patrocinó la legislación.

Si bien la mayoría de las personas están familiarizadas con prácticas racistas como el redlining, las cláusulas restrictivas y los préstamos abusivos, las cartas personales y las fotos que las acompañan son “el nuevo recurso mezquino del sector inmobiliario”, dijo Meek.
[...]

Desconocía por completo esta práctica, y jamás he visto por España nada parecido...

Yo lo descubrí en esta película, sorprendente:

https://www.tomatazos.com/peliculas/43206/Memorias-de-Manhattan

[Spheratu]

Si hace 5 años me hubieran contado que China iba a dar lecciones de capitalismo al mundo..

No son lecciones de capitalismo, son lecciones de sentido comun.
Es como decir....me gusta el vino, por lo tanto me voy a beber una botella al dia. Por que? por que me gusta y por que puedo. Pero oiga, dice el del fondo, su higado va a explotar, a lo que yo contesto, ya solucionaremos ese problema cuando se presente, y si hay que transplantar el higado, pues lo transplanto. Pero el vino no se toca.
Y entonces llegan en china y dicen, sabes que? que mejor una copita de vez en cuando, y asi nos evitamos disgustos.
Puro sentido comun.
Lo que me jode profundamente es que en occidente no haya nadie con un minimo atisbo de ese sentido. Es lamentable. Y asi vamos a acabar, con cirrosis cronica y un pie en la tumba.

[newclo]

Buenos días

Evergrande... ay ay ay


Y China con sus lecciones de cómo controlar al monstruo

https://www.zerohedge.com/commodities/biden-withdraw-allows-taliban-secure-worlds-largest-lithium-deposits

https://serenitymarkets.com/todos-los-comentarios/macro/el-presidente-chino-xi-y-el-presidente-ruso-putin-intercambian-opiniones-sobre-afganistan-medios-de-comunicacion-estatales/

[newclo]

[ Modo: divango ON
Me ha dado por pensar... o me ha dado una insolación peroooo ¿y si uno de los movimientos de China fuera forzar "inflación" para obligar a una subida de tipos que ahogue a su hiperendeudado oponente ? con su bloqueo de materias primas, puertos, producciones...
Bueno, quizá no tiene mucho sentido, entre otras cosa porque no le interesa ahogarle del todo y porque ya ha demostrado que les puede ahogar de nuevo cuando quiera.

Me parecen más acertadas mis pesquisas sobre lo de controlar sus burbujas, que esta otra idea feliz de la inflación

Tenemos muy pocas piezas del puzzle como para intentar saber de qué va la cosa

Vuelvo a lo mío

HoLd
Modo: divagando OFF]

[Derby]

https://www.tibetanjournal.com/china-is-putting-increasing-pressure-on-german-exporters-in-their-own-market/

China is putting increasing pressure on German exporters in their own market.

(...) According to a report by the Cologne Institute for Economic Research, German exporters are facing rising competition in their own market from Chinese shipments to the EU. Chinese exports to the region are increasingly complex industrial goods, such as machinery, pharmaceuticals, and automobiles, which were formerly thought to be the territory of German manufacturers.

According to the survey, the share of such products in all EU imports from China increased from 50.7 percent in 2000 to 68.2 percent in 2019. The analysis was published in Germany’s Welt am Sonntag newspaper. The figures serve as a sobering reminder to German lawmakers and businesses, who are already grappling with rising doubts about the country’s long-term economic viability. The legendary German automobile industry is grappling with the end of combustion engines and competition from Tesla, its tech industry is lagging behind European rivals, and manufacturers are concerned about the expense of the energy revolution.

At the same time, according to some commentators, China is increasingly looking to Germany’s economic model as a blueprint for future success. Beijing’s “Made in China 2025” program was inspired by Germany’s Industry 4.0 strategy, which focuses on growing manufacturing in tech areas. The latest regulatory crackdown in China has drawn comparisons to Europe’s largest economy. Others argue that China’s success in replicating Germany’s economic model will be hampered by the country’s unstable policy environment.

[Derby]

https://www.elconfidencial.com/economia/2021-08-26/crisis-empresas-insolvencia_3251078/

La crisis deja a una de cada cuatro empresas en situación de insolvencia
La economía remonta, pero muchas empresas se quedarán en el camino antes de alcanzar la playa. El Banco de España estima que el 25% de las empresas están en situación de insolvencia

Tras el derrumbe de la economía en 2020 (-10,8%) toca hacer cuentas. (...)

https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/21/Fich/do2119.pdf

[Derby]

https://www.reuters.com/business/energy/nord-stream-2-difficult-birth-russias-gas-link-germany-2021-05-20/

Nord Stream 2: the difficult birth of Russia's gas link to Germany

Aug 25 (Reuters) - As the Nord Stream 2 gas pipeline nears completion, a German court has ruled that is not exempt from European Union rules requiring the owners of pipelines to be different from the suppliers of the gas that flows in them to ensure fair competition.

