Click here for the PDF: The Weekly Beacon August 11 2023

We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.

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This weeks issue: Car payments, Consumer budgets, Credit card debt, Government debt, Consumer debt, interest rates, China exports and imports, Chinese economy, China and Russia, WeWork, Risk factors, Cash burning, Unprofitable, Recovery when stocks drop, Investor bias, Emotional investors, Uranium, Energy investing, Nuclear power as the future, Nuclear reactors, ESPN and PENN Entertainment, Disney and ESPN 2023, Dave Portnoy reclaims Barstool.


China bites back

A recent data release from China was at the forefront of investors’ minds on Tuesday. The news sent markets which had been rocky for a few weeks in a downward direction. The data which came in worse than expected show some serious cracks in the Chinese economy. Official data from China showed that imports and exports had each dropped by double digits in July.

The data signaled the lowest exports since the start of the Covid-19 pandemic, shipments were 14.5% lower than last July out of China. Imports were also down in China dropping 12.4% from last July’s number. Western demand for Chinese products has decreased as geopolitical tensions between the West and China heat up.

The U.S. has led the way in this exodus from China as American imports of Chinese products dropped by 25% from the year prior in July. The uncoupling of the west and east is a trend that we have been following for quite some time and will continue to monitor moving forward.

The U.S. government has also imposed restrictions on companies purchasing or producing products in China. This decoupling has led companies and consumers to purchase products (or inputs) from other places like Vietnam and South America.

The only positive news in this recent data dump for China came from its relationship with Russia. Chinese exports to Russia grew by 70% over the last year.

The China – Russia alliance is alive and well and is something that will impact the global economy and financial markets as a whole for the foreseeable future.