Here's how economies around the world are reacting to China's economic slowdown.
Welcome back, readers. I'm Phil Rosen, reporting from New York.
Today, we're talking macro. China's growth slowdown is sending ripples across the world, though the repercussions are varied based on where you look.
This morning, I'm breaking down what you want to know about how the world's second biggest economy moves the world's currency and commodity markets.
Here we go.
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1. China's economy is faltering and global markets have noticed. Beijing is navigating a slew of headwinds, including COVID-19 lockdowns and issues across property and labor markets, according to Bank of America.
"Meanwhile, unfavorable demographics and a low return on investment after years of rapid infrastructure development pose structural challenges to growth," analysts wrote in a Friday note.
For the US, China's economic weakness is a mixed bag.
Thanks to an aggressive Fed, the yuan has weakened roughly 8% against the dollar over the past year — and that means it can help ease inflation in the US.
BofA noted that a 10% appreciation in the dollar lowers personal consumption expenditures inflation by about 0.4%.
But at the same time, if China's pandemic lockdowns persist for much longer, the US could see fresh supply-chain disruptions, which ultimately could add pressure to US goods inflation.
Meanwhile, China's slowdown has less impact in Europe because the continent's focus remains on the energy crunch and Russia, analysts noted.
But Latin America has significant exposure to China, with Chile sending 40% of its total exports there, while Brazil and Peru each send about 30% of their totals.
"On the positive side, lower commodity prices are helping inflation to slow down this year from a peak around 12% to 6.5% by year-end," BofA said.
"On the negative side, they affect Brazil's fiscal position and trade balance. Therefore, the lower growth in China is negatively impacting Brazilian exports and growth — recall that China represents almost a third of Brazilian total exports, the equivalent of around 5% of the country's GDP."
What do you expect to happen next for China's economy? What would prolonged COVID-19 lockdowns mean for global economies? Email prosen@insider.com or tweet @philrosenn.
In other news:
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2. US stock futures, cryptocurrencies, and oil prices fell early Monday, as investors brace for the Fed, Bank of Japan, and Bank of England's rate decisions this week. Meanwhile, the London Stock Exchange is closed for Queen Elizabeth II's funeral and will reopen on Tuesday. Here are the latest market moves.
3. Earnings on deck: AutoZone Inc., FedEx Corp., and City of London Investment Group Plc, all reporting.
4. A top stock picker at $10 trillion BlackRock shared where to put your money right now to beat soaring inflation and recession risks. Tony DeSpirito offered a two-pronged strategy for succeeding in today's environment — here are his three best investments right now.
5. It's time to buy the dip in stocks after last Tuesday's rout, according to Fundstrat. The market bottomed months ago, the firm said, since the S&P 500 usually hits a low shortly after inflation peaks. Plus, the percentage of bearish stocks suggests this may be time to snap up deals.
6. Deutsche Bank said the Fed will raise rates to 5% to get a grip on inflation. The bank's economists said the central bank typically overshoots the inflation rate before starting to cut. Get the bank's outlook here.
7. Fed moves and global growth fears have weighed on foreign exchange markets this year. From the dollar to yen to yuan, this is what to expect from the world's largest currencies looking ahead.
8. An investment chief at Credit Suisse broke down why the bank cut its weighting to US stocks and said the chance of a recession is 35%. That bearish outlook pushed the firm to downgrade its stock indexes, Jack Siu explained to Insider. Here's how the bank is positioning its billions of dollars in client assets.
9. The Ethereum Merge just slashed 99% of its network's energy consumption. But there are a lot of moving parts and technicalities to note. These 10 podcasts will help you better understand the impact of one of the biggest events in crypto history.
Madison Hoff and Andy Kiersz/Insider
10. Consumers' expectations for long-term inflation dropped to the lowest level since July 2021. Over the next five to ten years, consumers see prices rising by 2.8% annually, according to the University of Michigan. And over the next year, consumers see prices jumping 4.6%.
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Curated by Phil Rosen in New York. (Feedback or tips? Email prosen@insider.com or tweet @philrosenn).
Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London.
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