US Consumer Borrowing Surges on Jump in Credit-Card Balances

Total credit rose $23.8 billion after rising a revised $5.8 billion in October, according to Federal Reserve data out Monday. The figure well exceeded the highest estimate in a Bloomberg survey of economists, which had a median forecast of $8.6 billion.

Revolving credit outstanding, which includes credit cards, increased $19.1 billion in November, the most since March 2022. Non-revolving credit, such as loans for vehicle purchases and school tuition, climbed $4.6 billion. The figures aren’t adjusted for inflation. (…)

According to separate data from the New York Fed, the amount of revolving debt outstanding was more than $150 billion higher in the third quarter than a year earlier, the largest annual increase in data back to 1999.

There are some signs of stress. New York Fed data also showed the rate of credit-card debt becoming newly delinquent rose in the third quarter. The increases were largest for millennials, or those born between 1980 and 1994, as well as people who also have auto loans and student debt.

Goldman Sachs:

(…) in recent quarters stock and home prices have recovered from their declines, strengthening household balance sheets. This has left total household net worth as a share of disposable income at 740%, the highest level in history aside from 2022.

Recent data releases from the Distributional Financial Accounts suggest that balance sheets have strengthened across the income distribution. In particular, households in the lower half of the income distribution, who typically have about twice as much of their wealth in real estate as in equities, have benefited from the steady rise in home prices over the past few years and experienced a meaningful increase in their net worth-to-income ratio since 2019.

See also my Sept. 11,2023 post: The Wealth Defect

Rent Rant (4)

We get good data on most everything from the BLS or other research outfits. Why can’t we get decent data on rent which is about 30% of CPI and 40% of core CPI? The FOMC itself has been wrongly guessing trends in the rental market for over 3 years.

Here’s a non-exhaustive run down of recent “expert” analysis for your consideration.

The WSJ: U.S. Rents Drop for Third Straight Month as Apartment Construction Booms Rising supply and vacancies are motivating landlords to lower asking rents, particularly in the South and West

The median U.S. asking rent fell 0.8% year over year in December to $1,964, according to Redfin’s report Monday. That’s on the heels of a 2.1% annual drop in November—the largest since 2020—and a 0.3% decline in October. December rents only slightly changed from the month prior (-0.2%).

As landlords look to fill vacancies created by the building boom, many have turned to dropping asking rents. They also are offering incentives, such as a free month of rent and reduced parking costs, as a way to draw potential renters. These additional concessions mean the total price that renters are paying is likely falling faster than the data suggest.

“High supply—more so than low demand—is driving rent declines,” Redfin economics research lead Chen Zhao said in the report. “But if mortgage rates continue to drop at a fast clip in 2024, slowing rental demand could become a major driver of rent declines. That’s because more Americans would ditch the rental market to become homeowners, leaving landlords with even more vacancies.”

There are currently more newly completed and under-construction apartments in the U.S. than there were a year ago. The number of completed apartments is near the highest level in more than 30 years, and the number of buildings still under construction is just below the record high.

Because renters have more options these days, the rental vacancy rate grew to 6.6% in the third quarter—the highest level since the first quarter of 2021. (…)

Goldman Sachs: “We expect a 0.45% increase in both rent and OER in December. Rent growth for new tenants has slowed from 5.7% in 2022 to only 0.6% in November, and we expect this to translate into a slower pace of shelter inflation in 2024. We expect shelter inflation to be running at a monthly pace of 0.25-0.30% by 2024H2.

Rosenberg Research:

The Apartment List National Rent report just came out for January and showed apartment rents going in the complete opposite direction of the Case-Shiller home price index — sagging -0.8% MoM for the fifth consecutive decline (and deflating in 83 of the 100 cities in the sample).

The YoY trend remained in negative territory at -1% — a far cry from the 2021-2022 peak of around +18%. The gap between tepid demand and abundant supply of multi-family units (and there are still around 1 million units under construction and soon to flood the market) has taken the national vacancy rate up to 6.5% (above the pre-Covid level of closer to 6%) from the cycle-low of 3.9% in October 2021.

