China’s consumer confidence index dropped to 86 points in August, near the lowest in 30 years. Over the last 3 years, consumer confidence in China is down ~ 50 points. Such a drop in consumer assessment of the Chinese economy has almost never been seen before.
Foreign firms are also pulling money out of China for the first time in 30+ years. In Q3 2024, investors withdrew $8.1 billion from China, according to recent data. Year-to-date, investors have withdrawn a total of $12.8 billion from China, the most since at least 1998.
And even with the prospect of stimulus, deflation in China continues. Prices in China fell for the sixth consecutive quarter in Q3 2024, the longest streak since 1999. This is 3 times longer than during the 2008 Financial Crisis when deflation lasted for 2 quarters.
(Daily Sabah) – The German business sentiment index fell more than expected in November, a key survey showed on Monday, amid political uncertainty following the collapse of the country’s coalition government and Donald Trump’s U.S. election win.
The ifo Business Climate Index, which is based on a survey of roughly 9,000 companies across the country, dipped by 0.8 points to 85.7 points, the institute announced.
The survey comes as Germany heads for new polls in February following the collapse of Chancellor Olaf Scholz’s coalition and with businesses facing the threat of higher tariffs on exports to the key U.S. market once Trump returns as president.
Philipp Scheuermeyer, economist at public lender KfW, said it was “no wonder” that the index had fallen.
“Donald Trump’s election victory is likely to create new headwinds for the already hard-hit German export industry,” he said.
“There is also the threat of a prolonged period until a new government is formed, during which German politics will hardly be able to react, let alone provide any stimulus.”
The picture in both the service sector and construction industry worsened significantly, according to the survey.
ifo President Clemens Fuest stressed that “sentiment among companies is still a long way off from being positive.”
“The German economy is floundering,” Fuest said in a news release announcing the results.
Meanwhile, here in the US
(Kobeissi Letter) – Auto loan early delinquency rates jumped to 8.12% in Q3 2024, the highest in 13 years. Serious delinquency rates surged to 2.90%, also the highest in 14 years. 90+ day delinquencies are now just 58 basis points below the record levels seen in 2009.
In 2024, auto loan delinquencies have risen at the fastest pace since the 2008 Financial Crisis. All while US households’ auto debt rose by $18 billion in Q3 and hit a new all-time high of $1.64 trillion. Americans are missing loan payments as if a recession is here.
(Wolf Street) – Big homebuilders cannot sit out this market, they have to do what it takes to build and sell homes to keep their businesses intact and keep their shares from tanking. So they’re building at lower price points, buying down mortgage rates, and throwing in other incentives at a substantial expense to them. Though that may not have been enough.
Some demand has shifted to new houses from existing houses whose sales have plunged to the lowest levels since 1995 because their too-high prices have triggered large-scale demand destruction. But inventories of new houses have been piling up, and then there’s this sales issue in October with spec houses.
Unsold inventories of new single-family houses at all stages of construction – from not yet started to completed – jumped by 9.3% year-over-year to 492,000 houses, not seasonally adjusted, the highest since December 2007, according to Census Bureau data today. That’s getting on up there. Supply rose to 8.2 months.
(Kobeissi Letter) – A near record 84% of Americans believe it is a bad time to buy a home, according to Reventure. Over the last 4 years, this share has increased by a whopping 50 percentage points.
By comparison, at the peak of the 2006 housing bubble, ~40% of Americans thought it was a bad time to buy a home. Even in the 1980s when mortgage rates were as high as 18%, this metric was 5 percentage points lower, at 79%. Homebuyer sentiment has never been worse.
(Kobeissi Letter) – The average rejection rate for credit hit 22.9% in October, the most in at least 11 years according to the Fed credit access survey. Meanwhile, the credit card rejection rate rose to 20%, the highest since 2014. Credit card limit increase rejections skyrocketed to 45%, a new record since the survey began in 2013.
Additionally, mortgage and auto loan rejection rates DOUBLED over the last 3 years to 23% and 14%, respectively. It has rarely been tougher to access credit in the US. Is the debt bubble bursting?
Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.
Today, unemployment is relatively low, if climbing.
Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.
In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.
It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.
Last month, Nasdaq asked the Securities and Exchange Commission (SEC) for approval to let tokenized stocks and ETFs trade on its main exchange.
If approved, these digital shares would sit side-by-side with traditional equities. Meaning, they would fall under the same U.S. securities laws that govern $50 trillion in annual equity trades.
And this rollout could begin as early as 2026, once the Depository Trust Company — the clearinghouse that settles every U.S. stock trade — updates its systems to handle digital tokens.
If it happens, this won’t be a small tweak to the machinery of finance. It’ll represent the first major step toward moving Wall Street onto blockchain infrastructure.
And we don’t have to imagine what it might look like…
The launch of ChatGPT in October 2022 ended the pandemic-era bear market in stocks. The AI story has been the predominant narrative for three years now. The indexes on Wall Street are at historic highs, surpassing 2000, 1968, 1929… the last three tech-inspired bubbles.
But ChatGPT did something else. It brought the idea of “productivity gains” back into the economic conversation.
Stablecoins have proceeded rapidly from being a grey zone through which capital would traverse as it moved into or out of the crypto-economy, to becoming an extension, if not a nascent pillar, of the fiat money system itself.
Coinbase Head of Institutional Research David Duong sees the market cap for stables hitting $1/2 trillion by 2028 (which would be somewhere between a 4X and 5X from where we are now).
Demetri Kofinas recently interviewed Charles Calomiris, former Chief Economist at the US Office of the Comptroller of the Currency, and it was eye-opening to hear someone of his stature speak so matter-of-factly about how the structure of the banking system is evolving in realtime.
