Weekly Global Economic Digest (WED) on 26.08.2023

We review the main economic news for the current week in all major economies of the world, crypto world and commodities (WED (26-08-2023))

Already available! The weekly World Economic Digest (Wednesday) on 26.08.2023 presents the most significant economic events and their impact on the world economy. In this issue, we will look at the latest updates in world trade, the development of financial markets, changes in the political situation and their possible impact on international firms and investors.


Swift "annihilated" the euro in settlements
Swift "annihilated" the euro in settlements
Swift “annihilated” the euro in settlements

According to Swift data, in July 2023, in one month, the share of the euro in settlements outside the eurozone collapsed from 36.7% to 13.6%.❗️

Can this be assessed as a real drop in the share of the euro – probably not. Apparently, finally, they made a slightly more adequate assessment, because it is obvious that outside the perimeter of the eurozone, the use of the euro is significantly lower than the dollar, before the July report they were almost identical currencies. In fact, such a revision is possible only if a decent part of the settlements in euros between the eurozone countries went through a conditional London hub, and now through some Frankfurt.

The share of yuan in Swift has grown to 2.23%, but even here, most likely, the data does not adequately reflect reality due to the fact that most of the payments in yuan go through Chinese infrastructure and CIPS, and Swift sees mainly netting between banks.

But in general, this says a lot about the quality of Swift estimates by calculations.

#USD #EUR #CNY #fx

The Turkish Central Bank nevertheless escalated and immediately moved the rate by 750 bps to 25%
The Turkish Central Bank nevertheless escalated and immediately moved the rate by 750 bps to 25%
The Turkish Central Bank nevertheless escalated and immediately moved the rate by 750 bps to 25%

The Turkish Central Bank nevertheless escalated and immediately moved the rate by 750 bps to 25%, after a rather sluggish start to the tightening cycle, which greatly disappointed the markets. This is still well below the inflation rate of 47.8% YoY, but it still helps the lira to hold on at the moment.

While, obviously, this is not enough, in order to return inflation to 5%, we will have to go through a long thorny path, while there are great doubts that a collision with problems in the economy and the financial system (and they will be on this path) will not turn everything 180.

#Turkey #rates #inflation #Crisis #TRY #banks


The IFO business climate index, calculated on the basis of a survey of German companies, fell in August to 85.7% vs 87.4 earlier (forecast: 86.7). The assessment of the current situation has worsened – 89.0 vs 91.4 (90.0 was expected). Business expectations for the month: decrease to 82.6 points vs 83.6 a month earlier (expectations: 83.8).

All three indices are going down, and the head of the IFO, Clemens Fuest, was extremely concise: “… the German economy has not yet emerged from the crisis…”


• German economy, there is no positive
• Flash PMI for Germany – MFG below 40 points, services are also falling
• deterioration of ZEW indices


According to preliminary data from the Federal Statistical Office, Germany’s GDP in 2Q23 was 0.0% QoQ vs -0.1% QoQ in 1Q2023 (forecast: 0.0% QoQ). Annual rates continue to be in the negative range: -0.2% kg vs -0.2% y quarter earlier (forecast: -0.2% y).

Both household consumption improved (0.0% sqq vs -0.3% sqq) and government spending (0.1% sqq vs -1.9% sqq). Gross capital accumulation (2.1% QoQ vs -1.7% QoQ). At the same time, exports collapsed (this is reflected in the very low German PMI index): -1.1% QoQ vs 0.4% QoQ.


The National Bank of Kazakhstan has decided to reduce the key rate by -25 bp to the level of 16.5% per annum, given that annual inflation in July continued to decline amounted to 14.0% yy vs 14.6% yy and 15.9% yy two months earlier.

The regulator notes that “… the pro-inflationary pressure from the external environment continues to gradually weaken. Prices on the world food markets, as well as logistics costs are decreasing.

At the same time, pro-inflationary pressure remains within the economy from the expanding fiscal stimulus, stable domestic demand, high and unstable inflation expectations, as well as rising production costs.

As a result, the cumulative balance of risks due to some easing of pressure from external factors remains in a weakly disinflationary zone.

With a further slowdown in actual inflation and its stable part, the policy of a smooth and prudent reduction in the base rate will continue…”


NBC; lowered, but cautiously
NBC; lowered, but cautiously
NBC; lowered, but cautiously

The People’s Bank of China has not yet decided on a more active reduction in rates and has reduced the annual LPR rate by 10 bps to 3.45%, and has not changed the five-year LPR rate at all, leaving it at 4.2%.

Although, obviously, there is a need for further rate cuts, but against the background of the strengthening of the dollar in foreign markets and the multidirectional movement of rates, the NBK holds the easing, risking sliding further into the Japanese scenario, since inflation is close to zero against the background of weak domestic demand. Although, of course, there is still a fiscal incentive….

#CNY #China #betting #NBK #fx

China is actively switching to the yuan

China systematically continues to transfer its foreign economic activity to the yuan. Payments from China have exceeded payments in dollars for several months, the total outgoing payments in yuan for 6 months amounted to $1.52 trillion, while in dollars they dropped to $1.36 trillion. The share of the dollar in payments received in 6 months fell below the yuan for the first time, respectively, $1.47 trillion versus $1.49 trillion.

At the same time, China’s dollar balance is positive (+$111 billion in six months), and negative in yuan (-$30 billion in six months). The outflow of yuan to foreign markets is relatively small, but it is gradually growing, which indicates a gradual increase in yuan liquidity outside the Chinese economy. The volumes, of course, are ridiculous for China so far, but given the rather small volumes of the offshore market, they are already quite noticeable.

"A flock of aimless flies": Chinese hedge fund accuses foreign investors of ruining stocks

China’s largest macro hedge fund blamed global capital for the country’s stock falling to its lowest level since November.
⛔️ Foreign funds are the main drivers of the recent sell-off in Chinese stocks, said Li Bei, founder of the Shanghai Investment Management Center Banxia. Foreign investors have caused market volatility, and “together they are a bunch of aimless flies,” she said in an article posted on the social media platform WeChat.
According to Li, initiatives to recharge slum reconstruction and eliminate the risks associated with financing local governments are more effective for stimulating the economy than lowering rates. Based on recent policy moves by the central bank and the retreat of foreign funds, this is probably “another good point to buy,” she said in the article.

