Finance

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China’s slowing economy is still waiting for the promised government support to kick in.
Senior economic and finance officials have told reporters in the last two weeks that fiscal support is in the works, and the issuance of ultra-long bonds to spur consumption would exceed last year’s.
Stimulus will begin to take effect this year, but it will likely take time to see a significant impact, Mi Yang, head of research for north China at property consultancy JLL, told reporters in Beijing last week.

Passengers walk along the platform after disembarking from a train at Chongqing North Railway Station during the first day of the 2025 Spring Festival travel rush on Jan. 14, 2025.
Cheng Xin | Getty Images News | Getty Images

BEIJING — As promised government support is still to meaningfully kick in, China’s economy hasn’t yet seen the turnaround investors have been waiting for.
While policymakers have, since late September, cut interest rates and announced broad stimulus plans, details on highly anticipated fiscal support won’t likely come until an annual parliamentary meeting in March. Official GDP figures for 2024 are due Friday.

“China’s fiscal stimulus is not yet enough to address the drags on economic growth … We are cautious long term given China’s structural challenges,” BlackRock Investment Institute said in a weekly report Tuesday. The firm, which is modestly overweight Chinese stocks, indicated it was ready to buy more if the circumstances changed.
Of growing urgency in the meantime is the drop in domestic demand, and worries about deflation. Consumer prices barely rose in 2024, up by just 0.5% after excluding volatile food and energy prices. That’s the slowest rise in at least 10 years, according to records available on the Wind Information database.
“Consumer spending remains weak, foreign investment is declining, and some industries face growth pressure,” Yin Yong, Beijing city mayor, said Tuesday in an official annual report.

The capital city targets 2% consumer price inflation for 2025, and aims to bolster tech development. While nationwide economic goals won’t come out until March, senior economic and finance officials have told reporters in the last two weeks that fiscal support is in the works, and issuance of ultra-long bonds to spur consumption would exceed last year’s.
China’s announced stimulus will begin to take effect this year, but it will likely take time to see a significant impact, Mi Yang, head of research for north China at property consultancy JLL, told reporters in Beijing last week.

Pressure on the commercial property market will continue this year, and prices may accelerate their drop before recovering, he said.
Rents in Beijing for high-end offices, called Grade A, fell 16% in 2024 and are expected to drop by nearly 15% this year, with some rentals even nearing 2008 or 2009 levels, according to JLL.
New shopping centers in Beijing opened in 2024 with average occupancy rates of 72% — previously such malls would not be opened if the rate was below 75% or much closer to 100%, JLL said. Within a year, however, the new malls have seen occupancy rates reach 90%, the consultancy said.

Home appliances

Unlike the U.S. during the Covid-19 pandemic, China has not handed out cash to consumers. Instead, Chinese authorities in late July announced 150 billion yuan ($20.46 billion) in ultra-long bonds for trade-in subsidies and another 150 billion yuan for equipment upgrades.
China has already issued 81 billion yuan for this year’s trade-in program, officials said this month. It covers more home appliances, electric cars and an up to 15% discount on smartphones priced at 6,000 yuan or less.
Consumers who buy premium phones tend to upgrade and recycle their devices more frequently than buyers on the lower end of the market, indicating the government may want to encourage a new group to shorten their upgrade cycle, said Rex Chen, CFO of ATRenew, which operates stores for processing smartphones and other secondhand goods.
Chen told CNBC on Monday he expects the trade-in subsidies program can boost recycling transaction volumes of eligible products on the platform by at least 10 percentage points, up from 25% growth in 2024. He also expects the government to carry out a similar trade-in policy for the next few years.
However, it’s less clear whether the trade-in program alone can lead to a sustained recovery in consumer demand.
Nomura’s Chief China Economist Ting Lu said in a report Tuesday that he expects the sales boost to fade by the second half of this year, and that tepid new home sales will limit demand for home appliances.

