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1. Inflation Rate Slows in UK
The inflation rate in the U.K. dropped to 6.8% year over year in July, down from 7.9% in June, the BBC reports. A decrease in electricity and gas prices helped bring the inflation rate down, but food, restaurant and hotel costs remain high, causing some to believe interest rates will rise.
Despite wages increasing 7.8% annually between April and June and the inflation rate dipping below 7%, food costs 15% more than it did a year ago and services inflation is at 7.4%, the news outlet reports.
"Inflation is still significantly above that 2% target and even if it is cooling off faster than a sunburnt Brit diving into a hotel pool, prices are not falling, they're just not rising as fast as they have been," said Danni Hewson, head of financial analysis at AJ Bell.
2. Chinese Stocks Sharply Drop in Value
An index of Chinese stocks traded in Hong Kong fell more than 9% this month, and the CSI 300, a stock index that tracks the biggest companies in Shanghai and Shenzhen, dropped 5%. Lower-than-expected domestic demand, a decrease in investment in real estate and falling consumer prices are all root causes of the stock woes, the New York Times reports.
“The Chinese economy is faced with an imminent downward spiral with the worst yet to come,” analysts at the investment bank Nomura wrote in a report Tuesday. “Beijing should play the role of lender of last resort to support some major developers and financial institutions in trouble, and should play the role of spender of last resort to boost aggregate demand.”
3. California Hotel Transaction Volume Diminishes
Individual hotel sales in California decreased by 53% in the first half of 2023, steeper than the decline during the Great Recession in 2009, HNN’s Bryan Wroten reports. The average sales price did grow 33.6% year over year, but the median price dropped 9.4%.
Atlas Hospitality President Alan Reay said the main cause of the drop in sales is interest rates.
“Buyers are looking at that going, ‘Wait a minute. I can’t borrow at 4.5%. I can’t afford to buy a deal at a return that’s less than my cost of capital,’” he said. “What we have now is this standoff between buyer and seller.”
4. Wildfire Evacuations Ordered in Northwest
Wildfires near California’s border with Oregon have led to evacuation orders in the area, the Associated Press reports. There were at least 19 fires that erupted in the Klamath National Forest, and thunderstorms carried the flames to timber and rural lands.
“If you are in this area, please get out immediately,” Rachel Smith, forest supervisor for the Klamath National Forest, said in a statement on Facebook.
There are no reported injuries, though the “Head Fire” was burning near the site of the McKinney Fire, which killed four people last year, the AP reports.
5. State of Consumer Credit Murky
One of the main drivers of leisure demand over the past two summers has been high personal savings after limited spending on experiences during the pandemic. While this is generally still the case — the median savings and checking balances were 30% higher in July than they averaged in 2019 — the question of when rising delinquencies on debt will lead to distress is weighing heavy on the market, the Wall Street Journal reports.
“The frequency with which people are becoming late with payments on their debts for some kinds of loans is returning not just to pre-pandemic levels, but even moving beyond them. The percentage of credit card and auto loan balances transitioning into delinquency — that is, going from current to becoming 30-days-plus late — is happening at a pace faster than that of 2019, according to the Federal Reserve Bank of New York’s recently released second-quarter Quarterly Report on Household Debt and Credit,” the news outlet reports.