Macro Mondays #54 - The Charts YOU NEED TO KNOW This Week
Jun 24, 2024
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Exploring the impact of AI on software developers and other sectors, analyzing US dollar liquidity and potential implications, discussing UK CPI disparity and political landscape, delving into retail sales data and real estate market trends, and providing updates on the US budget deficit and its election impact.
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Quick takeaways
Saudi Arabia aims to attract Western investors and tourists to boost economic growth.
US retail sales in building materials show unexpected weaknesses, raising concerns about economic cycle.
Real estate market has increased inventory levels despite housing scarcities, influenced by global interest rate changes.
Deep dives
Impact of Saudi Arabia's Efforts on Attracting Western Investors
Saudi Arabia's political efforts are directed towards attracting Western investors, hedge funds, and tourists to their Dubai clone cities, aiming to foster economic growth and partnerships. There is a misconception about Saudi Arabia not desiring dollars currently, which contradicts their strategic goals.
US Retail Sales and Economic Cycle Analysis
US retail sales, particularly in building materials, exhibited a surprising downside trend, indicating potential weaknesses in the economic cycle. Despite challenges in construction-related sectors, attributing these declines solely to weather effects in May may be premature. Data from weather incidents suggests a unique period, emphasizing June as a critical test for construction activity rebound.
Real Estate Market Trends and Inventory Increases
The real estate market, impacted by housing scarcities and increased completions, shows signs of higher inventory levels. Despite a relative surplus in new houses, the market still maintains low inventory due to limited selling activity. With rate cuts in Sweden and Canada influencing market expectations, the sensitivity to interest rates is crucial for future housing market dynamics.
Insights on German Economy and PMIs
Germany's electricity consumption and industrial production provide insights into the economy's current status, contrasting with PMI indicators. While PMIs lack real-time economic activity signals, real electricity consumption data suggests a more optimistic outlook for German economic performance, reflecting an upward trend despite PMI discrepancies.
Inflation, UK Elections, and Economic Deficit Considerations
The UK observes a divergence in inflation between services and goods, with substantial wage increases impacting real wages and consumer spending positively. The upcoming UK elections reflect dissatisfaction with current inflation rates and political conditions, potentially influencing voter sentiments. Although the deficit continues to pose financial challenges, political focus remains on short-term crisis management and economic stimulation, diverging from deficit reduction strategies.
Andreas Steno Larsen, founder and CEO of Steno Research, is back for another episode of Macro Mondays with his co-host Mikkel Rosenvold, Steno Research partner and head of geopolitics, to analyze U.S. construction, UK CPI numbers, and Chinese copper markets. They also dig into dollar liquidity and what recent geopolitical events mean for the economy. Recorded on June 21, 2024.
Host: Andreas Steno & Mikkel Rosenvold
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