CONSUMER WATCH
From the Bank of America Institute yesterday:
Consumer spending growth has built momentum over the last few months, with three back-to-back monthly increases in seasonally adjusted credit and debit card spending, according to Bank of America aggregated card data.
Looking across US Census Bureau regions, we see a pickup in spending growth throughout the country.
Containerized imports through American ports are set to take an historic plunge in September, an analyst predicts, as President Donald Trump’s China tariffs take a toll on the busiest trans-Pacific trade route. (…)
McCown said that without the spike from frontloading, the U.S. would have seen a drop in y/y volume in July “at least as high as the Far East’s positive number.” [+6.3%] (…)
He quoted a revised forecast by the National Retail Federation that shows import volumes falling 3.4% for the year.
“That translates into the remaining four months of 2025 being down 15.7% compared to the same four months in 2024,” said McCown.
The Port of Los Angeles expects inbound volumes to fall 10% in September y/y; McCown agrees that the busiest U.S. container port will see a double-digit decline for the month. (…)
Moreover, bookings for containers moving from China to the U.S. the first week of September were down 26% from the same week a year ago. Backhaul moves westbound to China were off by 18% despite the latest tariff pause. (…)
A year-on-year decline in inbound volume is a rarity in the more than six decades of container shipping, McCown noted, matched only by drops during the 2009 financial crisis and the pandemic, which were short-lived. Imports have reliably grown at a rate two, three or more times that of of the GDP. “The downward turn will be due solely to tariffs and unfortunately, there is nothing at present that suggests it will be short-lived,” McCown said.
The Big Three West Coast Ports reported combined containerized import growth of -7.0% MoM in August, below historical August seasonality of +1% MoM which comes after above-seasonal performances in June and July. (GS)
Strong consumer demand vs declining supply?
US New-Home Sales Unexpectedly Jump Over 20% in Broad Advance
New-home sales in the US unexpectedly surged in August to the fastest pace since early 2022, likely lifted by builders’ rampant price cuts and sales incentives.
Sales of new single-family homes increased 20.5% to a 800,000 annualized rate in a broad advance, according to a government report issued Wednesday. (…)
The data suggest US homebuilders are successfully luring buyers off the sidelines with aggressive sales incentives. This month, 39% of builders reported cutting prices in a survey by the National Association of Home Builders and Wells Fargo, a post-pandemic high.
Homebuilder Lennar Corp. recently reported offering sales incentives equal to 14.3% of its average sale price, more than double its usual 5% or 6%, Bloomberg Intelligence analyst Drew Reading said in a note. (…)
More demand for durable goods…
Sky-High S&P 500 Signals ‘New Normal,’ Not Bubble, BofA Says
US stocks are screamingly expensive when viewed from a historical perspective. But dig into the details, and the sky-high valuations may well be warranted, say strategists at Bank of America Corp.
The S&P 500 Index is trading at statistically rich levels based on 19 of 20 in-house metrics tracked by BofA, with four hitting all-time highs, a team led by Savita Subramanian said Wednesday in a note to clients.
Yet the attributes inherent in the current mix of members — including less financial leverage, lower earnings volatility, increased efficiency and more stable margins than in decades past — help to support the towering valuations, she argues. (…)
“The index has changed significantly from the 80s, 90s and 2000s,” Subramanian, BofA’s head of equity and quantitative strategy, wrote. “Perhaps we should anchor to today’s multiples as the new normal rather than expecting mean reversion to a bygone era.” (…)
This week, the S&P 500’s 12-month forward price-to-earnings ratio touched a high of 22.9, a level that this century was exceeded in just two prior instances: the dot-com bust and the pandemic rally in the summer of 2020 when the Federal Reserve reduced interest rates to near zero. (…)
“Buying stocks at these multiples feels bad,” Subramanian wrote, but a boom in sales, earnings and GDP would “resolve this seemingly untenable situation” by justifying those pricey levels, she added. “With major regions in easy fiscal mode, and with the Fed cutting against a backdrop of broadening and accelerating profits, it’s not hard to argue” for such a boom, Subramanian added.