As per the report:
“Despite a recent slowdown in new building permits being issued, the number of multifamily units under construction remains near record levels. As developers work through this robust construction pipeline, the supply of new apartment inventory should remain strong throughout 2024. This means that renters should have more available options than they have in some time, especially in the Sun Belt markets where construction activity has been strongest.”

Just imagine what happens to the YoY inflation rate and core rate once the lagged BLS rental data (showing near +7% YoY increases) “catches down” to what is happening in real time. The math is almost incredible: all else equal, we could well end up seeing the former (headline) easing sharply to 0.6% and the latter (core) decelerating to 0.9%.

  

For the record, here’s what Rosenberg Research headlined in January 2023: “Big Rental Disinflation Coming Our Way”

And in April 2023: “RENTAL INFLATION TO HEAD IN REVERSE”

(…) we think that the demand-supply mismatch is going to correct itself because of an outward shift in the supply curve during the second half of the year. The supply of rental units, which are predominantly apartment buildings (multi-family units), was severely curtailed last year. In fact, completed units built for rent grew by a meagre 0.6% in 2021 (the average annual change for the last 20 years is 2.5%). As a consequence, the rental vacancy rate dipped to 5.6%, the lowest since Q3-1984.

This tightness in the apartment rental market has contributed to the surge in rents. But builders have responded to high demand with a classic supply response, that is, by building more. Housing starts on multi-unit structures averaged about 40% higher on a monthly basis throughout the entirety of 2021, when compared to the past 10-years.

Given the surge in starts, apartment construction is now booming (…). The level of multi-family units under construction is currently at 811k — the highest it has been since June 1974. This means that there is a rich supply pipeline, which will increase the number of units available to rent.

Currently, it takes around 15 months for a start to morph into a completion. By factoring in that lag and taking into account the number of multi-family units started last year, we will end up adding about 450k units to the rental stock in the next 12 months. This is roughly 25% higher than 2021 and will be the largest 12-month percent change since 2014 (a 1.5 standard deviation event). Additionally, there are also about 120k multi-family units which have been “authorized but not yet started.” Once the builders commence working on these projects, it will only add to the wave of incoming supply.

(…) We find that the upcoming increase in the supply of rental apartments can potentially cause the vacancy rate to hook up by 1 to 1.2 percentage points in the next 12 months. Since the vacancy rate is inversely related with rents (primary rents and OER), an increase in the former can result in the latter declining by up to 1.5 percentage points to roughly 3% (YoY) over the same timeframe.

A 1.5 percentage point reduction in rents will shave off 45 basis points from headline CPI and 60 basis points from the core index. While this may not sound like much given the inflation prints that we have seen lately, the large flow of multi-family units coming our way implies that rental inflation has a higher chance of going down than up, which would be contrary to what the consensus expects.

Builders have taken a cue from higher rental demand and are building units at an unprecedented pace. As such, we can expect the vacancy rate start to start hooking back up and rental inflation to reverse course. This process seems to have already started as evidenced by the moderation observed in March in the pace of CPI rents. Other private rental websites like Apartment List are also witnessing the same phenomenon, with monthly changes in rent at much lower levels than were seen last year and the vacancy rate is also gradually starting to increase.

CPI-Rent was up 6.9% YoY in November with MoM growth rates stable around 0.5% (6.0%+ a.r.) since March 2023.

Rosenberg was far from being alone crying wolf on rent in recent years. The strong consensus remains that rentflation is about to slow down considerably.

I am no rent expert, I simply observe the available data:

• This puzzling chart highlights what many say is the coming tsunami of apartments. Units under construction have exploded, well above starts since 2016 and even more so since 2021 (note that “starts” and “completions” are at annual rates unlike “under construction”). The data implie that, of the roughly 1.35 million apartment units started since 2021, ~685k were completed in the last 7 quarters but 991k are still under construction, and still rising even though starts and completions have declined in 2023. Strange math that a Census Bureau economist suggested is possibly due to “constraints preventing the builder from completing a project”. At the end of the day, builders can only complete what they started. It seems better to focus on “completed” units which totalled 391k units, 9% more than the average of the previous 4 years.