China steps up fight against yuan Bears to stop Sell-off spiral

📍 China is strengthening its protection of the yuan, increasing the cost of financing in the offshore market to reduce short positions, and is setting a new record with a stronger-than-expected benchmark rate for the currency.
Analysts say that these steps are aimed at slowing the pace of depreciation of the yuan, and not to provoke a sustained rally. Analysts from JPMorgan Chase & Co., Nomura Holdings Inc. and UBS Wealth Management predict further weakness of the currency this year. The offshore yuan reversed earlier gains and weakened on Tuesday, returning to its 2023 low set last week.
The People’s Bank of China set the daily fixing of the currency at 7.1992 per dollar on Tuesday, compared with the average estimate of 7.3103 in the Bloomberg survey. This was the largest gap since the polls began in 2018.

Cities owe billions of dollars to Chinese real estate companies - report

According to local media reports, local authorities in some Chinese cities owe developers from 1 to 2 billion yuan ($137 million) in unpaid bills.
The outstanding debt to real estate firms includes tax benefits and promised reimbursement of commissions for the sale of land, the Economic Observer magazine reported late on Monday, citing unnamed executives of developers.
According to the report, various districts and counties in cities, including Zhengzhou in central Henan Province, have recently asked private real estate firms to provide detailed information about the debt owed to them by the government.

Pessimists in China's real estate market are missing out on underlying demand, says an economist with experience in making correct forecasts

Investors are too pessimistic about China’s real estate market, where demand for housing is still supported by high sales among state-backed developers and rising rents, according to an experienced analyst who correctly predicted the resumption of trade last year.
🔸 Sales of government-backed developers have deviated from the general downturn in the industry this year, and housing rents are also rising, Hong Hao, chief economist at Grow Investment Group, said on Monday. For example, sales of Poly Developments and Holdings Group jumped 109% year-on-year in the first seven months, and Yuexiu Property registered a 68% increase over that period, he said.
“Their strong sales hint at continued demand for housing, which is not affected by general market conditions and prevailing pessimism,” Hong said. “Rents are rising, which suggests that people are delaying buying decisions and renting instead. If that’s the case, then housing demand is probably lingering rather than disappearing.”

U.S. Commerce Secretary to visit China next week for talks

U.S. Commerce Secretary Gina Raimondo will travel to China next week for meetings with senior Chinese government officials and U.S. business leaders, the Ministry said on Tuesday.
🇨🇳🇺🇸 Last month, Raimondo promised to continue the visit, despite reports that her department’s email was hacked by the Chinese.
Raimondo “looks forward to constructive discussions” during a visit to Beijing and Shanghai from August 27 to 30, the ministry said in a statement.
🇨🇳🇺🇸 The talks will address issues related to commercial relations between the United States and China, problems faced by American business, and areas of potential cooperation.

According to Bloomberg, 40 companies included in the Hang Seng index have now published interim results and reported a decrease in profit by an average of 3.7% compared with an increase in annual profit by 5.5% last year.

“The recent weakness of the yuan, together with poor performance in real estate and stocks, as well as record high youth unemployment, have led to a decline in consumer spending. Consumers are feeling financial uncertainty, which has further undermined consumer confidence and increased the risk of deflation,” PwC analysts say.

U.S. Commerce Chief Gina Raimondo will visit China for three days in search of a “constructive discussion.” This trip increases the likelihood of a meeting between Xi Jinping and Joe Biden this year.

The US has lifted restrictions on 27 Chinese companies and organizations, which is a sign that Washington is extending an olive branch ahead of Trade Minister Gina Raimondo. Among others, restrictions were lifted from the chemical company and manufacturer of materials for lithium batteries Guangdong Guanghua Sci-Tech and sensor manufacturer NanJing GOVA Technology.

British Foreign Secretary James Cleverley is going to visit China at the end of August. Cleverley’s visit is rather a preliminary contact between the two sides after the pandemic and an attempt to resume relations.

Hong Kong and Macau will impose import controls on some food products from Japan in response to the country’s plan to start dumping purified radioactive water from the Fukushima nuclear power plant into the sea.

China promises to take action against Japan’s “selfish” plan to clean up nuclear waste.

🇨🇳🇪🇬🇮🇶🇸🇦🇸🇾🇾🇪 The Speaker of the Arab Parliament, Adel bin Abdulrahman al-Asumi, will visit China.

🇭🇰🇺🇸 Are American companies leaving Hong Kong? The chief U.S. envoy to Hong Kong, Gregory May, says firms are staying put, but some are expressing concerns about the national security law and Internet censorship.

🇺🇸🇨🇳 Washington will impose visa restrictions on some officials in China behind public boarding schools for their involvement in forcing Tibetan children to assimilate. According to UN experts, this policy has led to the fact that 1 million children have been separated from their families.

Experts disagreed when the 30-day period for Country Garden bonds ends on September 5 or 6 due to the fact that this period began on Sunday, when payments could only be made from Monday, the company does not comment on this point in any way.

Ant Group uses Alipay+ to improve the technological image of Hangzhou before the Asian Games. The company is expanding support for several Asian e-wallets through the Alipay+ service to facilitate a trip to your hometown.

⬇️ CK Asset, Sino Land and Henderson Land together plan to sell a total of 293 apartments this weekend with big discounts.

Shares of Anta Sports Products jumped by 7.3% after the report for the first half of the year, which exceeded forecasts. According to Jefferies, Anta management noted the stabilization of the demand situation and remained optimistic about the upcoming political support.

US removes control over some Chinese firms ahead of Raimondo trip

The United States has lifted restrictions on 27 Chinese companies and organizations, which is a sign that Washington is clearly extending an olive branch ahead of Trade Minister Gina Raimondo’s planned trip to Beijing this month.
The U.S. Department of Commerce on Monday excluded Chinese businesses such as chemical firm and lithium battery materials manufacturer Guangdong Guanghua Sci-Tech Co. and sensor manufacturer NanJing GOVA Technology Co., from its “untested list”, which limits the company’s ability to buy American technology.
🇨🇳🇺🇸 According to a government statement, the companies were removed from the list after they successfully completed end-use checks, which allowed the Commerce Department’s Bureau of Industry and Security to confirm their “legitimacy and reliability.”

