Market 07/15: China - GDP and retail growth weak, house prices drop sharply

China's Q2 GDP growth slows to just +4.7% YoY - lowest level since Q1/2023 due to weakening retail sales.
- GDP for the first 6 months of 2024 up +5.0% YoY (< estimate 5.2%).

Government revenue no longer boosting nominal GDP growth:
- Tax/fee reduction policies, difficulties in public financial management from Covid-19 greatly affect government revenue.

Real estate crisis in China continues:
- Resale house prices down -7.9% YoY in June - largest decline in history!
- Total housing area sold down -19% YoY, housing sales down -25% YoY
In particular, retail sales continue to grow slowly: up +2.0% YoY (< estimate 3.3%)
- => showing consumer demand in China remains subdued!

When people don't spend money, they continue to invest:
- Investment in Chinese bonds continues to rise +3.9% YoY — faster than last year.

Some other June macro data for China:

New York manufacturing index in July drops to -6.6 - negative level for 8 consecutive months.

Of which:
- New orders: -0.6
- Prices paid: 26.5 (higher than June: 24.5)
- Employment index: -7.9
6-month business conditions index drops to 25.8
=> Manufacturers are less optimistic about economic outlook

On 07/13, former President Donald Trump survived an assassination attempt at a campaign rally in Pennsylvania.
- Image of Trump raising fist showing defiance.

The incident condemned by both parties for political violence and shakes up the campaign.
- President Biden criticizes the assassination attempt “does not allow taking violent behavior for granted”, “need to cool down tense political issues”.

Complete security failure by the Secret Service

Security weaknesses of the Secret Service analyzed in the incident:

Large national flag: The flag could be used to determine wind direction and speed, helping the assassin calculate the bullet trajectory more accurately

Shooter's position: At a distance of ~400 feet from Trump's position, even audience members could see the shooter, so the Secret Service should have definitely spotted him.
=> surveillance was not completely tight.

On the other hand, Trump recently said he will announce his vice presidential candidate today.

Market reaction:

Stocks of gun manufacturers surge after the shooting.
- However, according to FBI check, gun sales declined 10% YoY in June.

Bitcoin surpasses 60,000 USD mark benefiting from prospects of Trump returning as president.

Net revenue: 12.73 billion USD (estimate: 12.39 billion USD).
Fixed FICC revenue: 3.18 billion USD (estimate: 3.02 billion USD).
Assets under management: 2.93 trillion USD (estimate 2.91 trillion USD).
Credit loss provisions down -54% YoY to 282 million USD.
Net interest income: 2.24 billion USD (estimate: 1.47 billion USD).
Profit up +150% YoY, reaching 3.04 billion USD
- Last year, profit was affected by the commercial real estate crisis and the sale of a consumer business segment.
EPS: 8.62 USD

Net profit: up +9% YoY, reaching 1.5 billion USD.
Revenue: up +8% YoY, reaching 4.81 billion USD.
- …mainly due to investment advisory fees, management fees and securities lending, and revenue from technology services.
Operating income up +12% YoY, reaching 1.88 billion USD.
AUM up +13% YoY, reaching 10.65 trillion USD.
BlackRock repurchased shares worth 500 million USD in the quarter.

30Y Treasury yield surpasses 2Y Treasury yield for the first time since January.

Macy's terminates negotiations with Arkhouse Management and Brigade Capital Management regarding the 6.9 billion USD buyout proposal to take Macy's private.

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