• True, rental vacancy rates have gone up and, at 6.6%, exceed pre-pandemic levels. But they are still historically very low. Furthermore, CPI-Rent is significantly better correlated with wages. On housing, people tend to dwell based on what they can afford to pay:

• Zillow has the most comprehensive rent data. It is still not as good as it should because it also only uses new rentals which are less than 10% of all rentals in the U.S.. Seasonally adjusted MoM rent growth troughed in June 2023 and has been accelerating every month since, reaching 0.32% in November, +3.9% annualized. On a YoY basis, Zillow rent is up 3.2% in November, close to John Burns Research’s 3.5% growth rate. CPI-Rent, which includes renewals, is still rising 0.5%+ MoM (+6.9% YoY).

• In absolute terms, Zillow rent has continued to rise, with CPI-Rent trying to catch up to close the apparent 10% gap to “market”.

• John Burns Research estimates that the monthly premium to own versus rent has now hit $1,030 per month, compared to $884 per month at this time last year, “increasing demand for rental homes while reducing demand for homeownership”. JBR reckons that 5.5% is the magic mortgage rate:

• 62% of consumers believe a historically normal mortgage rate is below 5.5%.

• 71% of prospective home buyers who plan to purchase their next home with a mortgage say they are not willing to accept a mortgage rate above 5.5%.

US Small-Business Optimism Rises to Five-Month High on Earnings

Price Wars Break Out Among Consumer Brands in China as Growth Slows Aggressive discounts from local players pull in global brands

A $3 KFC combo featuring a chicken sandwich, fries and soda. A $1.20 beer from a German supermarket. A new chain of grocery stores that stocks only deeply discounted soon-to-expire foods.

These are some of the deals foreign and domestic brands are rolling out to woo Chinese shoppers trying to stretch every penny as consumer confidence in the world’s second biggest economy fades. Across Chinese high streets, discounts and special deals are being advertised from clothing to cosmetics, a reflection of an alarming shift in consumption attitudes that has sent retailers scrambling. (…)

These cheaper fares are being rolled out by brands and companies that traditionally projected themselves as premium choices for the aspiring Chinese middle class. The pivot to discount offerings marks a sea change in their strategy to drive sales in the new Chinese economic reality and is weighing on their prospects. And those that aren’t slashing prices, like Starbucks Corp., are losing ground to cheaper rivals. (…)

The discounts will erode profit margins until the price war – which is currently accelerating – normalizes, they wrote in a note on Friday downgrading Yum to neutral. (…)

Job Gains Picked Up in December, Capping Year of Healthy Hiring Unemployment held at 3.7% last month and hiring was revised lower in prior months

The U.S. economy added 216,000 jobs last month with most industries increasing employment, the Labor Department reported Friday. That was larger than November’s gain of 173,000, and better than forecasters were expecting. For all of 2023, employers added 2.7 million jobs, a slowdown from 4.8 million in 2022, but a better gain than in the several years preceding the pandemic. (…)

Employers added a combined 71,000 fewer jobs in October and November than previously estimated. (…)

Wages rose a healthy 4.1% last month from a year earlier and the unemployment rate in December held at 3.7%. (…)

Friday’s report will do little to alter that calculus and keeps the central bank on track to hold rates steady at its next policy meeting, Jan. 30-31. It suggests the labor market is no longer at risk of overheating, particularly as private-sector hiring has eased over the past few months. But it also doesn’t point to material weakness that might move up the Fed’s timetable for cutting rates. (…)

Even so, some analysts said parts of the report signaled underlying weakness, highlighted by a steep drop in the labor-force participation rate. (…)

• Clearly slowing!?

Looking at quarterly data, employment growth is clearly slowing, but really only back to its pre-pandemic numbers (dashed lines) although private employment growth is now lower.