China's gloomy economic outlook has led to a decline in consumer spending, according to PwC

Chinese consumers are adjusting their buying habits, taking into account the less than optimistic economic prospects of the country.
The crisis in China’s real estate sector and high youth unemployment are among the problems putting pressure on consumer spending, according to a report published on Tuesday.
“Although the degree of financial concern of Chinese consumers is less acute than that of global counterparts, consumers refrain from secondary spending,” said Michael Cheng, PwC’s leader in consumer markets in the Asia-Pacific region.


Forget about world domination, India won't catch up with China soon

Last year, when Prime Minister Narendra Modi celebrated the 75th anniversary of India’s independence from British rule, he called on the nation to “rule the world.” Earlier this week, once again at the Red Fort, he mentioned “Amrit Kaal” — a crucial era when the gates of opportunity open.

His mantra of “reform, fulfill, transform” suggests big dreams. Perhaps he dreamed of those halcyon days before 1870, when India and China were considered the two largest and most powerful economies in the world.

But the dream does not make a plan. And in the nine years since Modi came to power, his plans to bring India to first place in the ranking of the most powerful economies in the world have remained plans.

Graham Ellison of Harvard University reminded us in a recent foreign policy report that about a decade ago, the late Singapore leader Lee Kwan Yew said that India would never catch up with China and would always remain the “country of the future.” Li said, “Don’t talk about India and China in the same breath,” throwing down the gauntlet to those who see India biting China’s heels and cheering India on in the hope of thwarting China’s ascent.”

To be fair to Modi, his government’s economic performance is worthy of respect after decades of stagnation and disappointment. India’s gross domestic product has grown by an average of about 6 percent every year since 2014, reaching a record high of 9.1 percent last year, which is impressive in light of the turmoil caused by the Covid-19 pandemic and recession in many parts of the world.

But a wide range of structural reforms is needed if India is to break out of the shackles of its economic past. These include the power of caste, bureaucratic friction, impenetrable tax rules, the still chronic protection of local business magnates, and import tariffs that are among the highest in the world.

Any country that has risen from such a low level should recognize that it will take many decades to achieve what the late Li called parity with China, and that there is nothing shameful about it. Last month, Goldman Sachs predicted that by 2075, China will become the world’s largest economy (57 trillion US dollars), and India (52.5 trillion US dollars) will overtake the United States (51.5 trillion US dollars).

Adani Group's quarterly profit rose sharply due to increased liquidity

Adani Group reported record profits for the quarter ended in June thanks to its infrastructure and renewable energy business, bolstering the finances of Gautam Adani’s business empire as it seeks to build investor confidence and resume fundraising months after a devastating attack by the shortseller.

The electricity conglomerate reported that quarterly profit for June before interest, taxes, depreciation and amortization jumped 42% compared to the same period a year ago to 235 billion rupees ($2.8 billion), which is the highest the group has seen in a single quarter and almost the same, how much profit he made for the entire 2019 fiscal year.

The high performance achieved by the infrastructure and utility business of its flagship company Adani Enterprises Ltd., as well as its clean energy and cement production units, “ensure a high level of stability, as well as predictability and transparency of revenues for several decades,” the company said in a statement.

Profitability also supported the company’s liquidity: the cash balance at the end of June increased by 4.2% compared to the end of March and amounted to 421 billion rupees. An improved liquidity position could help boost investor confidence more than six months after the short-listed company Hindenburg Research accused the company of widespread corporate abuse, resulting at one point in its listed companies losing more than $150 billion. Adani denies any wrongdoing.

After the shortseller attack, the embattled conglomerate managed to raise billions from GQG Partners and Qatar Investment Authority, which acquired shares owned by its founders. The company is also negotiating with international banks to refinance loans taken out last year to acquire Ambuja Cements Ltd.

However, investors are waiting for an opinion from the Securities and Exchange Board of India, which oversees Indian markets, which has examined some of the allegations made by Hindenburg. Sebi appealed to the country’s Supreme Court with a request to postpone the investigation until the end of August.


US housing market: volumes are low, prices are high

The US housing market continues to remain, on the one hand, in the mode of a shortage of supply of ready–made housing, on the other – the unavailability of this housing against the background of high rates and prices. Although some revival of market activity is fading amid a new wave of growth in mortgage rates above 7% per annum.

Sales of single-family homes in the US secondary market in July fell to the level of 3.65 million homes per year, slightly above recent lows. On the primary, on the contrary, they increased to 714 thousand per year. At the same time, the offer on the secondary market covers sales only for 3.2 months, which is very small by historical standards (the normal state of the market is 4-6 months), although above the minimums. There is no external shortage on the primary market – the supply covers sales in 7.1 months, but this applies only to housing under construction or where construction has not yet begun, with ready-made new houses there is also a shortage (supply covers demand in 3.1 months).

The average settlement payment on a mortgage in the secondary market at current rates of about $2.2 thousand per month and more than 51% of the average s/p is the maximum since 1984, when there were double–digit mortgage “Volcker rates” of 14-15% per annum.

Against the background of a shortage of ready-made housing and prices do not want to fall, despite the collapse of mortgage applications to a minimum since the 1990s (despite the fact that the population in the United States has grown over three decades) and below the level of the mortgage crisis. If we remove seasonality, then the cost of a house on the secondary market increased by 1% mom, even the annual dynamics came out in a small plus 1.6% yoy. Zillow also records a price increase of 0.9% mom and 1.4% yoy.

The market is shrinking in volume, but it is not getting cheaper. In part, these trends correspond to what happened before the 2008 crisis, but with the shift of risks from private ownership to institutional – here credit risks are now higher. And in this regard, the problems from high rates are still ahead.

#USA #mortgage #real estate #economy #inflation

Less than six months have passed ... how Bloomberg took care of the problem of the US budget deficit and public debt, noting that "The US budget deficit is growing like never before" in the conditions of a generally relatively good state of the economy.

It’s about discussing the budget for next year, and it will be difficult to discuss it. The increase in interest rates leads to the fact that only interest expenses on debt servicing will soon reach $1 trillion and will eventually exceed 4% of GDP with debt.

Moreover, it should be understood that the average debt service rates are generally not so high now – 2.84%, which is comparable to the Fed’s neutral rate (2.5%) with 2% inflation. The peculiarity is that it is extremely difficult to lower the deficit on other items below 2-4% of GDP. This makes the total potential budget deficit for many years decently higher than the US can afford if it wants to stabilize the debt (<4.5% of GDP).

