Paul Cavey

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Taiwan – TSMC still supporting macro

The relationship between TSMC's sales and Taiwan's exports has weakened this year. But with the company remaining bullish into Q4, TSMC remains a big, positive support for Taiwan asset prices and macro into 2025.

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Japan – finally, an export lift

Japan's export volumes in the last couple of months have suddenly broken out of the range of the last four years to reach an all-time high. That's probably not what the BOJ was expecting, given its worries about the July move in the JPY and "uncertainty" on the outlook for the US.

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China – big supply-chain adjustments

China's continued global market share gains negate the idea of decoupling. But foreign firms are relocating from China, a trend exemplified by Taiwan. How to square that circle? Previously, the ROW was dependent on foreign firms in China. Now the dependence is on Chinese domestic companies.

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Japan – capex going sideways

With today's August data, it continues to look like machinery orders are going sideways. That casts doubt on whether the recent upturn in machinery capex in the GDP data can be sustained.

Korea – labour market still fairly tight

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Taiwan – wages holding up, CPI should too

Yesterday's data for August show again that the post-covid stepping up of wage growth in Taiwan is holding. That fits with other signs of stronger inflation, in the form of property prices and core CPI. Rate cuts here still aren't likely.

China – credit both too weak and too strong

China – exports drop in September

Last week, next week

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.