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China's economy is the envy of the world – CNN

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A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
The pace of growth was a tad slower than economists had expected. But there were plenty of signs of strength, with the services and construction sectors performing especially well.
China’s economy has now recovered from its historically bad first quarter, when the coronavirus forced the country to shut down. GDP grew a cumulative 0.7% through the first nine months of 2020, the data show.
“China’s economy continued its rapid rebound last quarter, with the recovery broadening out and becoming less reliant on investment-led stimulus,” said Julian Evans-Pritchard, senior China economist for Capital Economics.
Growth of less than 5% would normally be a cause for real concern in China, which is accustomed to much quicker expansion. But it’s pretty good considering the circumstances, and even more remarkable when compared to the extremely fragile recoveries underway in most other big economies. 
The big picture: The International Monetary Fund expects China’s economy to expand by 1.9% in 2020. That compares to contractions of 5.8% in the United States and 8.3% in the 19 countries that use the euro. 
Benefits of control: The way Beijing handled the initial outbreak of coronavirus late last year has been criticized by some Western politicians. But China’s stringent lockdown and population tracking policies helped bring the virus under control within its borders. The country also set aside hundreds of billions of dollars for major infrastructure projects to fuel economic growth. The central bank has done its part, too.
The blueprint for controlling the virus has proved difficult for other countries to replicate, especially in places where leaders do not wield the same level of control over their populations as Beijing.
Europe and the United States are now facing another surge of coronavirus cases. Paris has imposed an overnight curfew. In London, people from different households are banned from meeting indoors. The United States is averaging more than 55,000 new cases a day — up more than 60% since a mid-September dip, and pretty much every state is trending the wrong direction.
What’s next: The United States is probably not headed for a national lockdown anytime soon, but its economy will remain hamstrung until there’s a dramatic reduction in the number of coronavirus cases. 
China, meanwhile, will continue to power ahead. Economic data for the month of September indicated the country’s recovery is gaining even more strength. Industrial production and retail sales figures were particularly robust.
“We think growth will continue to pick-up in the near-term,” said Evans-Pritchard. “Fiscal policy is set to remain supportive until at least the start of next year, which should keep activity in industry and construction strong. Meanwhile, tightening labour market conditions and improving consumer confidence mean that the recovery in consumption and services activity probably has further to run.”
Looking even further ahead: The International Monetary Fund predicts that China’s economy will grow by 8.2% in 2021, a much faster pace than the United States or the eurozone. 

Alibaba spots an opportunity

Alibaba (BABA) has taken a controlling stake in one of China’s leading supermarket chains as it tries to fend off rival JD.com in the fast growing online grocery industry, my colleague Sherisse Pham reports. 
Alibaba is spending 28 billion Hong Kong dollars ($3.6 billion) to up its stake in Sun Art Retail Group from 36% to 72%, the company said in a statement Monday. Alibaba will then make a general offer to shareholders to buy out the rest of the the retail company.
The news sent shares in Sun Art up nearly 20% in Hong Kong. Alibaba’s Hong Kong listed shares rose about 1%.
Alibaba is in a fierce battle with JD.com for China’s online food market. The e-commerce giants are both using a mixture of physical supermarkets and online platforms to win shoppers.
The play: The Sun Art deals signals that Alibaba is pushing for the “accelerated digitization” of Chinese consumers post-pandemic, according to Jefferies analyst Thomas Chong. Sun Art operates nearly 500 hypermarkets and supermarkets across China.
Alibaba “has been highlighting digitization as the greatest opportunity to change how people live and work,” and seeking “opportunities in traditional retail” by solving problems such as scalability and sustainability, said Chong. 
What’s next: Ant Group, a crown jewel of Alibaba co-founder Jack Ma’s empire, is preparing to go public in what could be the biggest IPO in history. 
Ant Group is one of the biggest technology firms in the world and the biggest online payments platform in China. The app has established its presence in every aspect of financial life in China, from investment accounts and micro savings products to insurance, credit scores and even dating profiles.
The company has secured a key approval from the China Securities Regulatory Commission for its listing in Hong Kong, Bloomberg reported on Monday. The IPO is expected to include a listing in Shanghai.

US debt hasn’t been this high since World War II

The amount of money that the United States owes investors has hit record levels in more than a few ways, my colleague Jeanne Sahadi reports. 
Both the annual deficit and total debt accumulated over the years has topped levels not seen since World War II.
Last week, the US Treasury reported that for fiscal year 2020, which ended September 30, the US deficit hit $3.13 trillion. As a share of the economy, the 2020 deficit is more than triple what the annual deficit was in 2019.
Having topped $21 trillion, the country’s total debt owed to investors is now estimated to have outpaced the size of the economy, coming in at nearly 102% of GDP, according to calculations from the Committee for a Responsible Federal Budget. Debt hasn’t been that high since 1946 when it hit 106% of GDP.
Extraordinary times: With millions of Americans still out of work and struggling to get by as a result, the country’s burgeoning debt is understandably no one’s top concern at the moment. Even deficit hawks are urging a dysfunctional Washington and a chaotic White House to approve another round of badly needed stimulus to the tune of trillions of dollars.
Big picture: The problem with such high debt levels going forward is that they will increasingly constrain what the government can do to meet the country’s needs.
“There is no set tipping point at which a fiscal crisis becomes likely or imminent, nor is there an identifiable point at which interest costs as a percentage of GDP become unsustainable,” Congressional Budget Office director Phillip Swagel said last month. “But as the debt grows, the risks become greater.”
Halliburton and Philips will report their latest quarterly results before the bell.
Also today:
  • IBM and PPG Industries report after the close.
  • The NAHB Housing Market Index for October is out at 10:00 a.m. ET.