Moreover, even if the Fed can (theoretically) stabilize inflation at 2% and the Fed rate will be in the neutral zone of about 2.5%, the average debt service rates should be higher than the current 2.84% and be around ~3.5%, which implies a non-interest budget deficit close to zero on a long horizon… and this has not happened in America for a couple of decades.

​​#budget #debt #rates

Speech by J.Powell's trip to Jackson Hole was fairly smooth, however, nothing else was expected.

Although the head of the Fed has come to life – even outwardly noticeably (a couple of months of comfortable inflation reports) in the hope that after the failure in previous years, prices can be reined in. And that ‘s what should strain the markets … The Fed needs to recoup for the failure with inflation and they will perceive any signal that is against it as an “elusive victory”. And in general, this is exactly what the rhetoric pointed to (in addition to the statements on duty and stories about extreme uncertainty):

“We are attentive to signs that the economy may not be cooling as expected.”..

“Evidence of sustained above-trend growth may jeopardize further progress in inflation and become the basis for further tightening of monetary policy.”..

“Evidence that labor market tensions are no longer easing may also require monetary policy responses.”…

In fact, this means that the Fed is pleased with the current trends and, if they persist, they will not change anything, but if they see that these trends are fading, or suddenly begin to change, they will react painfully to this and tighten policy.

This increases the likelihood of another rate hike, because the Fed will be very sensitive to data, and this sensitivity will be one–sided – in the direction of tightening.

P.S. If something doesn’t break sooner…

#USA #inflation #economy #Fed #debt #rates #dollar


• Composite index: 50.4 vs 52.0 in July.
• Manufacturing industry: 47.0 vs 49.0
• Services: 51.0 vs 52.3

Both industry and services are declining in the US in August. In production, a reduction is recorded both in output and in new orders, volumes have also decreased in services. There is also a reduction in exports in production, primarily to Europ


Dubai Residential Real Estate Market Overview (Summer 2023) by Knight Frank

European Battery Recycling Market (August 2023) by Strategy & (PWC)


Results of the day, August 21

A trader who bought the BAIC 85 NET token from the Bored Ape Yacht Club collection for 777 ETH sold it at a loss of 80% for 153 ETH after just 11 months.

🪙 The lone man again managed to single-handedly mine a block on the Bitcoin network and get 6.25 BTC for it.

The trader liquidated 14 times in 1 day and lost about $430,000.

🗺 Mining 1 BTC in Russia costs $14,900 — that’s how much the cost of the electricity needed for this is.

Vitalik Buterin transferred 600 ETH (~$1 million) to the Coinbase exchange.

Raiffeisenbank has been introducing a 50% commission on incoming transfers in dollars from other banks since September.

The Indian Army will use the blockchain platform from Beyond Imagination Technologies (BIT) for communications.

Bitget crypto exchange will introduce mandatory customer verification from September 1.

Results of the day, August 22

🪙 Coinbase increases investments in Circle, the USDC issuer.

🪙 USDT in Brazil can be cashed in 24,000 cryptocurrencies across the country.

An unknown Bitcoin address has accumulated 118,300 BTC ($3 billion) in a month and a half — analysts claim that this is the new address of the Gemini exchange.

🇰🇷 The authorities of the South Korean city of Cheongju demanded that 7 crypto exchanges provide information about the assets of 8520 users who have not paid taxes — they plan to confiscate the crypt.

🪙 Twitter is spreading information that Binance is allegedly selling BTC to support the price of BNB.

Oman has launched a mining center worth $350 million – this is the second such facility in a year that was opened in the free economic zone of Salalah.

🎶 CoinGecko has compiled a rating of popular cryptocurrencies in TikTok — in the report, analysts cite 15 hashtags related to cryptocurrencies, which together have gained 115 billion views.

🇨🇳 In China, an ex-official was given a life sentence for supporting mining.

Results of the day, August 23

Thai citizens aged 16 and older will receive $300 in digital assets from the Prime Minister of the country.

Last year, the revenue of the largest mining companies in Russia amounted to 11.5 billion rubles.

🪙 Binance “removed” Rosbank (BEAC) and Tinkoff from the list of payment systems on the p2p platform, replacing their names with “Green Local Card” and “Yellow Local Card”.

The former head of the Open Sea products department was sentenced to three months in prison and a fine of $50,000.

🪙 Elon Musk is trying to remember Dogecoin again.

🕵️‍♂️ The co-founder of Blockchain Capital has filed a lawsuit against an anonymous hacker who stole $6.3 million from him in various digital assets by swapping a SIM card.

🇰🇵 North Korea may try to sell BTC for $40 million.

The CEO of YouTube noted the rapid development of artificial intelligence — the company will continue to invest in new technologies, and will also create a Music AI Incubator platform for research and testing generative AI.

Results of the day, August 24

The main crypt of the CIS was killed.

Paolo Ardoino showed one of the energy production facilities that is used for BTC mining by Tether.

Pantera hedge fund predicts $35,000 for 1 BTC before halving (April 2024) and $148,000 by 2025.

📚 Arthur Hayes has published a new essay entitled “Kite or Board”, the main theses.

FTX scam exchange is planning a sale of its crypto assets worth more than $3 billion – the new FTX management plans to hire Mike Novogratz to implement the plan and maximize the profit from the sale.

Nodal Power has raised $13 million for mining in landfills — in the process of burning methane in the generator, the company reduces carbon dioxide emissions, ensuring efficient use of resources.

In Israel, drones collect apples — the AI chooses only ripe fruits and makes sure that the apple is not wormy.

The Israeli police are preparing to charge businessman and ex-owner of the Beitar Jerusalem football club Moshe Hogeg for fraud with digital assets worth $290 million.

Results of the day, August 25

The PEPE hype meme token has collapsed by 25% over the past day – more than 16 trillion tokens have been sent from PEPE’s multi—signature wallet to Binance, OXK and Bybit addresses.

Visa and Mastercard refuse to cooperate with Binance.

Oman invests $1.1 billion in the Bitcoin mining sector – the country’s government sees the first cryptocurrency as “digital oil”.

A hacker stole $55,000 in a crypt from the US Drug Enforcement Agency (DEA).

💸 Coinbase has added plans for listing a PayPal stablecoin (PYUSD) to the roadmap.

