Daily Brief Macro: Briefing. Massive Jobs Restatement and more

• New newsletter format called “The Briefing” provides quick market synopsis and company information, also available in podcast form on speedwellmemos.com
• Recent market events include S&P 500 reaching all-time high before job report and new tariffs cause market to drop, Fed considering rate cut in response to softening economy
• President Trump criticizes Fed Chair Powell for not lowering rates, Powell cautious on rate cuts to avoid inflation, history of rate mistakes highlighted

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• Consumers need to drive activity growth as tariffs and Euro strength harm export competitiveness. Reassuringly, retail sales returned to their trend after a trimmed fall.
• Growth was broad across countries and categories, taking the annual pace 0.5pp above consensus expectations. Non-food retail is critical and the strongest of them all.
• Surveys are gloomier, especially about the future, but rarely right. Resilient real wage and employment growth can sustain brisk retail trends, preserving economic expansion.

• A closer look at MOSF’s Tax Reform Plan for dividends suggests that it may not have a material impact on most listed companies unless the National Assembly drastically improves it.
• According to MOSF, it currently estimates that approximately 350 of the 2,500 listed companies, or 14%, could meet these requirements (two main dividend tax reduction requirements). 
• We provide a list of 70 companies in the Korean stock market with 40% or higher dividend payouts (excluding companies with smaller market caps). 

• Only one of our non-consensus macro calls are not working and eight of eleven markets are moving our directions. 
• Our latest business cycle indicator assessment points to a better second half. 
• 2025 Investment Strategy maintained. We are overweight equities and underweight government bonds.

• The economy remained stagnant in May due to an unexpected contraction in some services.
• In the second half of the year, we continue to expect a heterogeneous performance across industries, which will result in low economic growth in 2025.
• Monthly GDP showed a 0.01% month-over-month (MoM) increase, falling short of INEGI’s preliminary estimate (0.3% MoM), the market consensus (0.20% MoM), and our own estimate (0.3% MoM).

• We expect inflation for the second half of July to stand at 0.11% bw, due to a lack of price increases in agricultural products.
• On an annual basis, headline inflation would be 3.53%. Typically, inflation for this period is around 0.18% bw.
• Our lower estimate is explained by an expected stagnation in agricultural prices (-0.02% bw). 

• Jobs /In Depth: Cost-cutting freezes over-35s out of China’s job market
• Obituary /: Cho-yun Hsu, influential historian of ancient China, dies at 95
• Services /Chart of the Day: China’s first-half services trade hits 10-year high

• Soft expectations were met by resilient results.
• As expected, weather headwinds and a weak consumer environment weighed on results.
• Nonetheless, while top-line was fairly in line with our estimates, margins contracted less than expected, as companies benefitted from different strategies —along with mix, FX in some cases, and efficiencies— to protect profitability.