The diffusion index, a measure of the breadth of job gains across industries, rose to its highest level since August, a sign that most industries are still adding jobs, but at a slower rate. Looking at just the private sector, the 3-m job gain average is now 115k vs the 6-m average of 134k, the 2023 average of 169k and the 2022 average of 376k.

Since December 2019 to November 2023 (its peak level), the labor force (persons 16 yrs and older) grew by 3.43 million people (+2.1%). Meanwhile, the number of employed Americans rose 5.47 million (3.6%) and now represents 93.9% of the labor force, up from 92.8% pre-pandemic and from its previous high of 93.3% in December 1999.

Without a sustained rise in the participation rate (% of the population that is either working or actively looking for work), the employment math needs to slow down further. There is much hope on the participation rate easing labor market pressures but actual trends are not encouraging.

The percentage of the population at work has always risen post recessions. That’s not happening just yet. The labor participation rate is not even back to its pre-pandemic level, itself way down from pre-GFC.

• The total participation rate has been slowly crawling back to its Q4’19 level which was nonetheless still down from its pre-GFC level.

• The participation rate of the important 25-54 age group is also only back to its pre-pandemic and pre-GFG levels.

• The younger cohort (lower wages, productivity) has been growing the labor market since 2016 but that only helped offset the decline in the older age group (higher wages, productivity) which has yet to show any desire to return to work en masse.

This in spite of real wages 3.5% above their pre-pandemic level and 13% above their pre-GFC level.

Purchasing managers surveys suggest a coming marked slowdown in hiring (although S&P Global’s survey is not as weak):

The openings are there, but not the hires:

Meanwhile, Indeed’s data show wage increases flattening in the 4-5% range:

Indeed, hourly earnings rose 5.4% annualized in December…

… helping aggregate weekly payrolls rise 5.4% YoY in December and 5.2% in Q4, only slightly slower than the 5.7% gain in Q3. Consumption expenditures should thus keep rising nicely given PCE inflation well below 3% in Q4.

Canada’s job growth stalls in December, while wages accelerate

The country added just 100 net new jobs in December, after an increase of 25,000 in November and 18,000 in October, Statistics Canada said Friday. Bay Street analysts were expecting an increase of 13,500 jobs last month.

The unemployment rate remained at 5.8 per cent. It has risen consistently over the past year as rapid population growth has outstripped job creation. But last month, this dynamic was offset by a decline in labour-force participation, keeping the unemployment rate steady. (…)

On an annual basis, average hourly wages rose 5.4 per cent in December, up from 4.8 per cent in November and the quickest pace since last February. Bank of Canada officials have said that continuing wage growth in excess of four per cent is not compatible with its two-per-cent inflation target, unless there is a significant jump in labour productivity. (…)

The Canadian economy overall has slowed more rapidly than its neighbour to the south. And this showed up in softer labour market data through the back half of 2023. Job growth in Canada averaged 48,000 per month in the first half of the year, but only 23,000 per month in the second half, Statscan said. (…)

• David Rosenberg: Why the BoC will be forced into cutting rates sooner – and to lower levels – than most people think

(…) The BoC hiked policy rates by 475 basis points since March 2022 to 5 per cent and pursued the most aggressive tightening cycle since the late 1980s. While it is clear that monetary policy is restrictive, the question of “how restrictive” remains puzzling.

To answer this, first, one has to estimate the neutral interest rate (the difference between the overnight rate and the nominal neutral rate would quantify the restrictiveness). This matters because the lower the neutral rate, the more cuts would be needed for the BoC to move from a “restrictive” to a “neutral” monetary policy. (…)

The BoC left its measure of the neutral rate unchanged from its 2022 estimate within the range of 2-3 per cent (0-1 per cent in real terms, after inflation) in the latest Monetary Policy Report in October 2023. Meanwhile, the New York Fed took down its estimate (on an inflation-adjusted basis) from 1.7 per cent in 2022Q3 to 1.3 per cent in 2023Q3, corresponding to 3.3 per cent in nominal terms. (…)

Governor Tiff Macklem seems not to be persuaded by the Bank’s models and suggested in November that “there are some reasons to believe it’s more likely that the neutral rate is higher than lower.” Adding to this were the remarks from former deputy governor Paul Beaudry in June: “The risks appear mostly tilted to the upside … that makes it more likely that long-term real interest rates will remain elevated relative to their pre-pandemic levels than the opposite.”