The user said that he bought Dogecoin for $ 250,000, spending all his savings — in May 2021, his portfolio was worth $ 3 million, now the value of his coins is only $ 50,000.

Jerome Powell, head of the US Federal Reserve, spoke at the economic symposium in Jackson Hole, the main theses.

Tether, the issuer of USDT, has updated the report on its reserves — the company’s total assets amount to $86.1 billion, liabilities — $82.8 billion. Tether’s excess reserve is $3.29 billion.



Monday 28.08
• 🇬🇧 UK, no bidding

Tuesday 29.08
• 🇩🇪 Germany, GfK Consumer Climate, Aug (est. -24.2)
• 🇺🇸 USA, open jobs Jolts, Jul (est. 9.793 million)
• 🇺🇸 USA, Case&Shiller index (est. -1.4% yy)
• 🇺🇸 USA, consumer index. confidence, Aug (est. 113.4)

Wednesday 30.08
• 🇨🇳 China, PMI
• 🇩🇪 Germany, CPI, Aug (est. 0.2% mm, 6.0% yy)
• 🇷🇺 Russia, weekly inflation MMI Forecast: 0.04%
• 🇷🇺 Russia, Rosstat, social economy statistics for July
• 🇺🇸 USA, GDP 2Q23 (est. 2.4% QQ)
• 🇺🇸 USA, unfinished. builds-in, Jul (est. -0.1% mm)

Thursday 31.08
• 🇹🇷 Turkey, GDP, 2Q23
• 🇫🇷 France, GDP 2Q23 (est. 0.5% QQ, 0.9% yy)
• 🇪🇺 EU, CPI, Aug, prev (est. -0.1% mm, 5.1% yy)
• 🇺🇸 USA, Initial Jobless Claims (est. 235K)
• 🇺🇸 USA, PCE, Jul (est. 0.2% mm, 3.3% yy)
• 🇺🇸 USA, Core PCE, Jul (est. 0.2% mm, 4.2% yy)

Friday 01.09
• 🌏 MfG World PMI Day
• 🇧🇷 Brazil, GDP, 2Q23 (est. 0.3% QQ, 2.7% yy)
• 🇺🇸 USA, Non-Farm payrolls (est. 168K)
* • USA, Private payrolls (est. 143K)
* 🇺🇸 USA, unemployment (est. 3.5%)
• 🇺🇸 USA, labor remuneration (est. 0.3% mm, 4.4% yy)
• 🇨🇦 Canada, GDP, 2Q23

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Weekly Global Economic Digest (WED) on 13.08.2023

Homeowners in the US are now spending a record 40% of their gross income on mortgages.

Already available! The weekly World Economic Digest (Wednesday) on 13.08.2023 presents the most significant economic events and their impact on the world economy. In this issue, we will look at the latest updates in world trade, the development of financial markets, changes in the political situation and their possible impact on international firms and investors.



The monthly Eurozone Sentix Investor Confidence index is calculated based on a survey of about 2,800 investors and analysts regarding their expectations regarding stock indices, bond markets, foreign exchange and commodities, as well as additional questions for the next 6 months.
August indicators: -18.4% yy vs -22.5% kg -17.0 kg in July-June (waited -23.4).


DESTATIS figures on consumer price growth of Europe’s leading economy in July showed the following figures:
July inflation was 6.2% yy (forecast 6.2% kg) vs 6.4% yy a month earlier. Monthly dynamics: 0.3% mm. vs 0.3% mm (forecast 0.3% mm).

Harmonized HICP index: 6.5% kg vs 6.8% g (expectations: 6.5% kg), and 0.5% mm vs 0.4% mm (waiting for 0.5% mm)


The European regulator reduced its balance sheet by -€24 billion to €7.165 trillion, against an increase of €4 a week earlier. From the peak values (€8.836 trillion), the balance decreased by €1.671 trillion.

The rhetoric of ECB representatives:

• we are not far from the end of the rate hike process, but it is not over yet
• if there is a pause in September, it will not mean the end of the cycle

• the September decision has not yet been clearly formed

• the data indicate that the peak of inflation has already been passed, but it is at unacceptably high levels


The Turkish lira continues to update the next lows against the dollar, and now it is trading above 27 USD TRY, and it has lost more than a quarter of its value since the beginning of this year.

The regulator, under the leadership of the new head, twice raised the cost of borrowing from 8.5% to 15%, and then to 17.5%, but at the same time, inflation is growing strongly again: 9.49% mm / 47.83% yy in July vs 3.92% mm / 38.21% yy earlier, and these steps are certainly not enough.

However, back in June, the government decided not to spend reserves to maintain the national currency, and the situation in this segment began to improve somewhat.


According to preliminary data from the Office of National Statistics, UK GDP in 2Q2023 was 0.2% QoQ vs 0.1% QoQ in 1Q23 (forecast: 0.0% QoQ).

Annual rates increased to 0.4% kg vs 0.2% y quarter earlier (forecast: 0.2% y). Both indicators came out above preliminary estimates.

In terms of output, the services sector grew by 0.1% QoQ due to increased activities in the field of information and communications, tourism and catering, as well as growth in health and social services; the manufacturing sector grew by 0.7% QoQ, while the growth in processing was 1.6% QoQ.

In terms of spending, there was a strong increase in household consumption and government spending, which was partially offset by a drop in international trade flows in the second quarter.



China’s foreign trade statistics published today for July showed a further deterioration in indicators:

• * Exports: $281.7 billion (-14.5% kg) vs $285.3 billion (-12.4% yy) in June. Forecast: -12.5% yy

• * Imports: $201.16 billion (-12.4% kg) vs $214.69 billion (-6.8% yy). Forecast: -5.0% yy

• Trade surplus: $80.60 billion vs $70.62 in June

The figures again came out below the forecast. The slowdown in exports is, first of all, an indicator of weakness in global demand, which signals a slowdown in the global economy.

The weakness of imports is an indicator of subdued domestic demand in China. The Celestial Empire is recovering at a decidedly slower pace than the market expected


According to the National Bureau of Statistics of China, by the end of July, the growth rate of retail prices amounted to -0.3% kg vs 0.0% yoy and 0.2% yoy in June-May (forecast: -0.4%). Monthly indicator: 0.2% mm vs -0.2% mm in June (forecast: -0.1%).

