Paul Cavey

China – core deflation worsens

Korea – right, for some of the wrong reasons

Japan – incomes up, but still not enough

China – 4/10

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Japan – household incomes bounce

Household incomes bounced in 1H24, boosted by fiscal policy (welfare benefits and Kishisha's tax cuts), as well as property income and solid wage growth. This is an important change, given the big problem with aggergate demand has been the weakness of consumption.

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Taiwan – US trade surplus now over 10% GDP

Much has been made of the US overtaking China as Taiwan's biggest market. One consequence is a surge in the trade surplus with the US to over 10% of GDP. That will likely attract a lot more political attention in the event of a Trump re-election.

Korea – a peak more than a pivot

Japan – EW and wages remain firm

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China – what if property is for speculation (part 2)?

My base case - that the economy won't turnaround without fiscal – isn't especially differentiated. But the reports of stronger real estate sales in the holiday highlight a risk case: that the equity rally mobilises household savings and boosts price expectations, lifting the economy without fiscal.

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Japan: consumption slows again

After a better Q2, consumption looks to have basically flat-lined again in July-August, capping any upside in GDP. Consumption isn't falling again, and last week's consumer confidence survey suggests no new deterioration in September. But there is downside risk if the JPY continues to weaken.

Last week, next week

China – has the Fed really been a constraint?

Korea – on track, except for services

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Asia – PMIs suggest end of recovery

It wasn't just in Taiwan. Korea's PMI also fell sharply last month. The deterioration is puzzling, not being seen in other surveys, nor in Korea's September exports. So probably, it is noise. But data patchiness has been a theme of recent months, suggesting underlying cycles are rather so-so.

Japan – Q3 Tankan details

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Korea – private services CPI rises to 3%

Data today show headline inflation fell below the BOK's 2% target in September for the first time since April 2021. But core inflation isn't continuing to drop. Sequential core looks to be bottoming around 1.8%, and the rebound in personal services inflation is continuing, from 2% in Q1 to 3% now.

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Taiwan – PMI back below 50

Taiwan manufacturing should be on a big upswing, driven by recovery from the 2022-23 recession, and AI demand for semis. And yet, even before now, data have been patchy, and the PMIs suggest that mfg started to contract again in September. If that's the end of the upturn, it didn't last long.

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China – Equities, the YC and FCI

The equities move has been extreme. To argue that this heralds broader economic recovery relies on: 1) the YC moving next as savings get mobilised; 2) the YC mattering less as an indicator than equities. Both are possible, but while the YC has issues as a leading indicator, so does the stockmarket.

Japan – Q3 Tankan on track

China – What to watch

China – PMIs show policy has work to do

Last week, next week

China – why is fiscal....late?

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Japan – Tokyo underlying CPI stable

Underlying core inflation in Tokyo in September continued to run at around a 2% annualised rate. The trimmed mean has stabilised at a bit below that, and the proportion of rising items has ticked up. Inflation isn't accelerating, but there's no sign of a slowdown either.

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China: profit share as low as 2009

The 17% YoY fall in profits in August is exaggerated by comparison with the spike 12M previously. But the details are sluggish. Corporate revenues haven't yet regained the level of November 2023, and except for early 2023, the profit share of GDP is lower than any time since 2009.