Beaudry justified his stand on higher neutral rates by mentioning i) aging demographics, ii) shrinking global savings mainly due to China, iii) a possible easing in income inequality, and iv) higher demand for investments as a result of a transition to green technology and advances in AI.

We argue that the majority of forces that drive the neutral rate down have not reversed their course and there are more reasons to think that the neutral rate is heading lower than higher. Labour productivity fell in 12 of the past 13 quarters and is 2.5 per cent below the year-ago level. Unlike the U.S., Canadian productivity did not pick up and continues its secular downtrend – in terms of the level, it is back to where it was 10 years ago.

While some point to productivity-enhancing developments such as AI as an answer, they are unlikely to move the needle in the near term enough in the face of a massive deleveraging cycle that awaits households and chronically low business investment. Savings will rise as households anticipate mortgage renewals, and firms will have to choose between rolling over their debt and servicing it at a higher cost or retiring it. In either case, future demand for investment faces downward pressure, pushing down the neutral rate.

Another major determinant of the neutral rate, the wealth/income inequality, has increased gradually in Canada from 2020 to 2022 – the Gini index of net personal wealth (a measure of wealth inequality) stood at 0.74, the highest level since 2007. Inequality likely worsened in 2023 with low-income consumers bearing much of the inflation burden.

This upward trend in inequality is prone to stay with low and middle-income households suffering elevated food and shelter prices and rising unemployment. Meanwhile, high-income households spend a much smaller proportion of their income on goods and services. They likely are owners of capital, in which case they have benefited from higher shelter costs and an incoming rally in the fixed-income space. A rise in income/wealth inequality will drive down the neutral rate as the rich tend to save more than the average household.

Regarding demographics, the neutral rate in Canada has both upside and downside risks. An immigration-led rise in population (+3.2 per cent year over year in 2023Q4 as per Statistics Canada, the highest yearly increase since 1958) is pushing up labor supply, hence driving up the neutral rate through higher potential GDP growth even though the unemployment rate keeps rising (up +0.9 percentage points to 5.8 per cent from the cycle low). Over two-thirds of new immigrants are between 25 and 64 years old, contributing to the much-needed labour supply in Canada.

As households age, they save more in preparation for longer retirement, but not so much once they are old. With a record number of 65+ year-olds as a share of the total population (22.4 per cent), a possible drawdown of savings from older people will exert further upward pressure on the neutral rate. However, the aging population also creates upward pressure on government spending, which could crowd out private investment and productivity. Overall, it is hard to tell whether a drawdown in aggregate savings is enough to outweigh the lower demand for investment. So, the effect of aging demographics on the neutral rate remains in question.

Lastly, economy-wide debt in Canada is modestly higher than the U.S. (337 per cent versus 335 per cent of GDP) – and excessive debt burdens, which represent a future drag on economic growth, are also a key anchor for a continuing depressed level of the equilibrium natural rate of interest (as has long been the case in Japan where total debt relative to GDP stands at 658 per cent).

We see the balance of forces pointing to R-star heading lower and what this means is that the longer the BoC stays on the sidelines and does not adjust policy rates lower, there will end up being an undesirable tightening in monetary conditions – for an economy which is now flatlining in real terms. When the BoC eventually cuts rates, we think it will need to be below the current 2 per cent estimate of neutral.

What does this all mean for the markets? The obvious trade is in the fixed-income space, which will be a primary beneficiary when the BoC cuts policy rates by more than 300 basis points to get to the neutral rate. The other major implication is on the Canadian dollar. Although the U.S. and Canada share many similar characteristics (such as income inequality and population aging), they differ significantly in terms of productivity growth.