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Remarks by President Trump on the Economy – Whitehouse.gov

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James S. Brady Press Briefing Room

12:31 P.M. EST

THE PRESIDENT: Well, thank you very much. And I just want to congratulate everybody. The stock market, Dow Jones Industrial Average just hit 30,000, which is the highest in history. We’ve never broken 30,000. And that’s despite everything that’s taken place with the pandemic. I’m very thrilled with what’s happened on the vaccine front. That’s been absolutely incredible. It’s — nothing like that has ever happened medically. And I think people are acknowledging that, and it’s having a big effect.

But the stock market has just broken 30,000. Never been broken, that number. That’s a sacred number: 30,000. Nobody thought they’d ever see it. That’s the ninth time since the beginning of 2020, and it’s the 48th time that we’ve broken records in — during the Trump administration. And I just want to congratulate all the people within the administration that worked so hard. And most importantly, I want to congratulate the people of our country, because there are no people like you.

Thank you very much, everybody. Thank you.

END

12:32 P.M. EST

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China’s Li Sees Economy Returning to ‘Proper’ Range Next Year – Yahoo Canada Finance

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The Canadian Press

Best Buy reports 3Q results that exceed Wall Street views

NEW YORK — Best Buy Co. reported fiscal third-quarter results that blew through analysts’ expectations as the nation’s largest consumer electronics retailer enjoyed surging demand for items like home theatre and appliances that help people learn, cook, work and connect in their homes during the pandemic.
The Richfield, Minnesota-based retailer, said that third-quarter profits rose 33% while sales were up 21%. Sales at stores opened at least a year rose 23%, while online sales in the U.S. surged 174%.
Still, shares fell 5% in Tuesday morning trading as Best Buy warned that sales could slow down during the current quarter as the number of virus cases surge.
“As we start the fourth quarter, the demand for the products and services we sell remains at elevated levels, but similar to last quarter, it continues to be difficult for us to predict how sustainable these trends will be,” Matthew Bilunas, Best Buy’s chief financial officer, told analysts during the call. “In fact, we are seeing COVID cases surge throughout the U.S. and Canada at a time of significant holiday volume through our stores, online and supply chain. “
Bilunas also noted other factors such as potential government stimulus, the risk of continued high employment and the availability of inventory like computers to match customer demand.
Best Buy joins big box stores like Walmart, Target, Home Depot and Lowe’s in reporting strong fiscal results. Unlike mall-based stores and other businesses that sell non-essentials, big box retailers were allowed to stay open during the lockdown in the spring and have all seen their dominance increase as consumers focus on necessities and home-related activities.
Before the pandemic, Best Buy had expanded its services to such options as at-home consulting and same-day delivery. It also sped up its online shipping. But the pandemic has forced Best Buy to adjust its operations and launch new shopping experiences that provide more convenience and safety for customers.
Early fall, Best Buy began using 250 of its stores as fast-shipping hubs for online orders. It’s now adding 90 more locations during the holiday period. It says its goal is to have all 340 stores ship more than 70% of its ship-from-store units during the holiday quarter. It’s also testing new store formats as it transforms locations to fulfilment hubs.
For example, in four Minneapolis locations, Best Buy reduced its square footage for shopping to 15,000 square feet from an average of 27,000. The product assortment on the sales floor will still include the primary categories these locations featured before the remodel, but instead the focus will be on the most popular items, the retailer said. The remodels will result in increased space for staging product for in-store pickup and to help ship-from-store transactions, as well as provide the ability to stage inventory for items that may not be on the sales floor.
Best Buy reported fiscal third-quarter profit of $391 million, or $1.48 per share, compared with $293 million, or $1.10 per share, in the year-ago period. Earnings, adjusted for restructuring costs and amortization costs, were $2.06 per share.
The results exceeded Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.76 per share.
The consumer electronics retailer posted revenue of $11.85 billion in the period, also beating Street forecasts. Eight analysts surveyed by Zacks expected $11.02 billion.
Shares fell $6.69 to $1150 in late morning trading. Shares have increased 39% since the beginning of the year, while the S&P 500 index has increased 11%. The stock has increased 69% in the last 12 months.
____
Elements of this story was generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on BBY at https://www.zacks.com/ap/BBY

Anne D’Innocenzio, The Associated Press

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German economy grew by 8.5% in third quarter, but recession fears grow – The Guardian

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BERLIN (Reuters) – Germany’s gross domestic product grew by a record 8.5% in the third quarter as Europe’s largest economy partly recovered from an unprecedented plunge caused by the first wave of the COVID-19 pandemic in spring, the statistics office said on Tuesday.

The stronger-than expected rebound was mainly driven by higher household spending and soaring exports, the office said.

“This enabled the German economy to make up for a large part of the massive decline in gross domestic product caused by the coronavirus pandemic in the second quarter of 2020,” it added.

The reading marked an upward revision to an earlier flash estimate of 8.2% growth, and followed a 9.8% plunge in the second quarter.

The outlook is clouded by a second wave of coronavirus infections and a partial lockdown to slow the spread of the disease. Restaurants, bars, hotels and entertainment venues have been closed since Nov. 2, but shops and schools remain open.

Chancellor Angela Merkel and regional state premiers are planning to extend the “lockdown-light” on Wednesday until Dec. 20, according to a draft prepared for their meeting.

A contraction in the service sector is expected to weigh heavily on gross domestic product in the fourth quarter, while lockdown measures in other countries are likely to hit export-oriented manufacturers as well.

DIW economist Claus Michelsen said a decline in economic output was therefore on the cards, with initial estimates indicating a GDP drop of around 1% in the final quarter.

“Germany and many important trading partners are likely to slide back into recession,” Michelsen said.

(Reporting by Michael Nienaber and Rene Wagner; Editing by Riham Alkousaa and EKevin Liffey)

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