Two recent surveys indicate that consumer optimism about inflation is increasing, which could be beneficial for President Joe Biden's reelection campaign. The New York Federal Reserve's consumer survey shows a drop in inflation expectations, while the University of Michigan's survey records a significant shift in consumer confidence. Despite a strong post-pandemic economic boom, the Biden administration has struggled to convince voters of its achievements, with high prices for essentials overshadowing economic progress. However, the recent positive consumer sentiment and strong jobs report may signal the beginning of an economic turnaround for the Biden administration in a challenging election year.
A former Chinese official has highlighted the severity of China's property crisis, stating that experts estimate there are up to 3 billion vacant homes in the country, far exceeding the population of 1.4 billion. The crisis, which has been ongoing since 2021, has been exacerbated by the default of real estate giant China Evergrande Group and the precarious financial situation of other major developers. The unsold floor area of homes stands at a staggering 648 million square meters, excluding incomplete projects and vacant homes purchased by speculators. The property slump has had a detrimental impact on China's economy, leading to a decline in tax revenue and increased unemployment.
China's industrial profits have fallen for the seventh consecutive month, with a 6.7% decline in July compared to the previous year. Weak demand and a faltering post-pandemic recovery have squeezed companies in the world's second-largest economy. Profits for the first seven months of the year have shrunk by 15.5% year-on-year, following a 16.8% decline in the first half. Major banks have downgraded their growth forecasts as a worsening property slump, weak consumer spending, and tumbling credit growth continue to hamper the economy. State-owned enterprises, foreign firms, and private-sector companies have all recorded significant profit declines.
Chinese leader Xi Jinping has called for patience as the ruling Communist Party attempts to reverse a deepening economic slump. Xi emphasized the need to focus on long-term goals of improving education, healthcare, and food supplies for China's population instead of solely pursuing short-term material wealth. The government's efforts to support struggling entrepreneurs have not yet yielded positive results, as consumer and factory activity weakened further in July. Xi also criticized Western countries for their materialism and spiritual poverty, stating that they are increasingly facing troubles due to their pursuit of capital interests rather than serving the interests of the majority.
Chinese leader Xi Jinping has called for patience as the ruling Communist Party attempts to reverse a deepening economic slump. Xi criticized Western countries for their materialism and "spiritual poverty," while emphasizing the need for China to focus on long-term goals such as improving education, healthcare, and food supplies for its population. The government's efforts to support struggling entrepreneurs have not yet yielded positive results, as data shows further weakening of consumer and factory activity. Xi's speech also highlighted the importance of narrowing China's wealth gap and regulating the development of capital, but no new initiatives were announced.
US stocks rose on Friday following strong results from Apple and better-than-expected jobs figures in April. Regional banks and growth-sensitive sectors like energy and consumer discretionary also saw gains. The S&P 500, Nasdaq 100, and Dow Jones Industrial all traded deeply in the green. Crude oil and Treasury yields rose, while gold and silver fell. Bitcoin rose 3%. Carvana, Western Alliance Bancorp, PacWest Bancorp, First Horizon, East West Bancorp, and KeyCorp were among the stocks in focus. AMC Entertainment Holdings, Fluor, and Warner Bros. Discovery are among the companies reporting results before the market opens.
