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Christophe Barraud🛢🐳 Profile picture
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Aug 25 • 8 tweets • 3 min read
🇺🇸 #JacksonHole | Since July #Fed meeting, data point to GDP weakness, housing recession, inflation peak but also lower unemployment rate

1/ GDP: Towards downward revisions
*GDP fell for a 2nd straight quarter in 2Q
*Aug. Composite PMI crashed to 45, lowest since May 2020 ⚠
*Atlanta Fed expects 3Q GDP to be close to 1.5% in 3Q
*Taking into account these figures, it seems that 4Q21/4Q22 GDP growth will be close to 0%
*In June, Fed expected 1.7% growth so there could be a significant downward revision in Sep.
2/ Housing: a key downside risk to GDP projections
*Refinancing index hit the lowest since 2001
*Existing and new home sales fell by >20% YoY
*Inventory rebounded (especially for new home sales)
*Homebuilder sentiment turned negative in August
*Builder cancellation rates have doubled since April
*30-year mortgage rates remained well above 5%
*Prices fell for the first time in many years
3/ Inflation: Peak is behind us

*July CPI (unrounded) turned negative on a MoM basis, surprising downward for the first time since Aug. 2021 report
*Proxies suggest that Aug. CPI could contract again on a MoM basis
*Given that all private data suggest that market rents’ growth (YoY) already reached a top, CPI’s shelter inflation (YoY) should follow soon, particularly in a context where housing prices started retracing.
*Add that most recent data show that suppliers’ delivery time shrank in the U.S. while global supply chain disruptions eased.
*In this context, inflation projections could be also revised downward.
4/ Unemployment rate kept dropping

*In July, UR surprised downward, hitting 3.5%. Employment figures (lagging indicators) have remained robust since last #Fed meeting.
*A downward adjustment of Fed 2022 projections can’t be excluded but it will mainly depend on Aug. report.

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More from @C_Barraud

Christophe Barraud🛢🐳 Profile picture
May 29
🇨🇳 #China | #Shanghai Unveils Fresh Policies to Support Economy Hit by Covid - Shanghai municipal government
*50 measures in eight categories aimed at stabilizing the city’s economy.
*Link (Chinese): shanghai.gov.cn/nw12344/202205…
🇨🇳 #CHINA | *#SHANGHAI TO REMOVE 'WHITELIST' REQUIREMENT FOR COS. FROM JUNE - BBG
*SHANGHAI TO ADD 40,000 PASSENGER CAR PLATES THIS YEAR
*SHANGHAI TO CUT PURCHASE TAX FOR SOME PASSENGER CARS
*SHANGHAI SUPPORTS COUPON ISSUANCE TO BOOST CONSUMPTION
🇨🇳 #CHINA | *SHANGHAI TO LAUNCH NEW BATCH OF HOUSING PROJECTS - BBG
*SHANGHAI TO IMPROVE HOUSING MARKET POLICY, SUPPORT HOUSING NEEDS
*SHANGHAI TO PROPERLY INCREASE CONSTRUCTION LANDS FOR 2022
Read 5 tweets
Christophe Barraud🛢🐳 Profile picture
Apr 22
🇺🇸 #Fed (1) | As I expected ⬇, the Fed is on track to tighten its policy quickly and strongly for economic and political reasons.
christophe-barraud.com/why-is-the-fed…
🇺🇸 #Fed (2) | On the economic front, Inflation is well above target and the risk of a wage/price spiral for low-income families has become real.
🇺🇸 #Fed (3) | Given that the labor market also looks tighter than indicated by the U.R., the Fed can easily justify a tightening move.
Read 9 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 14
🇨🇳 Chinese officials will be forced to support growth soon in a context where downward pressures are gaining traction.
*The probability of missing growth target (5.5% in 2022) looks high the year of Xi re-election.
1/ The hospitality sector is under pressure with air traffic and restaurant sales plunging YoY in early March.

2/ More damages from the Zero-Covid policy are expected with restrictions and lockdowns in several areas such as Shenzhen.

Read 6 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 11
🇩🇪 German economy is facing heavy headwinds:

1/ Covid-19 is still circulating a lot which implies that several restrictions will remain in place longer than expected.

2/ Sanctions/counter-sanctions linked to #Russia/#Belarus and the collapse of Ukrainian economy will have a significant impact on trade and supply chain. It's more than just natural gas.

3/ Problems of logistics multiply with airspace and ships bans while freight costs are still rising.
*See Harpex index: bit.ly/3MFkrid
Read 6 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 7
🌎 Global GDP Update (1) | The impact will be larger than the consensus expects. Even the most pessimistic forecast I saw recently (-1% for global GDP) looks optimistic.
*In my opinion, it’s clear that Global 2022 GDP growth will be below 3% (v >4.0%e).
🌎 Global GDP Update (2) | Economists from banks will keep underestimating the shock as they use traditional models.
*🇺🇸 economists are the most exposed to a miss as they don’t perceive the gravity of the situation in a context where the 🇺🇸 economy is less exposed.
🌎 Global GDP Update (3) | The shock has multiple direct and indirect effects (supply and demand). Traditional models are not useful to identify the point of demand destruction in case of multiple price shocks.
Read 6 tweets
Christophe Barraud🛢🐳 Profile picture
Mar 5
🇨🇳 #NPC Meeting Debrief (1) | The 5.5% GDP target (upper range of expectations) signals an intent to limit downward pressures from the #property slump, zero-#Covid strategy and #Ukraine war (affecting foreign demand).
*Note: China 2021 GDP growth was 8.1%
🇨🇳 #NPC Meeting Debrief (2) | The fact that officials opted for the upper range of expectations looks very encouraging.
*There is a significant risk of missing this goal the year of Xi re-election.
🇨🇳 #NPC Meeting Debrief (3) | The fiscal support could be much stronger than indicated by the headlines as the government will use unused resources from last year (above-budget income as well as below-budget spending)
*Link: bit.ly/3sHrZZL
Read 6 tweets

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