“This is the higher probability ‘tail’ in 2026 than stagflation or recession, in our view,” she said.
China’s Boost to Argentine Soy Buying Sidelines US Farmers
China ramped up buying of soybeans from Argentina this week after the South American country abruptly suspended export taxes, sidelining US farmers who usually dominate the trade at this point of the year.
Importers in China have expanded purchases to at least 35 cargoes, up from an earlier tally of 20 shipments, according to people familiar with the matter, who asked not to be identified as they’re not authorized to speak to the media. Most of the soybeans are slated to be loaded in November, they added. (…)
The world’s largest importer typically turns to US supplies between October and February following the American harvest, while the new Brazilian crop is in the process of growing for collection in March.
But as of Sept. 11 — almost two weeks into the new marketing season for the US — China hadn’t booked a single American cargo. That’s the first time in records going back to 1999, according to US Department of Agriculture data.
The American Soybean Association urged President Donald Trump to secure an “immediate deal” with China following reports of the Argentine purchases. In a statement on Wednesday, the group said “the farm economy is suffering.” (…)
(…) “Tonight we recognize President Javier Milei for his tireless efforts to make Argentina great again,” said Bessent, introducing Milei to receive an award at an Atlantic Council dinner on Wednesday. He hailed Milei’s “visionary leadership,” saying the Argentinian leader “recognized government is not the solution, it is the problem.” (…)
With Argentina, Bessent is trying to support a currency under threat. In so doing, he’s effectively moving to prop up one of Trump’s closest allies on the world stage in a region where China has been making inroads with other nations, including neighboring Brazil. (…)
The Treasury secretary earlier Wednesday said the US plans to extend a $20 billion swap line to Argentina, and stands ready to buy the country’s foreign bonds. That provided much-needed financial support to Milei as he tries to regain investor confidence and stem a run on his nation’s currency. (…)
He made clear in an interview on Fox News that the financing was meant to help Milei ahead of next month’s crucial vote. (…)
Bessent’s overture also marks an extraordinary turnabout for a US president who was elected on a promise to limit American military and financial interventions overseas in favor of focusing on domestic concerns. Since taking office, Trump has slashed billions in foreign aid. (…)
And in Trump and Bessent, Milei has found a pair of financial backers from the world’s largest economy, ready to intervene in order to stave off a collapse of his nation’s currency caused by doubts about Milei’s own economic plans. And all of that comes just ahead of key midterm elections next month in Argentina, as polls show the more liberal opposition gaining support. (…)
Trump has stoked conflict with leftists in Latin America, slapping tariffs on Brazil, whose President Luiz Inacio Lula da Silva is an elder statesman in the region. He’s also hit Mexican President Claudia Sheinbaum’s nation with duties, repeatedly clashed with Colombia’s Gustavo Petro and ordered strikes on boats belonging to alleged drug traffickers in the Caribbean as a warning to Venezuela’s Nicolas Maduro.
By contrast, Milei has carved out a friendly path with Trump, making multiple trips to the US, including for Trump’s inauguration in January. Bessent also made Argentina one of his first trips as Treasury Secretary in April to show support for Milei’s economic program days after the nation won a new loan from the International Monetary Fund.
From the FT:
One of biggest obstacles to Milei rethinking his political strategy may be his sister and life-long confidante, Karina. As presidential chief of staff, she has tried to build electoral support for Milei’s upstart political party La Libertad Avanza.(…)
Karina is also embroiled in a corruption scandal that hurt Milei’s reputation as an outsider determined to break with Argentina’s notoriously venal politics. The former head of the government’s disability agency and Milei’s former lawyer, Diego Spagnuolo, was heard on recordings discussing commissions of 3 per cent on medicines being funnelled to Karina.
Milei’s response has failed to quell voters’ doubts, analysts say. The president stayed silent for a week, then dismissed Spagnuolo as a liar, then claimed the recordings were AI-generated.
On Saturday he told local media the claims were improbable because 3 per cent was a low figure: “Would you take 3 per cent when you could take 100 per cent?”