Production prices: -4.4% kg vs -5.4% kg and -4.6% y earlier (forecast: -4.1% y)

The National Bureau notes that one of the key factors contributing to the decrease in CPI was the collapse of pork prices (-26% yy). In general, consumer demand in China continues to be quite restrained due to quite noticeable changes in the behavior of the Chinese, who have now noticeably reduced their purchasing activity.

Chinese Deflation

While the trends remain here – consumer prices have gone into deflation -0.3% YoY, although this is largely due to a decrease in food prices (1.7% yoy) and energy due to the high base of last year. Prices for consumer goods decreased by 1.3% YoY, while prices for services increased by 1.2% YoY. Prices in the housing sector remained virtually unchanged over the year (0.1% YoY), prices were actively growing only in the travel sector (13.1%), fuel prices were sharply decreasing (-13.2%).

But still, core inflation excluding food and energy increased and amounted to 0.8% YoY, in June it was 0.4% yoy.

Producer prices fell by 4.4% YoY in July due to lower prices in the extractive industries. In part, low core consumer inflation is a consequence of a rather weak increase in producer prices for short–term goods (0.8% YoY) and a drop in prices for long-term goods (-1.5% yoy) in conditions of excess production capacity and weak domestic demand. The drop in company profits fully confirms this – overproduction as it is. Given that the excess savings of Chinese households continue to grow, weak demand is not an income problem. So demand will continue to be stimulated by both monetary and fiscal measures.



US consumer prices increased in July with the elimination of seasonality by 0.17% mm sa vs 0.18% in June (expected: 0.2% mm sa). The annual figure rose to 3.18% kg vs 2.97% in June (expected: 3.3% yy).

Core inflation (with the elimination of the impact of energy and food prices): 0.16% mm sa vs 0.16% a month earlier (0.2% mm was expected). Annual rate: 4.65% kg vs 4.83% yy (forecast: 4.8% yy).

The annual CPI increased, but at the same time the Core CPI decreased, which is more fundamental for the Federal Reserve.

Compared to June, a smaller increase was recorded in new and used cars, medical services, and electricity. Monthly rates have increased in gasoline and fuel prices, food, transport services, and housing fees.


The Federal Reserve’s balance sheet has grown by +$1 billion over the past week. vs -$36 billion. a week earlier. Now it is $8.258 trillion. From the highs ($9.015 trillion), the balance decreased by -$757 billion

The rhetoric of the Fed representatives:

• it is very early to talk about a rate cut, there is still a lot of work ahead
• The bid will be restrictive for a while
• economic slowdown is a likely scenario
• the task of the regulator is not to cause a recession, but to stop inflation, and it is much higher than the goal
• it is possible that you will have to raise the rate even more
• the “key” may decrease, but not in 2023

Temporary inflation will increasingly figure
Temporary inflation will increasingly figure
Temporary inflation will increasingly figure

We are still in August, and this month we are nervously looking at the markets. But at the same time, this month’s sales are likely to be “frontal” in nature:

• * The key point is the return of the S&P 500 to the 20th dmo

• The 20th border is at 4,531, and the S&P 500 closed at 4,518, so the burden is on the market.

• Even if August is turbulent, we are still constructive towards the markets until the end of the year and we see that the S&P 500 will close >4,825 before the beginning of the year.

More and more Fed officials admit that inflation is cooling
More and more Fed officials admit that inflation is cooling
More and more Fed officials admit that inflation is cooling

• The core CPI decreased to a rate corresponding to inflation of ~2%. +0.16% x 12 = 1.97%, which is <2%, and this is the second consecutive month of low core CPI.

• The base CPI excluding housing and cars, which amounted to +0.22% for the month. There is still a relationship between goods and services.

• Basic goods decreased by -0.33% for the month.

• Basic services excluding services for the month decreased by +0.22%, which corresponds to 2% inflation. The housing sector remains the main problem.

• Today, the probability of a November Fed rate hike has decreased to 18% compared to 22% yesterday and 31% last week. Thus, the probability of a rate increase has decreased. We still consider July to be the last rate hike in this cycle.

• The PPI index may be relevant because the focus is on new employment contracts and their impact on the PPI index. Deflation in China will still spread to the United States.

While stocks are selling, the July CPI report is encouraging and may be repeated
While stocks are selling, the July CPI report is encouraging and may be repeated
While stocks are selling, the July CPI report is encouraging and may be repeated

It follows that the stock sell-off is not directly related to the CPI report. Therefore, several questions arise:

• Has the bond market come to a different conclusion? We don’t think that’s the case, but if investors were prepared for lower rates, then a painful deal is higher rates.

• Maybe the markets are nervous about something else? Perhaps we know that the Bank of Japan has made changes to the regulation of the yield curve, and this may have lingering consequences. Or the markets are nervous because of Friday’s PPI or even weak data on China.

• But, in our opinion, inflation is moving on a lower and more favorable trajectory than many believe, and this will affect stocks more than today’s knee-jerk reaction.

USA: inflation has slowed down

Inflation in the US in July was expected to be 0.2% mom and 3.2% YoY, core inflation is also 0.2% mom, but 4.7% YoY.

The growth of food prices calmed down somewhat (0.2% mom and 4.9% yoy), energy prices increased by 0.1% mom in July, but here a significant drop in prices relative to last year by 12.5% by 0.9 percentage points reduces annual inflation (the effect of the base of last year will be sharply reduced from August and general inflation, annual inflation will rise).

Goods without energy and food continue to maintain deflationary dynamics of -0.3% mom and 0.8% YoY, but this is largely due to the ongoing correction in prices for used cars (-1.3% mom and -5.6% yoy).

Services provided the main contribution to price growth by adding 0.3% mom and 5.7% YoY – annual growth rates remained at June levels. Services excluding energy added 0.4% mom and 6.1% YoY – housing rental continues to play an important role here (0.4% mom and 7.8% yoy), prices continued to rise in transport services (0.3% mom and 9% yoy) and recreational services (0.8% mom and 6.2% yoy). But in medicine -0.4 m/ m and -1.5% yoy, but there is a distortion of the indicators due to the fact that the accounting of health insurance goes with a big lag and reflects the state subsidies last year, and it is reflected only this year.

