Finimize - πŸ“‰ Uh oh, China

China's ruthless efficiency backfires | The UK just keeps spending |

Hi Reader, here's what you need to know for September 16th in 3:02 minutes.

πŸ“± Microchips are everywhere: your phone, your games console, your car. Or at least, they were. Join BlackRock’s Omar Moufti on Friday for The Great Semiconductor Shortage, and find out when companies will finally be able to get their hands on those elusive rascals again. Grab your free ticket here

Today's big stories

  1. Chinese retail sales rose at their slowest pace in 12 months in August
  2. There could be stock market winners even if the US's newly proposed tax plan goes ahead – Read Now
  3. UK inflation hit a nine-year high in August

What The Gel?

What The Gel?

What’s Going On Here?

Data out on Wednesday showed Chinese retail sales rose at their slowest pace in a year in August, as the country’s efforts to kill off Covid leave behind a sticky situation.

What Does This Mean?

China’s done a pretty solid job of keeping the pandemic in check, with the country quick to clamp down on any outbreaks as and when they spring up. But that efficiency’s come at a price: retail sales rose just 2.5% last month compared to the year before – well below the expected 7%. That’s got analysts worried that the country’s overall economic recovery is at risk, especially since any more outbreaks are bound to interrupt consumer spending and supply chains all over again. Investment bank Goldman Sachs is so worried, in fact, that it’s lowered its forecasts for the country’s economic growth from 5.8% to 2.3% this quarter.

Why Should I Care?

For markets: A change of tactics might be in order.
China’s resisted relying on broad-brush support packages like other developed economies, instead choosing to focus on targeted programs for small businesses. But economists think this recent data might encourage its government to try a different approach: cutting the amount of cash banks are required to hold in reserve in an effort to boost lending and, in turn, spending. It might help increase investment in Chinese stocks too, which would be good news for the country’s ailing stock market: it’s fallen 8% this year.

The bigger picture: So much for β€œsafe as houses”.
China’s property market has been having a tough time of it too: the government’s been rolling out restrictions across the sector, making it a lot harder for developers and homebuyers to take out loans. That might be why home sales fell 20% in August compared to the year before – the biggest drop since the pandemic hit last year.

You might also like: Are Chinese stocks a bargain?

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Analyst Take

There Are Ways To Profit From The US’s Proposed Tax Hikes – If You Squint A Little

There Are Ways To Profit From The US’s Proposed Tax Hikes – If You Squint A Little

What’s Going On Here?

If the US government has its way, tax hikes are coming.

And the companies in the key US stock index are set to pay the price, with profits expected to be at least 5% lower as a result.

But not all stocks are necessarily going to suffer. In fact, there’s a certain type of company that’ll carry on business as usual.

What’s more, there might be babies thrown out with this bathwater. That is to say, some stocks might take a hit when they’re not actually at risk.

So that’s today’s Insight: the short and mid-term opportunities created by higher taxes, and the stocks that are effectively tax-proof.

Read or listen to the Insight here

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Early Riser

Early Riser

What’s Going On Here?

Fresh data out on Wednesday showed UK inflation hit a nine-year high in August, so the Bank of England (BoE) might need to shake itself out of its slumber earlier than it wants to.

What Does This Mean?

Consumer prices in the UK have been rising fast ever since the government eased pandemic restrictions back in April, climbing 2.7% in the last six months alone (tweet this). And that seems to have come to a head last month: prices were 3.2% higher than they were the same time last year.

This isn’t great news for the BoE, which has maintained for a while that the current spike in inflation is only fleeting. Then again, the central bank was considering raising interest rates anyway – a move that would discourage borrowing and cool down spending. So this data – along with Tuesday’s strong jobs report – won’t just vindicate that decision: it might encourage the BoE to spring into action even sooner than expected.

Why Should I Care?

The bigger picture: It’s not just consumers...
UK energy prices are surging too – so quickly that two British suppliers went out of business earlier this week. See, energy suppliers tend to lock in the price they pay for energy ahead of time, but Utility Point and People’s Energy hadn’t. Their customers, meanwhile, had locked in their own prices via fixed yearly tariffs, which means the companies were selling energy on for a much lower price than they were paying for it.

Zooming out: And it’s not just in the UK…
Energy prices are surging to record highs all across Europe, and governments are starting to take note: Greece and Spain are handing out subsidies to help their people afford rising energy bills. And since analysts are expecting bills to rise by 20% across Europe, it mightn’t be long before other governments follow suit.

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πŸ™‹ Ask a question

πŸ’¬ Quote of the day

β€œI think age is a very high price to pay for maturity.”

– Tom Stoppard (a Czech-born British playwright and screenwriter)
Tweet this

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🎨 WTF Is Next For NFTs?: 1pm UK time, September 16th
βœ… How To Be Greener About Bitcoin: 6pm UK time, September 16th
πŸ”Œ When Will Microchips Bounce Back?: 1pm UK time, September 17th
πŸ’° A Guide To Valuing Crypto Assets: 5pm UK time, September 17th
πŸš— How To Profit From The EV Boom: 5pm UK time, September 20th
πŸ”’ Navigating The World Of Bitcoin Security: 6pm UK time, September 21st
πŸš€ Should You Jump On The NFT Bandwagon?: 1pm UK time, September 22nd
πŸ“± How To Be A Diligent Tech Investor: 4pm UK time, September 22nd
♻️ How To Turn Your Portfolio Green : 6pm UK time, September 23rd
πŸ›’ How To Build A Commodities Portfolio: 6pm UK time, September 27th
🀠 How To Win Big With Fractional Shares: 5pm UK time, September 28th
πŸ’° Does It Make Sense To Own Bonds In 2021?: 3pm UK time, September 29th
πŸ€– The Pros And Cons Of Algorithmic Trading: 6pm UK time, September 29th

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