This is a key factor. Productivity in the U.S. is expanding +2.5 per cent year over year which compares with a -2.5 per cent slump in Canada. This means that neutral rates will diverge from historical patterns, and interest rate differentials in the future will work against the Canadian dollar. In other words, the loonie should find equilibrium at a weaker level than has historically been the case (as in, at any given level of commodity prices).

Rosie may be overlooking the fact that the Bank of Canada’s mandate, unlike the Fed’s, is essentially focused on inflation: “Monetary policy: The Bank’s monetary policy framework aims to keep inflation low, stable and predictable.”

Here’s the BoC’s conundrum:

Despite clear signs that the labour market is easing, wage pressures remain significant, as evidenced by the evolution of average hourly earnings, which have continued to surge, with year-over-year growth showing its strongest increase during this inflationary episode. This undoubtedly complicates the task of the central bank, which may be reluctant to provide oxygen to an economy that is nevertheless showing signs of significant weakening. (NBF)

Yellen Declares US Economy Has Achieved Soft Landing

Treasury Secretary Janet Yellen declared Friday the US economy had achieved a long-sought soft landing, a historically unusual event in which high inflation is tamed without significantly damaging the labor market.

“What we’re seeing now I think we can describe as a soft landing, and my hope is that it will continue,” Yellen said Friday in an interview with CNN. (…)

No soft landing at the office:

Offices Around America Hit a New Vacancy Record The 19.6% of office space that isn’t leased in major U.S. cities is the highest since at least 1979.

China’s Debt Mountain Is Even Bigger Than Feared

(…) In recent weeks, China watchers have taken notice of a previously little-publicized assessment by a former adviser to China’s central bank. Li Daokui has estimated that local Chinese authorities had by 2020 run up a much bigger tally of debt than previously realized, at some 90 trillion yuan ($12.6 trillion).

Most of this debt came from building infrastructure, much of which is unlikely to generate revenues sufficient to pay off the obligations. With China’s trend growth rate notably lower now than it was, it leaves a burden over the long haul. National authorities have the wherewithal to resolve the problem, but it would take a major rethink in economic policy. Without a strategic shift, it leaves China heading for Japan-style stagnation.

Li Daokui is a Harvard-trained economist at Beijing’s Tsinghua University who served as an external adviser to the People’s Bank of China early in the last decade. In October, he delivered a lecture on his findings on the debt accumulated by China’s local authorities.

He explained that one oversight in previous estimates was a failure to dig out the basis for “capital” behind major infrastructure projects, such as a massive rail transit loop in the southwestern mega-city Chongqing. Almost two-fifths of Chongqing’s broader, near-$29 billion project came from so-called “paid-up capital.” But Li and his colleague’s analysis showed that the “paid-up capital” was effectively debt as well.

The research also determined that the fiscal wherewithal of local authorities to service their debt had deteriorated by 2020. The conclusion: “It’s clear that local governments are compelled to incur new debts to repay existing ones, which is unsustainable.” Given how growth momentum has deteriorated in recent years, the debt-servicing ability is likely “even lower now,” according to Li.

In much the same way, Japan’s economic growth by the 1990s was insufficient to simply pay off the mountain of debt created during the bubble years, based on real-estate collateral valued at entirely unrealistic prices. Tokyo’s response was to guide banks into offering companies forbearance, and avoiding US-style bankruptcies with all the social and labor carnage they entail.

Another piece of Japan’s response was to keep lowering interest rates to encourage new borrowing to fund new investments. The trouble with that was the appetite to extend or take on new credit was limited. Low rates came to be seen as a symptom of Japan’s diminished potential. (…

Li argues that there’s a three-part solution for China’s local debtload, which his analysis showed amounted to 88% of gross domestic product as of 2020. That’s notably larger than previous estimates by the International Monetary Fund. (It would have been all the bigger in Li’s worst-case estimate of $14 trillion worth of debt.)

First would be to have the central government simply take over part of the local authorities’ obligations. There have been signs in recent months that President Xi Jinping’s team is indeed thinking along these lines, though policymakers in Beijing have long sought to maintain the central government’s relatively low debt-to-GDP ratio.