Real estate

Real estate and related sectors such as construction once accounted for more than a quarter of China’s economy. When central authorities started cracking down on developers’ high debt levels in 2020, that had ripple effects on the economy, alongside the Covid-19 pandemic.
China shifted its stance on real estate in September following a high-level meeting led by President Xi Jinping that called for halting the sector’s decline.
Measures to prop up the sector include using a whitelist process to finish construction on the many apartments that have been sold but yet not been built due to developers’ financial constraints. New apartments in China are typically sold ahead of completion.
Jeremy Zook, lead analyst for China at Fitch Ratings, said the real estate market had yet not reached a bottom, and that authorities might provide more direct support. He pointed out that it was difficult for the economy to transition away from real estate, despite China’s wishes to reduce its reliance on the sector for growth.
The government’s latest measures have helped the broader stock market rally, and lifted sentiment slightly.
Sales of new homes in China’s largest cities over the last 30 days have surged by nearly 40% from a year ago, Goldman Sachs analysts said in a Jan. 5 report.
But they cautioned that high inventory levels in smaller cities indicate property prices “have further room to fall” and that homebuilding is “likely to remain depressed for years to come.”
In the relatively affluent city of Foshan — near Guangzhou city in southern China — housing inventory could take 20 months to clear in one district, and seven months in another district, according to a 2024 report from Beike Research Institute, a firm affiliated with a major housing sales platform in China.
The city overall saw floor space sold last year fall by 16% to the lowest in 10 years, the report said.

Geopolitical concerns

Complicating China’s economic challenges are tensions with the U.S. Similar to Washington’s export controls, Beijing has also made efforts to ensure national security by prioritizing domestic players in strategic sectors such as technology.
That stance has pressured an increasing number of European businesses in China to localize — despite added costs and reduced productivity — if they are to retain customers in the country, the EU Chamber of Commerce in China said in a report last week.
Official Chinese statements have also emphasized coupling security with development.

A slogan for part of Beijing’s efforts to support growth is an effort to build “security capabilities in key areas,” pointed out Yang Ping, director of the investment research institute within the National Development and Reform Commission. She was speaking at a press event Wednesday.
This year, “boosting consumption has been prioritized ahead of improving investment efficiency,” Yang said in Mandarin, translated by CNBC. “Expanding and boosting consumption are the main focus of this year’s policy adjustment.”
She dismissed concerns that the impact of trade-in subsidies on consumption would fade after an initial spike, and indicated more details would emerge after the March parliamentary meeting. More

JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn’t grow further.
The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would’ve required more capital.
Back in May CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock.

CEO of Chase Jamie Dimon looks on as he attends the seventh “Choose France Summit”, aiming to attract foreign investors to the country, at the Chateau de Versailles, outside Paris, on May 13, 2024. 
Ludovic Marin | Via Reuters

JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn’t grow further.
Fresh off a record year for profit and revenue, JPMorgan is facing questions over what CFO Jeremy Barnum admitted was a “high-class problem”: the bank has, by some estimates, roughly $35 billion in money that it doesn’t need to satisfy regulators, or what analysts call “excess capital.”

“We would like to not have the excess grow from here,” Barnum told analysts Wednesday. “Given the amount of organic capital generation that we’re producing, it means that — unless we find in the near term, opportunities for organic deployment or otherwise — it means more capital return through buybacks.”
The bank has heard it from investors and analysts who want to know what JPMorgan intends to do with the cash. The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would’ve required more capital, but Wall Street analysts now believe that the incoming Trump administration is likely to propose something far gentler.
Back in May, when the question came up at his bank’s annual investor day, CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock, which was then trading near a 52-week high of $205.88.
“I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” Dimon said at the time.
That’s because the company’s valuation was too rich, even in its own eyes, Dimon said: “Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren’t going to do it.”

The bank’s stock has only appreciated since: A share trades hands for 22% more now than when Dimon made those remarks.
In fending off calls to whittle down its cash pile by more than it deems necessary, JPMorgan has hinted at the risk of rockier times ahead. Since at least 2022, Dimon and others have warned of the possibility of a recession just ahead, but it has yet to arrive, leaving the end of an economic cycle still on the horizon.
Barnum returned to the subject on Wednesday, telling reporters that there was a “tension” between the risks in the economy and high asset prices in the market; the bank therefore had to prepare for a “wide range of scenarios,” he said.
A sharp economic downturn would give the bank the opportunity to deploy more of that estimated $35 billion in excess cash through loans, according to Portales Partners analyst Charles Peabody.
“I think JPMorgan will be disciplined in not pissing away capital,” Peabody said. “The best time to take market share is coming out a recession, because your competitors are somewhat impaired. And I expect he will pull back on buybacks from current levels, despite pressure from shareholders to do more.” More

The consumer price index, an inflation gauge, rose 2.9% on an annual basis in December. That’s up from 2.7% in November.
Energy, food, new and used vehicles, car insurance and airline fares were among the contributors to the increase.
There was some good news: “Core” CPI saw disinflation, as did shelter prices.