[Derby]

https://www.theguardian.com/business/2021/aug/26/uk-economic-recovery-shows-signs-of-stalling-due-to-worker-shortage

UK recovery begins to falter amid shortage of workers and supplies

Guardian analysis suggests double whammy of Covid and Brexit causing more than supply chain disruption

[Derby]

https://www.thelykeion.com/on-inflation-vs-deflation/

On Inflation vs. Deflation

If you believe in inflation or deflation, chances are, you're somehow right. For now. But we need to dive deep to figure out what the future holds for this 'debate of our time'

(...) Dr. Lacy Hunt (EVP at Hoisington), one of the most prominent and well-respected deflationists out there, believes that after a few inflationary bumps ahead, we’ll likely be back to the disinflationary environment we’ve been in for the past 50 years.

Before moving on, let’s clear up a common misconception about money:

*The Fed does not actually print money; they create reserves, called deposits, for commercial banks to lend against (that brrr meme needs to die before it kills Jeff Snider).

*New money is created when commercial banks make loans to households and corporations. The Fed can pump up the balance sheets of commercial banks with as many deposits as they want, but that’s not new money (you can read about the effects these deposits are having on the Reverse Repo market here).

*So, if banks don’t lend against those deposits, no new money is created. Just because the Fed’s balance sheet is going up, it does NOT mean new money is being created. That’s only an expression of the potential for new money.

The Loan-to-Deposit ratio (chart below), which simply measures the number of loans made to the private sector vs. deposits on commercial banks’ balance sheets, is at an almost all-time low – i.e. banks are not lending because risk premiums (explained below) to lend to private sector borrowers are too high.

This broadly means that the risk-reward tradeoff is simply not enticing enough for banks to lend.



Economics 101 tells us that % Change in Gross Domestic Product = Velocity x Money.

This means that the growth of an economy can be expressed by the amount of money in circulation, and how quickly that money moves between the hands of users of that money.

Velocity of Money is down because new lending to the private sector by commercial banks has slowed as debt levels have reached a point where the risk premium to lend makes them (banks) unable to do so.

Here’s the risk premium phenomenon, explained by Hoisington, “In highly indebted economies, additional debt triggers the law of diminishing returns. This fact is confirmed when the marginal revenue product of debt (MRP) falls, where MRP is the amount of GDP created by an additional dollar of debt”.

Therefore, too much debt = higher risk premium to lend = less lending = lower velocity = lower GDP growth.





The conclusion drawn here is that the banking system is functionally unable to assist the Fed in its mandates of economic growth and inflation unless banks are willing to lend. But banks are unwilling to lend as the risk of lending to consumers right now is too high given that there is too much debt out there.

One more thought on debt from Hoisington:

“The benefit of the debt financed fiscal operation goes away under the weight of the debt. First, there is the evidence of diminished returns, which is derived from the overuse of a factor of production, which is the same as saying the government debt financed multiplier is negative.

In other words, one dollar of government debt financed operations, at the end of the day, will reduce GDP by more than a dollar, therefore, the economy is worse off. Increasing deficits in an overindebted economy slows growth after a brief transitory acceleration”. 

Trading short-term gains for long-term losses.

The Takeaways:

1. “Monetary and fiscal actions are largely impotent in stimulating economic activity due to the massive debt overhang in the US and most major foreign economic powers.

2. While taking on more debt does produce a fleeting benefit for economic growth, such actions embroil the economies deeper in a debt trap.

3. Central Bank tools have the capability of restraining economic activity, as was illustrated by tightening actions from 2016 – 2018.

4. Fiscal restraint would temporarily diminish economic growth, but if it could be sustained, the debt overhang could be worked off and in time the economy would recover. (However, in a democracy it is highly unlikely that a program of fiscal austerity would even be proposed and if taken, surely not sustained)”

It boils down to this - the US, along with most of the developed world, is mired in a debt trap, where more and more debt is required to stimulate less and less growth, and the correlations support the thesis that lower growth and therefore lower treasury yields remain the base case for how the future may look after a short burst of inflation indicators. (...)

Summary

* Commercial bank lending is the key metric for long-term, sustained inflation to take place.
If banks do begin lending again at a higher than historical pace, then even the traditional deflationists will likely shift their stance.

* Current inflation is primarily driven by supply-side (cost) pressures from COVID, which will likely subside, but the timeframe is unknown.

* Cost inflation on inelastic goods (i.e., food) and wages, should be watched very closely. As Lyn Alden said, when places like Chipotle raise food prices by 4% to overcome the increased cost of their supplies, those prices aren’t likely ever coming down again.

[Cadavre Exquis]

Me he tropezado con este hilo en Twitter que refleja lo absurdo del momento actual en lo que a "hactivos" y "mercaos" se refiere (la gráfica está en escala logarítmica):

https://twitter.com/muneeb/status/1430739307254398980

Y en el segundo tweet el autor del hilo menciona como fuente la web:

https://inflationchart.com/

Curioseando entre las páginas más populares (haciendo scroll hasta casi el final panel de la derecha) me he tropezado con esta gráfica que compara los ingresos medios en USA con el valor medio de los inmuebles entre 1984 y 2020, en ella se aprecia perfectamente como empezó a formarse la burbuja hacia el 1999 y como estalló en 2006 y como en 2020 la re-burbuja deja a la burbuja anterior en una nimiedad.

https://inflationchart.com/income-in-home/?show_adjuster=1

Saludos.