Investment Rating - The report maintains an equal-weight rating on equities, overweight in core fixed income, and underweight in other fixed income [3][4]. Core Insights - The US labor market is showing signs of downside risks, with employment growth moderating faster than expected, leading to a forecasted decline in real GDP growth from 2.5% in 2024 to 1.0% in 2025 [1][7]. - Global growth is expected to decrease from 3.5% in 2024 to 2.6% in 2025, influenced by tariff impacts and trade tensions [1][7]. - The report suggests a focus on quality assets amid growth and tariff risks, favoring quality cyclical stocks and investment-grade credit over high-yield credit [3][5]. Economic Forecasts - The US GDP growth is projected at 1.0% for 2025 and 1.1% for 2026, with inflation expected to be 3.0% in 2025 and 2.5% in 2026 [9]. - The Euro Area GDP growth is forecasted at 1.0% for 2025 and 1.1% for 2026, with inflation at 2.1% and 1.8% respectively [9]. - Japan's GDP growth is expected to be 0.4% in 2025 and 0.6% in 2026, with inflation at 2.1% and 1.7% [9]. - Emerging Markets (EM) are projected to grow at 3.8% in 2025 and 4.4% in 2026, with inflation at 1.6% and 1.9% [9]. Sector Recommendations - In the US, the report recommends positioning in quality cyclicals, large caps, and defensives with lower leverage and cheaper valuations [5]. - For Japan, the focus is on domestic reflation and corporate reform beneficiaries, as well as defense-related spending [5]. - In Europe, key sectors for overweight positions include defense, banks, software, telecoms, and diversified financials [5]. - In Emerging Markets, the preference is for financials and profitability leaders, particularly domestic-focused businesses [5]. Market Dynamics - The report indicates that US markets remain unmatched in size and liquidity, but rising policy uncertainty may pressure the dollar as foreign investors increase FX-hedging ratios [3][12]. - The anticipated Fed rate cuts in 2026 are expected to influence Treasury yields, with 10-year Treasury yields projected to reach 4.00% by the end of 2025 [12][13].

RT Archie Hall (@ArchieHall)My latest in @TheEconomist: on America's data-centre boom.Vast short-run impact on GDP growth:— Accounts for ~1/6th of growth over the past year— And ~1/2 of growth over the past six monthsBut: so far still much smaller than the 1990s dotcom buildout.And... https://t.co/jcFqg94s8u ...

Summary of Key Points from the Conference Call Industry Overview - **Global Economy**: The conference focused on the global economic outlook, emphasizing the importance of macroeconomic indicators in understanding economic trends [1][4]. Core Economic Insights - **GDP Growth Projections**: - The US and China are experiencing the sharpest growth slowdowns among the regions covered, with the US projected to grow at 1.0% in 2025 and China at 4.2% [5][8]. - Euro Area growth is expected to be 0.9% in 2025, while Japan is forecasted at 0.5% [8]. - Selected emerging markets like India are projected to grow at 6.5% [8]. - **Inflation Trends**: - A divergence in global disinflation is noted, with the US experiencing a short-term tariff boost to inflation, but a downward trend is expected to continue thereafter [9][11]. - The Federal Reserve is anticipated to maintain a pause in interest rate changes through 2025, while other developed market central banks are expected to ease [11][14]. - **Tariff Impacts**: - A 30% tariff rate on imports from China is currently in effect, which is expected to boost inflation over the summer [20][25]. - The effective tax rate has decreased to 13% since "Liberation Day" [22]. Employment and Labor Market - **Job Market Pressures**: - The job market remains under pressure, with payroll breakevens expected to drop to 70,000 per month in 2025 and 2026 due to rising deportations [29][66]. - Manufacturing production declines have been accompanied by falling payrolls [50]. Regional Economic Insights - **China's Economic Conditions**: - Persistent deflation is expected, with entrenched PPI deflation and low CPI inflation continuing [60][64]. - Consumption improvements are likely to be driven by policy measures, and the housing supply-demand balance has improved significantly in tier-1 cities [69][64]. - **Japan's Economic Outlook**: - Japan's nominal GDP is on a gradual growth trajectory, with base wage payments trending around 3% [85][87]. - The economy is not expected to experience runaway inflation or a return to deflation [88]. - **Euro Area Challenges**: - The Euro Area is projected to see GDP slowing year-on-year until Q1 2026, influenced by various shocks [52]. - The ECB is expected to cut rates to 1.5% by the end of the year [44]. Additional Insights - **Global Supply Chain Dynamics**: - China remains central in the global supply chain, with a stable global export share despite a declining share in the US market [72][74]. - The diversification of China's supply chain with new export destinations is noted, particularly in green products [77]. - **Political Uncertainty**: - Political uncertainty in Japan is highlighted, particularly regarding the outcomes of the 2024 Lower House elections [88]. This summary encapsulates the key points discussed in the conference call, providing insights into the global economic outlook, regional economic conditions, and the implications of tariffs and inflation on various markets.