A customer browses eggs on partially empty shelves at a grocery store in Lawndale, California, on Jan. 2, 2025. 
Patrick T. Fallon | AFP | Getty Images

Inflation ticked up in December on the back of higher energy and food prices, the Bureau of Labor Statistics reported Wednesday.
The bureau’s consumer price index, an inflation gauge, rose 2.9% during the month versus the prior year.

That’s up from a 2.7% annual inflation rate in November, and up from a recent low of 2.4% in September.  

While the upward move may seem disheartening, evidence suggests inflation should resume its downward drift in 2025, economists said.
But they caution that President-elect Donald Trump’s incoming administration could stall or reverse that progress if it pursues policies such as tariffs and tax cuts, which, depending on their scope, may be inflationary.
“The key wildcard here is policy,” Joe Seydl, a senior markets economist at J.P. Morgan Private Bank, said of inflation’s trajectory.

The consumer price index, or CPI, measures how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, clothing and concert tickets.

CPI inflation has declined significantly from its pandemic-era high of 9.1% in June 2022. However, it remains above the Federal Reserve’s target. The central bank aims for a 2% annual rate over the long term.
The Fed also uses another inflation measure, the personal consumption expenditures price index. CPI readings tend to run about 0.2 to 0.3 percentage points higher than the PCE, Seydl said.
“We’re not that far away,” Seydl said. “By the end of this year, we’d expect the year-over-year rates to be back in those targets.”

Eggs are a ‘swing factor’

There were some trouble spots in December.
For example, grocery prices increased by 0.3% from November to December, according to CPI data. A rise of about 0.2% a month is consistent with hitting the Fed’s target, economists said.
Eggs are a “swing factor” contributing to that increase, Seydl said.
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An outbreak of avian influenza, known as bird flu, in the U.S. has had a “significant impact” on egg prices, he said. The virus is highly contagious among birds and has killed millions of egg-laying chickens, reducing egg supply.
Egg prices jumped 3.2% from November to December, the largest increase for any grocery item, according to the CPI. They’re up 37% since December 2023.

Brandon Bell | Getty Images News | Getty Images

Inflation for gasoline jumped, too: Prices increased 4.4% from November to December, according to CPI data.
Consumers may not be seeing that in the real world, though: Average prices at the pump actually fell about two cents last month, to $3.01 a gallon on Dec. 30 from $3.03 on Dec. 2, according to weekly Energy Information Administration data.
Federal statisticians adjust inflation data for seasonal patterns; gasoline prices fell less than usual in December, and the CPI registered this lower-than-normal drop as an inflation increase, Seydl said.
Gasoline prices are down more than 3% in the past year, according to the CPI. Groceries are up 1.8%.

Shelter inflation continues to retreat

Meanwhile, there were some bright spots in the CPI report, such as shelter.
The 4.6% annual inflation rate for housing in December was the lowest since January 2022. As the largest component of the price index, it has a significant bearing on inflation’s trajectory.
Economists prefer looking at a measure known as “core” CPI, which strips out volatile food and energy prices, for a more accurate reading of underlying inflationary dynamics.
There, the picture is better: Core CPI fell to 0.2% on a monthly basis in December, after having been stuck at 0.3% a month since August. The annual core inflation rate fell to 3.2% from 3.3%.

“It’s encouraging that inflation continues to throttle back, slowly but steadily,” said Mark Zandi, chief economist at Moody’s.
“The only difference between where we are and the Fed’s target is growth in the cost of housing,” he said. “That’s now definitively slowing.”
Zandi estimates inflation could return to its target level by spring or summer, barring any speed bumps from Trump administration policy.
Wage growth continued to cool in December even as the labor market remained strong: Average hourly earnings grew at a 3.9% annual rate last month, down from 4% in November, according to a separate Bureau of Labor Statistics report issued Friday.
This is important because labor is a major input cost for businesses, especially those in the service sector, such as leisure and hospitality. Businesses may raise prices if wage growth spikes.