The Extraordinary Rise of Electric Cars in Developing Countries Colin McKerracher, head of transport for BloombergNEF
(My emphasis)
(…) from 2019 till now, the size of the fleet forecast has gone up a fair bit. But actually in the last three years, it’s been level and even slightly down. So 2025 was the very first year where our global forecast went down, and that’s because we were anticipating, and starting to see now, a very strong drop in the US. It’s not dropping yet, but the policy levers going away under the Trump administration will absolutely have an impact.
And this is an important thing to mention, is that policy still really matters. You still get the policies that you vote for, and those policies have an impact on the market.
But zooming out and sort of taking the long view, I think the biggest reason why it’s gone up over a five or six year time horizon is that we reached the point of organic consumer demand takeoff in China about three years sooner than we thought we would. So our general view before was that China and most of the markets are policy push markets for the next few years, and then around 2025 it takes off.
What happened in China is that around 2021-2022, organic consumer demand vastly outstripped what the government targets were. Over 50% of sales have a plug, the largest auto market in the world, half of the sales are electric, and that is way ahead of what the government targets were. What that means is that that kink in the curve where you get organic consumer adoption has come about three years sooner than we thought (…).
Battery costs have come down dramatically. (…) as soon as you started to look at battery costs and battery prices, you sort of concluded, ‘whoa, there’s something really dramatic going on here.’ And eventually you’re going to get to price parity between electric vehicles and combustion cars, and that’s largely what’s played out.
Not everywhere, like an EV is still significantly more expensive in the US, and depending on where you are in parts of Europe, than a combustion car. But in China, it is cheaper. And again, that’s part of why you’ve seen that organic consumer demand take off. (…)
So you do need competitively priced EVs. We’re getting more and more of those around the world, and that’s a big part of why you’ve seen adoption take off. And underlying that is the battery story. And batteries do keep getting cheaper, and they do keep getting better.
(…) we have revised our US EV adoption forecast dramatically down in this year’s outlook. And the biggest thing behind that is that the federal tax credit is going away. So at the end of September, it’s gone. And then the other thing is that the fuel economy regulations, the CAFE regulations, are being rolled back, and both of those were set to be big drivers, along with some parts of the Inflation Reduction Act that were incentivizing the supply side. So virtually all of those are under threat.
Now the other big pillar of US EV adoption has been California, and the standards that California sets for vehicles and the zero emissions vehicle mandate in California that exists because of the waiver that California has to set its own standards. Trump has gone after that waiver. (…) Our outlook this year assumes that California retains some ability to set its own air quality standards, and that things like the ZEV mandate in California may be revised, but not fully eliminated. That could go down further. So we already reduced our outlook pretty significantly between last year’s and this year’s for US EVs in 2030. We could revise it further if that California ability is confirmed to be removed.
You said that China is now selling more than half of all its new car sales as electric. But there’s a more shocking stat in the report that this will be the first year when China will sell more electric cars than the total number of cars sold in the US whether that’s electric or those massive gas guzzling pickup trucks. What is that going to do to the competitiveness of US automakers?
(…) in Q4, we think there’ll be more EVs sold of all types, not including two and three wheelers, but cars and trucks versus combustion vehicles and all types of vehicles in the US, which is pretty remarkable. So it’s going from very few sales a few years ago to overtaking the entire size of the US vehicle market, which is part of the reason we say as well that combustion vehicle sales peaked in 2017. (…)
And not only are they selling a lot of electric vehicles within China, but the amount of vehicles they’re exporting is also rising really quickly. So China has become the largest vehicle exporter in the world, overtaking Japan last year and Germany the year before. There is a real risk right now in the US, and US consumers are not able to access these vehicles that the Chinese automakers are producing because of 100% tariff, which basically makes it impossible for an automaker to sell there profitably.
There is a real risk that the US market is sort of evolving as its own island, if you will. If you think of evolutionary life forms, these islands that get cut off from other parts of the world, they grow different species within them. And there was always a bit of that within the US and North American market. But it starts to look like a stronger effect if the rest of the world is moving much more forcefully towards electrification.