Labor Market Analysis - The labor market is weaker than headline unemployment suggests due to sluggish hiring and declining labor supply, potentially influenced by immigration policies [1][2] - Businesses are not firing, but hiring is slow, contributing to the weakness in the labor market [1][2] - BLS data may require updates in practices, technology, and funding to maintain confidence in the numbers [4][5][9] - Alternative data sources and trends over three, six, or nine months should be considered to assess the labor market, rather than over-relying on any single data print [10][11] Monetary Policy and Economic Outlook - Prospects for future GDP growth have slowed from initial estimates of 225%-250% to 125%-150%, impacting treasury yields [17] - The ten-year treasury yield is influenced by supply and demand factors, future growth prospects, and deficits, with concerns about the amount of treasuries being sold [18][19] - The market anticipates a potential rate cut in September, but it is not a certainty due to conflicting factors such as above 2% inflation and sluggish growth [20][21][22] - The Fed faces a conflict between its dual mandates of employment and inflation, potentially requiring a serious look at cutting rates by 25 basis points in September [24][25] Fed Independence and Treasury Market - There is a strong culture of independence at the Fed, and the onus is on the chair to uphold that ethic [14] - Concerns exist regarding the weakening dollar and upward pressure on rates due to factors like firing a statistician and the rest of the world looking elsewhere [16] - The US is running a $2 trillion deficit, adding to concerns about the supply and demand of treasuries [18]

Investment Rating - The report maintains an equal weight in equities, overweight in core fixed income, and underweight in other fixed income [4][6]. Core Insights - The US labor market is gradually cooling, with expectations of a decline in real GDP growth from 2.5% in 2024 to 0.8% in 2025 [2][8]. - Global growth is projected to decrease from 3.5% in 2024 to 2.5% in 2025, influenced by tariff shocks and immigration restrictions [2][8]. - The report highlights a preference for quality cyclical stocks and investment-grade credit over high-yield credit amid growth and tariff risks [4][6]. Economic Outlook - The US GDP growth forecast for 2025 is revised down to 0.8%, with inflation expected to peak at 3.0% [9]. - The Euro Area and Japan are also projected to experience slow growth, with GDP growth of 0.8% and 0.4% respectively in 2025 [9]. - The report anticipates a significant drop in global demand due to tariffs, impacting supply chains and investment [8]. Sector Recommendations - In the US, the focus is on quality cyclicals, large caps, and defensives with lower leverage [6]. - Key sectors in Europe include defense, banks, software, telecoms, and diversified financials, with a recommendation to reposition into resilient market pockets [6]. - Emerging markets are favored towards financials and domestic-focused businesses over exporters [6]. Market Valuations - The S&P 500 is projected to reach a price target of 6,500 with a P/E ratio of 22.5x for 2025 [7]. - The MSCI Europe index is expected to see a slight decline in earnings, with a target of 2,250 [7]. - Emerging markets are forecasted to have a P/E ratio of 13.1x, with a target of 1,200 [7].