Trump tariff threat may influence consumer buying

Elsewhere, airline fares rose 3.9% from November to December, after rising 0.4% the prior month. Used car and truck prices jumped 1.2% during the month and those for new vehicles increased 0.5%.
Increases for new and used vehicles “points to a continued surge in demand for replacement vehicles after October’s hurricanes, which will receive a renewed impetus from the California wildfires,” Thomas Ryan, North America economist at Capital Economics, wrote in a note on Wednesday.
Car insurance prices increased by 0.4% on the month, and are up 11% since December 2023.
This is largely due to a lag effect from high vehicle inflation earlier in the pandemic, economists said. Car prices feed into motor vehicle insurance: When prices are elevated, insurers’ cost to replace vehicles after a car accident is also much higher.

At least some of the recent increase in auto prices may be because consumers are speeding up purchases — thereby raising demand — to avoid potential tariffs imposed by the Trump administration, Seydl said.
Data from a recent University of Michigan Consumer Sentiment Survey “suggest that consumers are becoming more worried about the likely stagflationary impact of Trump’s policy plans,” Stephen Brown, deputy chief North America economist at Capital Economics, wrote Friday.
“The expectation of tariffs to come mean consumers judge that it is a better time to buy durable goods,” he wrote. More

Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 5, 2019.
Adam Jeffery | CNBC

DoubleLine Capital CEO Jeffrey Gundlach believes the Federal Reserve is missing the bigger picture again.
“The Fed looks like Mr. Magoo, driving around, bumping into things. Then became systematic, got inflation to come down,” Gundlach said in an investor webcast Tuesday evening. “But for the past five months we’ve had another rising trend. This has got the Fed back into short-termism, reacting too much to short-term data, not being strategic.”

Gundlach, a noted fixed income investor whose firm manages $95 billion, made the comments before the latest reading of the consumer price index on Wednesday. The CPI increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%
Excluding food and energy, the core CPI rate came in slightly lighter than expected both on a monthly basis and an annual basis. While the numbers compared favorably to forecasts, they still show that the Fed has work to do to reach its 2% inflation target.

“CPI month-over-month change has got the Fed zigzagging,” Gundlach said. “The market has gone from an aggressive assumption of Fed cuts to just one cut in 2025.”
The Fed has cut benchmark rates by a full percentage point since September, a month during which it took the unusual step of lowering by a half point. In December, the central bank projected only two quarter-point rate cuts in 2025, fewer than the four reductions it previously forecast.

“The Fed is now in sync with the market, and the market is not given further signals for a change,” Gundlach said. “That is consistent with the Fed slowing down its change of monetary policy.”
Futures pricing continued to imply a near certainty that the Fed would stay on hold at its Jan. 28-29 meeting but leaned more toward two quarter-point rate cuts through the year, assuming quarter percentage point increments, according to CME Group.

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“There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election,” Goldman Sachs CEO David Solomon said, according to a transcript from FactSet.
Donald Trump, who is set to return to the White House on Monday, is seen as broadly more business-friendly than outgoing President Joe Biden.
Solomon’s comments line up with some survey data that suggests renewed confidence among business leaders.

David Solomon, CEO of Goldman Sachs, speaks during the Reuters NEXT conference, in New York City, U.S., December 10, 2024. 
Mike Segar | Reuters

The election of Donald Trump in November and a swing back to Republican power in Washington is already starting to make an impact in the business world, according to Goldman Sachs CEO David Solomon.
The bank executive said on a conference call Wednesday that other CEOs are feeling better about the direction of the economy and their businesses since the presidential election, even though Trump has yet to take office.