Monthly inflation has been keeping within the Fed’s target for the past couple of months, but trend indicators and the services sector separately are still far from what the Fed would like to see.

The US budget deficit is still growing

In July, the US budget deficit was twice as high as market expectations and amounted to $221 billion, it was higher in July only in 2021, when the deficit was $300 billion.

In total, over the past 12 months, budget expenditures amounted to $6.72 trillion, which is 16.4% higher than last year, while revenues amounted to only $4.48 trillion and were 7.3% lower than last year. As a result, the budget deficit over the past 12 months amounted to $2.26 trillion, or about 8.6% of GDP. Even if we discard the $0.4 trillion advanced in September for writing off student loans, the deficit is still extremely high.

Of course, with such a deficit, the fiscal stimulus for the economy is extremely strong and overrides any monetary tightening, but this story will end. The United States will have to normalize the budget, both because of the growth of interest expenses on debt servicing ($0.87 trillion over the past 12 months), and because of the weak dynamics of income, which degraded due to the huge volume of various tax deductions Biden and Co. Which already leads to lower ratings.

Non-interest expenses will have to be cut at some point (or taxes will be raised, which Republicans are unlikely to do), which in conditions of high rates will be quite painful for the economy.

The average US government debt service rate continues to grow by ~25 bps per quarter (in money ~ $80 billion) and in July amounted to 2.84% per annum (in June it was 2.76% per annum). Not so much yet, but growth will continue here, and given the size of the debt (already $32.6 trillion), payments will become increasingly burdensome for the US Treasury.

Homeowners in the US are now spending a record 40% of their gross income on mortgages.
Homeowners in the US are now spending a record 40% of their gross income on mortgages.
Homeowners in the US are now spending a record 40% of their gross income on mortgages.

👉 This is HIGHER THAN the 2008 maximum of 39% and the value has increased dramatically over the past 2 years.

After paying income tax and mortgage expenses, most home buyers have less than 30% of their income.

The spread between bulls and bears in the US is 19.20% compared to 27.66% last week and -8.33% last year. This is above the long-term average of 6.47%

The spread between bulls and bears in the US is 19.20% compared to 27.66% last week and -8.33% last year. This is above the long-term average of 6.47%
The spread between bulls and bears in the US is 19.20% compared to 27.66% last week and -8.33% last year. This is above the long-term average of 6.47%





The OPEC monthly review published today maintained estimates of global demand in 2023 at 102.0 million bps (+2.44 million bps) vs 102.0 million bps. in June. In 2024, the demand will be 104.25 million bs (+2.25 million bs), the figures are unchanged. The main growth in consumption is China, South-East Asia, Latin America

The forecast of demand for OPEC oil in the third quarter is 29.57 million bs. At the same time, in July OPEC produced only 27.31 million bs, so the deficit in the market rose sharply to -2.26 million bs vs -120 thousand bs in June.

Saudi Arabia practically fulfilled its promise in July, voluntarily reducing production by 968 thousand bps at the declared 1 million bps. Production in Russia amounted to 9.5 million bs (-100 thousand bs by June)


• Global oil demand will grow by 2.2 million bs in 2023 and reach 102.2 million bs, which will be a new record. The estimate is left unchanged compared to July

• Global oil production is expected to grow by 1.5 million bps to a record 101.5 million bps in 2023, while production growth outside OPEC+ (mainly in the United States) will amount to 1.9 million bps. Next year, non-OPEC+ supplies will also dominate the growth of global supply, increasing by 1.3 million bs, while OPEC+ may add only 160 thousand bs.

• OPEC+ in July lagged behind the oil production plan by 3.67 million bs (by 2.55 million bs – in June)

• RUSSIA: oil exports in June decreased by 200 thousand bs (in June by 600K bs) to 7.1 million bs.

• RUSSIA: China and India accounted for about 80% of all oil from the Russian Federation

• RUSSIA: estimated export revenue in July is the largest since November 2022: $15.3 billion (+ $2.5 billion per month). Since August, Russian exports will be reduced by another 500 thousand bs. According to OPEC estimates, Russia produced 9.5 million bs in July




🇺🇸Although everything in Washington points to the conclusion of an agreement on raising the debt ceiling, Wall Street believes that the euphoria from such a deal has already passed or will be short-lived next week.

Similarly, as soon as the euphoria associated with Nvidia’s good forecast of $NVDA for the second quarter and enthusiasm for everything related to AI subsides, investors’ attention will switch to non-agricultural employment data for May, which will be released next Friday (according to Dow Jones estimates, 188,000 new workers are expected places) and the next Fed meeting on June 13-14.

To top it all off, June is usually a bad month for stocks anyway, regardless of what’s going on in Washington and speculation about the Fed’s decision.

“The reason why June is usually weak is that the reporting season is already coming to an end, which means that companies are relatively calm, which means investors depend mainly on political news,” said Jay Hatfield, CEO of Infrastructure Capital Management. “This year, the debt ceiling negotiations, the Fed’s hawkish comments and the banking crisis are looming on the market. It looks like there will be an agreement on the debt ceiling over the weekend, which should help the market stabilize.”

The problem for many on Wall Street is the dynamics of the S&P 500 Tech, which has grown by more than 5% this week; the Nasdaq Composite is ahead by 2.5%, and the S&P 500 is up by 0.3%, which may mask the non-obvious weakness of the market, which is growing only at the expense of certain assets. The S&P 500 indices of consumer goods, materials, healthcare and utilities declined 2.4%-3.2% this week, while the Dow Industrials index declined 1%.

“Although the S&P 500 is up 9.5% in 2023, only a few stocks are performing well. The number of stocks trading above their 200-day moving average has been falling since mid-April,” Liz Yang, head of investment strategy at SoFi, wrote on her blog on Thursday.

“The ‘summer rally’ in most years is the weakest rally of all four seasons,” Stock Trader’s Almanac says.

“Unfortunately, the market background “remains alarming and sets up for further sideways movement and a likely pullback or correction during the weak summer months, especially after mid-July in the worst two months of the year – August and September,” Jeffrey Hirsch, editor-in-chief of Stock Trader’s Almanac, wrote on Thursday. @ESG_Stock_Market

Joe scares the stock market

Joe scares the stock market

Employment has grown quite well

USA: employment has grown well, unemployment – too

The number of people employed in the US non-agricultural sector increased by 311 thousand in February, of which 265 thousand in the private sector and most in the service sector (245 thousand). The negative dynamics were in the IT (-25 thousand) and transport/logistics (-21.5 thousand) sectors, but the leisure, medicine/education/trade industries more than compensated for the reductions. The unemployment rate increased from 3.4% to 3.6%, although the share of employed remained virtually unchanged at 60.2%, but labor force participation increased slightly (62.5%). So far, these are only local changes within the framework of ordinary fluctuations.