Summary of Hong Kong GDP Growth Q2 2025 Conference Call Industry Overview - The report focuses on the economic performance of Hong Kong, specifically the real GDP growth for Q2 2025. Key Points 1. **GDP Growth Performance** - Hong Kong's real GDP growth for Q2 2025 was reported at +3.1% year-over-year (yoy), surpassing consensus expectations of +2.8% yoy and Goldman Sachs' forecast of +2.0% yoy. This is an increase from +3.0% yoy in Q1 2025, which was revised [1][2][4] 2. **Quarterly Growth Analysis** - In quarter-over-quarter seasonally-adjusted non-annualized terms, real GDP rose by +0.4% in Q2 2025, down from +1.8% in Q1 2025, which was also revised downward from +2.0% [1][2][4] 3. **Consumption and Investment Trends** - Private consumption increased by 1.9% yoy in Q2 2025, a significant recovery from -1.2% in Q1 2025, contributing positively to GDP growth [5][10] - Government consumption rose by 2.5% yoy in Q2 2025, compared to 0.9% in Q1 2025, providing a boost to headline GDP growth [8][10] - Investment growth, including changes in inventories, contributed a 3.2 percentage point (pp) boost to year-over-year headline GDP growth, largely driven by inventory restocking [8][10] 4. **Trade Balance and External Factors** - Hong Kong experienced a significant goods trade deficit in Q2 2025, contrasting with a surplus in Q1 2025. Goods export growth increased to 11.5% yoy, while import growth accelerated to 12.7% yoy [9][10] - Services export growth also improved to 7.5% yoy in Q2 2025, compared to 6.3% in Q1 2025, contributing positively to GDP growth [9][10] 5. **Revised GDP Growth Forecasts** - The full-year GDP growth forecast for 2025 has been revised up to 2.6% from 2.0%, and the forecast for 2026 has been slightly increased to 1.8% from 1.7% [1][10] Additional Insights - The boost from inventory restocking is viewed as transitory and may reverse in the coming quarters, indicating potential volatility in future growth [10] - The preliminary nature of the report suggests that further details will be released by the government on August 15th, which may provide additional context for investors [10] This summary encapsulates the key findings and insights from the conference call regarding Hong Kong's economic performance in Q2 2025, highlighting both the positive growth indicators and potential risks moving forward.

Energy Consumption & Economic Growth - Britain is uniquely wealthy while maintaining low per capita energy consumption [1] - Achieving GDP growth without increased power consumption is unprecedented [1]

The economists were talking about the Great Depression and instead we got 3% GDP growth.Stop listening to people who have no skin in the game. ...

Economic Performance - Texas experienced higher GDP growth compared to most states post-pandemic [1] - Texas also had a lower unemployment rate than most states since the pandemic [1] Financial Distress - Texas is identified as the state with the most people facing financial distress [1]

Summary of Key Points from the Conference Call Industry Overview - The discussion primarily revolves around the impact of trade policies and tariffs on the U.S. economy and global markets, particularly in relation to President Trump's administration and its trade strategies [1][5][21]. Core Insights and Arguments 1. **Tariff Policy Changes**: - An increase in the "reciprocal" tariff rate from 10% to 15% is anticipated, while the 25% pharma tariff is expected to be delayed until after the 2026 midterm elections. This suggests an average effective tariff rate increase of about 14 percentage points in 2025, with a further rise to nearly 20% in 2026 [1][5]. 2. **Inflation Impact**: - The tariffs have begun to affect inflation, with estimates indicating that 60% of the tariffs implemented in February have passed through, raising the core PCE price index by 0.2%. A further 1.2% price level increase is expected, leading to a year-on-year core PCE inflation rate above 3% in the second half of the year [5][10]. 3. **Consumer Spending Trends**: - Real personal consumption has stagnated for six months, a rare occurrence outside of recession periods. This stagnation, coupled with a sharp decline in housing activity, has led to a downward revision of the H1 real GDP growth estimate to 1.1%, which is about a percentage point below potential [10][12]. 4. **Labor Market Dynamics**: - Private payroll growth has slowed significantly, with only 74,000 jobs added in June. The labor market is showing signs of weakness, with a risk of hitting "stall speed," where job creation is insufficient to maintain low unemployment rates [14][16]. 5. **Monetary Policy Outlook**: - The slowdown in economic activity has strengthened the case for earlier monetary policy easing. A forecast of three consecutive 25 basis point cuts is expected starting in September, bringing the funds rate down to 3.5%-3.75% by the end of 2025 [16][18]. 6. **Risks to Economic Forecasts**: - There are concerns regarding the independence of the Federal Reserve, which could destabilize long-term inflation expectations. A potential threat to Fed independence could arise from political pressures, particularly from the Trump administration [20][23]. 7. **Global Economic Implications**: - A 30% U.S. tariff on imports from Europe could reduce Euro area GDP by 0.5% by the end of 2026. However, there is cautious optimism regarding Euro area growth due to fiscal expansion in Germany and strength in Spain [21][24]. 8. **China's Economic Situation**: - China's GDP growth has exceeded expectations, but there are concerns about a potential "second China shock" affecting global manufacturing employment. Calls for higher trade barriers against China are likely to increase, although the effectiveness of such measures is debated [26][28]. Additional Important Insights - The report emphasizes that the current economic conditions are influenced by a combination of tariff impacts, consumer behavior, and labor market trends, which collectively shape the outlook for both the U.S. and global economies [10][14][26]. - The potential for a cyclical upturn in Germany and continued strength in Spain is noted, indicating regional variations in economic performance despite overarching global challenges [24][25].