And you don’t have to go very far from the US, or from Canada even to see that. If you look at Latin America, other parts of the Americas, you’re seeing really strong growth in electric vehicles coming from mostly Chinese manufacturers.
So there is a competitiveness risk, I will say (…). About 25% of global car sales this year are going to be plug-ins, and the majority of those are battery electric. So maybe it’s not so early in the transition anymore, but there is still room for this to turn around, and companies like Tesla, though their sales have fallen a little bit in the last little while in some markets, they are still leaders in electric vehicles globally, so there is still room to compete and to be at the forefront of this.
But it does look more and more like under the Trump administration, the US will fall further behind on electrification and on batteries, and it is unclear yet whether that’s something they’ll be able to recover from if that set of policies lasts four years or longer. (…)
If you’re sat in the US, this might sound surprising, but you’re getting higher rates of EV adoption in many emerging economies than you have in the US, than you have even in some European countries. And the list is getting longer. So it used to be maybe one or two countries, but now you say, ‘Okay, actually, we’ve got quite high rates in Brazil, in Uruguay, in Costa Rica, in big parts of Southeast Asia, Vietnam, Thailand, Nepal, Ethiopia.’
These are not places that are doing this for some sort of obligation around CO2 emissions, or some sense of moral obligation to other countries. Primarily, those factors can play a role, but they’re primarily doing it because it’s the lowest cost economic choice.
Now, I think there is a bit of a pushback from some of these countries if they make automobiles themselves to say — and India is a good example of this — ‘We want more of it made here. We don’t want to import technology.’ But what you’re seeing in places that don’t make a lot of vehicles of any type within the countries, they’re saying, ‘we’re importing this either way, we may as well import the one that cleans up local air quality and is cheaper to buy.’ (…)
And again, not just in a few countries, in many countries, and in many different segments, two wheelers, buses, delivery vans, cars, all those are really moving in a lot of emerging economies. Then the whole thing goes a lot faster.
So India is probably the most interesting one to watch, to be honest, because the numbers are starting to go up quite quickly. You do have domestic manufacturing, so the model choice is going up very fast. (…)
The fastest growth rates are all in countries where Chinese vehicles are part of the mix, they’re forcing competition. They’re bringing down costs for consumers. And sometimes I hear in the US people say, ‘no, no, consumers don’t want to buy these.’ And I say, ‘well, let’s take out that 100% tariff and see what happens. Let the consumer decide.’ (…)
Nepal, 70% of all new cars are electric. Thailand, 60%. Vietnam, 40%. No developing country can quite match your resident country of Norway, where 100% cars that are sold are EVs. But barring that exception, we are now at that place where many developing countries have begun to leapfrog developed countries when it comes to new sales of cars. (…)
And the last time I was in San Francisco, I took one [autonomous car] in a rainstorm, a full on downpour, and it handled everything really, really smoothly. So the technology is getting better. The number of trips is going up exponentially. You’re seeing their first permits approved to pick up at airports. And again, if you look at shared mobility patterns, airport pickups are a really big part of Uber and Lyft earnings, and things like that. So there’s a lot of trips available there.
(…) 90% of all the kilometers traveled in autonomous vehicles today are electric. So that’s happening. It’s not hypothesized anymore. That market is electric, but it’s probably more like the 2040s or say the late 2030s and onwards, where it starts to make a material impact in global transit patterns and global energy use from transport.
So we think about 25% of cars this year will be electric. That’s battery electrics and plug-in hybrids combined. If you go down from there, light commercial vehicles, about 10% will be electric this year, medium and heavy, about 4%. So passenger cars are ahead of those two segments, but they’re actually behind the two leading segments, which is two and three wheeled vehicles, which is 39% of global sales this year will be electric, and buses, about 43% of sales will be electric.