The markets were very happy about something else: the growth of hourly wages slowed down to 0.2% mom and 4.6% yoy. But it’s not so simple here, the dismissal of higher-paid workers and the hiring of less well-paid ones can quite objectively affect the average pay. If we look at the salaries of non-managerial production personnel, then in February, on the contrary, the growth accelerated to 0.5% mom and 5.6% YoY. However, at the same time, the average number of hours worked decreased, which somewhat adjusted the total wage fund (-0.1% mom) after its sharp rise in January (+1.2% mom). The annual growth of the wage fund has slowed down to 7.4% YoY, but it is still much higher than the pre-crisis ~4%, and the slowdown is rather due to the base effect. The increase in three months was 1.8%, which is slightly higher than the average observed in the last six months (1.7%), i.e. the short-term trend remains the same.

The report is generally ambiguous, on the one hand, it gives certain hints of a slowdown, but the number of employed is actively growing, and the slowdown in the growth of s/p is largely due to the cuts of higher-paid workers. The data can be interpreted quite broadly, the report is rather neutral for making a decision on the rate, but still allows the Fed not to rush back to the 50 bp step.

Yellen continues to spend

Yellen continues to spend “stash”, but there are still reserves

The Fed paused this week – the securities portfolio has practically not changed, in 4 weeks the reduction of the portfolio of government bonds is $61 billion, but the chronic shortage of MBS is only $15 billion reduction in 4 weeks. If Powell is on pause, then Yellen cannot do this and continued to spend “cash” from accounts, adding new dollars to the system: the deposits of the Ministry of Finance in the Fed decreased by $39 billion to $311 billion in a week, in 4 weeks the Ministry of Finance poured $184 billion into the financial system from its account in the Fed. It can add up to $50-100 billion more in March, but in April it will begin to actively withdraw through taxes (~$250..300 billion) – it will be interesting to see how the markets behave.

The banks returned dollars to the Fed through the reverse repo mechanism, the volume of which increased by almost $60 billion to $2.56 trillion in a week, because, despite the operations of the Ministry of Finance, there was a little less liquidity. Banks use reverse repos with the Fed to hedge – the inversion of the debt curve has intensified again. At the same time, corporate bond spreads were rather declining, although the “rout” of bank stocks on Thursday may indicate that there is a clear underestimation of risks.

Biden’s budget, which is $5.5 trillion in tax exemptions, is extremely negative for the stock market, because it will decently reduce capital inflows to the stock market, but it is unlikely to be missed by Republicans in Congress. Ahead of a stormy showdown with the debt ceiling and the budget… The annual CDS on the US national debt continues to grow (76 points).

The US Treasury will continue to add dollars to the system, but in April it will absorb a lot, which may add headaches to the markets along with a shake-up of banks if the Fed does not smooth the situation.

And what does Joe offer us?

US President Joe Biden has proposed a new budget plan for 2024

What is important for us there?

▫️Increase in corporate tax to 28%. Well, thank you, of course, that it is not up to 35% as it was before 2017, but it is still very unpleasant.

▫️Increase in the tax on baibek from 1% to 4%. They say there is nothing to return the value to shareholders here — invest in the development of business and jobs. It seems logical, but there are businesses that are in a cycle of peak development, and according to all norms of corporate finance, they need to give money to shareholders.

▫️The income tax abroad will be raised from 10.5% to 21%. Companies in the USA export services abroad and earn worldwide. Now they will pay “like at home”.

The tax on the rich will be raised from 8% to 25% with a fortune of $100 million. The richest stratum — 0.01% of all taxpayers — will suffer the most.

Cancellation of benefits for oil and gas companies and Big Pharma. For neftegaz, this means literally “pay taxes”, and for pharmaceutical companies, that many medicines can be made available to Medicare, which will lead to negotiations to reduce their cost.

So far, this is only a Biden Administration proposal, but the market reacted accordingly yesterday.


U.S. Labor Market Remains Hot Despite Drop in Job Openings

U.S. Job Market Remains Overheated

U.S.: labor market remains overheated

U.S. job openings fell by 410,000 in January, but the 2022 data was revised upward to 11.23 million, bringing the total to 10.82 million openings in January. That’s 1.9 times the number of unemployed, up 1.96 times in December after the revision. In the private sector, 9.77 million job openings remain. But still there are hints of the market cooling, for the first time in many months less than 4 million Americans have changed jobs in search of a better life (wage), and the employer-initiated layoffs are more common. True, more Americans are hiring than firing – not much has changed.

The ADP counted a job gain of 240,000 in February, with small businesses cutting and medium and large businesses hiring. Considering the past reports, the ADP data should be treated rather cautiously, they used to count crookedly, after the change of methodology something may improve, but it is too early to say. That said, they now have data on wage changes: growth slowed down a bit but from 7.3% y/y to 7.2% y/y, and with job changes you can expect a gain of 14.3% y/y (was 14.9% y/y). This is still very aggressive and so far the job market remains extremely overheated. Weekly jobless claims <200k and a total of <2 million on benefits is telling.

The head of FRS J. Powell on Wednesday did not bring much joy to the markets, though he tried to smooth the signal a little bit by saying that they have not made a decision yet (25 or 50) and will look at the data… but so far the data is more in favor of a harder reaction… although the labor market report and inflation reports are still to come – they will be decisive. That said, the Fed, based on the data, continues to show that it just doesn’t know where the ceiling will be and is even technically almost guaranteed to overreact.

In Congress, the head of the Fed was very nervous this time with questions like “You’re trying to put people out of work… That’s your job, isn’t it?”… “you want to put 2 million Americans out of work,” etc. Powell, of course, fought back that they were trying to restore price stability… telling them that this time things might be “different”… I recall how “different” it already was when inflation was “temporary”). Unemployment is not yet rising, elections are a year and a half away, and the Fed has already begun to actively “press” politicians… It’s going to get worse…


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