“There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election,” Solomon said, according to a transcript from FactSet.
“Additionally, there is a significant backlog from sponsors and an overall increased appetite for dealmaking supported by an improving regulatory backdrop,” he continued.
The comments line up with some survey data that suggests renewed confidence among business leaders. The latest Chicago Fed Survey of Economic Conditions showed an improved outlook for the next 12 months. The NFIB Small Business Optimism Index rose to its highest level since October 2018 in December.
To be sure, executives on JPMorgan Chase’s earnings call said that the optimism among business leaders has not yet resulted in loan growth, according to a FactSet transcript.
Stocks rose sharply in the immediate aftermath of Trump’s win, as investors cheered the prospect of lower taxes and fewer regulations. However, many of those gains have since disappeared, in part due to a recent rise in interest rates.

Trump, who is set to return to the White House on Monday, is seen as broadly more business-friendly than outgoing President Joe Biden. During his campaign, Trump floated lowering taxes and reducing regulation, including around energy. However, his proposed tariffs have made some investors and business leaders nervous about the potential for higher prices and a disruptive trade war.
Solomon’s comments came on a conference call discussing Goldman’s fourth-quarter results. The bank beat estimates on the top and bottom lines for the period, with its profit roughly doubling year over year.

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According to Jamie Dimon, chief executive of JPMorgan Chase and king of Wall Street, bankers were elated upon Donald Trump’s election victory. Many chafed under Joe Biden’s presidency, as mergers and bank fees faced additional scrutiny, and new capital-market rules came thick and fast. Now, with the inauguration of Mr Trump imminent, American financiers will discover just how much cause they have for celebration. More

JPMorgan Chase on Wednesday topped estimates for fourth-quarter revenue and profit.
The bank was helped by better-than-expected net interest income and fixed income trading and investment banking results.
Profit rose 50% to $14 billion in the quarter as noninterest expenses fell 7% from a year earlier.

JPMorgan Chase on Wednesday topped estimates for fourth-quarter revenue and profit, helped by better-than-expected net interest income and fixed income trading and investment banking results.
Here’s what the company reported:

Earnings: $4.81 a share vs. $4.11 LSEG estimate
Revenue: $43.74 billion vs. $41.73 billion expected

The bank said profit rose 50% to $14 billion in the quarter as noninterest expenses fell 7% from a year earlier, when the firm had a $2.9 billion FDIC assessment tied to regional bank failures.
Revenue climbed 10% to $43.74 billion, helped by Wall Street operations and better-than-expected net interest income of $23.47 billion, exceeding the StreetAccount estimate by roughly $400 million.
Fixed income trading revenue jumped 20% to $5 billion, topping the $4.42 billion StreetAcount estimate on rising credit and currency results. Equities revenue climbed 22% to $2 billion, missing the $2.37 billion estimate.
Investment banking fees jumped 49% to $2.48 billion, topping the $2.39 billion estimate.
CEO Jamie Dimon said in the release that the economy was “resilient,” buoyed by low unemployment and healthy consumer spending, as well as optimism for the Trump administration’s pro-growth agenda.

“However, two significant risks remain,” Dimon said. “Ongoing and future spending requirements will likely be inflationary, and therefore, inflation may persist for some time. Additionally, geopolitical conditions remain the most dangerous and complicated since World War II. As always, we hope for the best but prepare the firm for a wide range of scenarios.”
Banks ended the year with several reasons to be bullish: Wall Street activity has picked up at the same time that Main Street consumers remain resilient, while the election victory of Donald Trump has led to hopes of regulatory relief.
While the business is thriving, analysts will likely ask Dimon about his succession planning after his No. 2 executive, Daniel Pinto, said he was stepping down as chief operating officer in June. Dimon signaled last year that he was likely to step down as CEO within five years.
Another question is how the changing outlook for Federal Reserve rate cuts will impact the bank across its sweeping operations. While Fed officials expect two more cuts this year, economic indicators could cause them to pause.
Finally, analysts may press JPMorgan on what it intends to do with a possible windfall of capital if Trump regulators present a gentler version of the Basel 3 Endgame, as potential nominees have supported. Dimon said last May that share buybacks would be muted because the stock was expensive, but they’ve only climbed since.
Besides JPMorgan, Goldman Sachs, Wells Fargo and Citigroup are also out with quarterly and full-year results Wednesday, while Bank of America and Morgan Stanley are due to report on Thursday.
This story is developing. Please check back for updates. More