So when you think particularly about emerging economies, think of this combined ecosystem of different vehicle types. It’s not all about passenger cars, but you’re seeing progress, rapid progress, on electrification in multiple segments at once. (…)
And actually, what’s interesting in the oil displacement story is that early on a lot of it was driven by buses and two and three wheeled vehicles, and just now you’re starting to see passenger cars start to make a material dent. It’s about 2 million barrels per day being displaced right now by electric vehicles of all types. Now that’s against over 100 million barrels per day of oil demand globally.(…)
But I think where it gets quite interesting is the markets where you’re seeing higher levels of EV adoption, because there you are starting to get significant displacement. (…) So places like Norway, you’re getting about three to 4% drop in liquid fuel demand for road transport every year, and that’s just as the fleet turns over.
In China, which has been the biggest driver of oil demand growth over the last two decades, various groups, including Sinopec, the largest fuel distributor in the country, has said they think gasoline demand is either peaking this year or has already peaked. Diesel demand, they see growing for a little bit longer because of heavy trucks, but you’re actually also starting to see pretty rapid uptake of electric trucks, about 16% right now, of heavy truck sales are electric, much higher for vans.
So that’s starting to displace as well. When we add that all together, we at BloombergNEF see global road oil demand, or road fuel demand, which is a contributor to global oil demand, peaking around 2029, so within four years. Now that doesn’t mean overall transport demand peaks. That’s just road transport with shipping and aviation. You could see that growing for another couple of years. But then our view is that the sort of weight of that road fuel part, which is still the biggest consumer of oil, biggest single consumer of oil in the world, starts to outweigh both the rising shipping and aviation part around 2031.
And then you start to get a peak around there. Now this is a hotly debated topic, but I would say that you can look a little bit just at the fleet of vehicles like the biggest thing driving oil, global oil demand is the fleet of combustion engine vehicles on the road. It is still growing, therefore oil demand is still growing, but it’s not going to grow for much longer, because we passed the peak of sales in 2017. It takes above 10 years for that to fully flow through the fleet, and then that flows through to gasoline and oil demand. (…)
- Climate change is “the greatest con job ever perpetrated on the world.” (Trump)
- “Green and low-carbon transition is the trend of our time”. (Xi)
Europe Car Sales Keep Rising as EVs, Hybrids Lure Consumers
New-car registrations across the region rose 4.7% last month from a year earlier to 791,349 units, the European Automobile Manufacturers’ Association said Thursday. Germany and Spain gained more than 5%, while demand in the UK and Italy dwindled.
Even as electric-vehicle sales pick up pace in Europe, automakers are grappling with a slower uptake than had been predicted. While volume players are starting to gain traction with more affordable EVs, luxury-car makers such as Porsche AG are rolling back their electric ambitions due to weaker demand and high costs. (…)
For car manufacturers, plug-in hybrids are a bright spot, with a 56% rise in registrations last month for cars combining electric driving with a combustion engine. Sales of fully electric vehicles increased 27%. (…)
US EV pioneer Tesla Inc. continued its downward spiral. European sales of the brand led by Elon Musk dropped 22% in August, giving it a market share of just 1.9%.
Volkswagen, BMW and Mercedes-Benz Group AG all gained, while BYD outshone them all as it more than tripled deliveries, though sales still remain relatively low.
US shale bosses decry ‘chaos’ in Donald Trump’s energy policy Oil executives tell survey that administration support for low prices and levies on crucial goods is scaring investors and raising costs
Donald Trump’s tariffs and drive to slash oil prices are “kneecapping” the US shale sector, chilling investment and risking reprisal against the industry, executives have warned.
Immediately after entering the White House, the president declared a “national energy emergency”, pledging to “drill, baby, drill” and pass on lower energy costs for consumers.
But bosses told a survey by the Federal Reserve Bank of Dallas that the administration’s support for low prices, levies on crucial goods and chaotic decision-making is scaring off investors and increasing costs. The report is often a source of surprisingly frank assessments of US energy policy because executives are allowed to provide responses anonymously.
“The noise and chaos is deafening! Who wants to make a business decision in this unstable environment?” wrote one exploration and production executive.
The government “operate[s] with little understanding of shale economics”, said another. “They’ve effectively aligned with Opec — using supply tactics to push prices below economic thresholds, kneecapping US producers in the process.”
Since January the price of West Texas Intermediate, the benchmark for US crude, has declined 18 per cent. Respondents said drilling becomes a money-losing proposition below $60 a barrel.