Li’s second step is to extend the duration of debt, something that is under way through a variety of swap programs—some at the local level and some involving the central bank.

The third component, however, would require a significant ideological shift. That would involve selling off state assets. In Japan, that was one component of the eventual solution to its own bad-debt mountain under Prime Minister Junichiro Koizumi, in the years before the global financial crisis. (A policy option Tokyo is looking at again.)

But far from embracing privatization, Xi’s regime has tilted instead toward elevating the role of the state. It seems hard to envision a dose of 1980s Thatcherism to reduce debt and energize the private sector.

Which all magnifies the risk of a dynamic in China’s financial system that limits the economy’s potential in coming years.

China Stocks Slump to Five-Year Low in a Dismal Start to 2024

EARNINGS WATCH

Goldman Says S&P 500 Earnings Forecast Could Rise Further US growth, Fed pivot, weaker dollar may boost profits

S&P 500 companies’ earnings per share are forecast to rise 5% to $237 this year, the team led by chief US equity strategist David Kostin predicted in a weekly research note.

That’s above the median $231-per-share forecast of strategists tracked by Bloomberg but could still be too low, the Goldman Sachs strategists said.

“We see potential upside to our EPS estimate from stronger US economic growth, lower interest rates, and a weaker dollar” despite lower oil prices, the strategists said. (…)

Actually, the LSG/IBES estimate for 2024 is $243.98, up 11.1% from the $219.67 current estimate for 2023. Trailing EPS are $218.93.

• Analysts Made Larger Cuts Than Average to EPS Estimates for S&P 500 Companies for Q4

(…) The Q4 bottom-up EPS estimate decreased by 6.8% (to $53.90 from $57.86) from September 30 to December 31. (…)

During the past five years (20 quarters), the average decline in the bottom-up EPS estimate during the quarter has been 3.5%. During the past ten years, (40 quarters), the average decline in the bottom-up EPS estimate during the quarter has also been 3.3%. During the past fifteen years, (60 quarters), the average decline in the bottom-up EPS estimate during the quarter has been 4.2%. During the past 20 years (80 quarters), the average decline in the bottom-up EPS estimate during quarter has been 3.8%.

Thus, the decline in the bottom-up EPS estimate recorded during the fourth quarter was larger than the 5-year average, the 10-year average, the 15-year average, and the 20-year average. This quarter also marked the largest decrease in the bottom-up EPS estimate since Q3 2022 (also -6.8%). (…)

  China-U.S. cooperation ‘no longer an option … but an imperative’ – Wang Yi

Chinese Foreign Minister Wang Yi said on Friday the most urgent task for Sino-U.S. relations is to establish a correct understanding and cooperation between the two sides, stressing it is “no longer an option … but an imperative” for the world.

Cooperation is the “most correct choice for China and the United States to get along”, Wang said in a keynote speech at an event to mark the 45th anniversary of the establishment of diplomatic relations between China and the U.S.

“It can be said that China-U.S. cooperation is no longer an option for the two countries and even for the world, but an imperative that must be seriously addressed,” Wang said. (…)

Wang said China hopes the U.S. will relax its mindset and “in an attitude of equality and inclusiveness” respect the choices made by the Chinese people and China’s development path, including when defending its national sovereignty and territorial integrity.

“We are willing to commit ourselves to building a stable, healthy and sustainable China-U.S. relationship on the basis of mutual respect,” he said.

Wang also said China’s development and revitalisation has a “strong endogenous momentum”, which he said meant that China will assume greater responsibility for the world’s peace and development.

“We have no intention of replacing anyone, overriding anyone, and have no intention of seeking hegemony,” he added. (…)

“We must insist on peaceful coexistence, and the most important thing is to effectively manage differences,” Wang said. (…)

David Meale, U.S Deputy Chief of Mission for the Embassy of the U.S. in Beijing, who attended the event with Wang, said “as we look ahead to 2024, my colleagues in the U.S. Embassy and in our four consulates general look forward to working with our counterparts to continue to responsibly manage our bilateral relationship.”