“The administration is pushing for $40 per barrel,” said one executive. “Drilling is going to disappear.”
Trump’s trade policy featured heavily among concerns because of 50 per cent tariffs placed on steel and aluminium since June. A boss in the oil and gas support services sector said it was suffering from “increased cost[s] due to tariffs”.
Another responded that the subsector was “bleeding”. (…)
The report showed activity declined 6.5 per cent in the third quarter, a slight uptick from the previous quarter’s dip of 8.1 per cent.
However, negative outlook nearly tripled, slumping 17.6 per cent among the 139 companies that responded. (…)
But lower oil prices are keeping inflation low, sustains discretionary income and making voters happy.
1 thought on “YOUR DAILY EDGE: 25 September 2025”
” Not everywhere, like an EV is still significantly more expensive in the US, and depending on where you are in parts of Europe, than a combustion car. But in China, it is cheaper. And again, that’s part of why you’ve seen that organic consumer demand take off. (…)”
It is cheaper in China because: Chinese labor costs per hour are half or less the Western ones, China EV manufacturers are heavily subsidised by Uncle Xi’s minion$, and Chinese consumers can reload their cheap EV’s using utterly dirty local coal produced electricity costing half per kWh compared to the USA and 1/3th per kWh compared to the green EU . . .
And in Norway, which has 100% EV penetration, this was achieved by heavy Govmint intervention: public parking is free for EV’s while ICE cars pay through the nose per hour for these public parking places, no tax are put on registration for EV’s while ICE’s are paying a high tax at govmint desk car registration, Norway’s electricity supply rates are hydropower cheap (25% of EU’s rates per consumed kWh), and not VAT tax are put on any EV purchased car, plus each EV get a small subsidy at purchase, loads of benefits on your salary payslip if your drive them to work and back home, and so on – bottom line: only a financially illiterate moron would opt for an ICE engine in Norway, given such a heavily Govmint skewed purchasing environment to the EV benefit, all paid for by selling Norway’s plentiful indigenous offshore oil and gas extracted benefits, oil and gas sold to the rest of the world for a very nice profit, all thsoe profits being recycled into NOK, to be put to the Norway govmint coffer and to be recycled into foreign purchased EV vehicles . . .
In most EU countries, EV and hybrids face far lower insurance fees than pure ICE vehicles for the same vehicle size and motor power, far less drastic driving regulations (ICE engines are subjected to Low Emission Zones restrictions for vehicles in many European cities – e.g. London, Paris, Bonn, Antwerp, etc, who are off limits if your Euro3-4-5 motor is not Euro 6abcdef level), and BEV get a boatload of financial tax incentives too, to get pushed up.
In other words, an artificially positive ecosystem environment is making that BEV + plug-ins are increasingly being adopted all over the place. Now let’s see what happens once the normal ecosystems get put back in place, because the Govmints can’t afford anymore all those freebies towards EV and plug ins, given their dicey fiscal positions (and emerging far right voting surges in some places in the EU, USA, and elsewhere . . .).
And in India, many three wheeled EV’s with a large back flat platform for material handling, bought cheaply from China, are now rusting in the farmer’s courtyard in the area’s around New Delhi, etc, and higher up the Himalaya mountains. Why ? because when the harvest time is finally there in September, it is too cold in those higher latitudes places. They three wheeler batteries are only half capacity loaded, even after a whole night of loading up at full throated capacity- too cold for the cheap systems plus no internal heater in place to get more juice from the damn exhausted batteries. Farmers are pissed off, feeling scammed, since they can’t move their harvest to the markets with their EV vehicles who can’t perform – driving range being cut in half or far less than that. They are forced to fall back on rented diesel trucks backups that are charging them a premium price given that everyone is in harvesting time. They are in the dicey positions of choosing to let the harvest rot in the cold fields, or collect and go to the markets for much higher diesel truck transport fees than first anticipated, because their damn three wheeled EV can’t perform as advertised by the Chinese suppliers . . .
Well, I am agnostic, we will see what happens down the road . . .
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