Weekly Market & Economic Recap (Week of January 2, 2023)

• More than two-thirds of economists at 23 major financial institutions expect the U.S. to have a downturn this year (Source: The Wall Street Journal, January 2nd 2023, https://www.wsj.com/articles/big-banks-predict-recession-fed-pivot-in-2023-11672618563?mod=economy_lead_pos3)

• Fed minutes show officials feared markets’ optimism could complicate inflation fight. Officials flagged concerns that their effort to lower inflation could be more difficult if market rallied, in part as evidence accumulates that inflation is slowing. (Source: The Wall Street Journal, January 4th 2023, https://www.wsj.com/articles/fed-minutes-show-officials-feared-markets-optimism-could-complicate-inflation-fight-11672859245?mod=markets_lead_pos3)

• The World Bank is concerned that “further adverse shocks” could push the global economy into recession in 2023, with small states especially vulnerable. The warning is contained in an abstract for the bi-annual “Global Economic Prospects” report due for release on Tuesday and visible on the group’s Open Knowledge Repository website. (Source: Bloomberg, January 7th 2023, https://www.bloomberg.com/news/articles/2023-01-07/world-bank-to-warn-of-global-recession-risk-in-economic-outlook?srnd=economics-v2)

• China’s reopening will be a main theme in 2023 but won’t be a ‘strong positive’ for the yuan. It expects there will be “mixed signals” for the currency over time. (CNBC, January 5th 2023, https://www.cnbc.com/video/2023/01/06/chinas-reopening-wont-be-a-strong-positive-for-the-yuan-citi.html)

• American jobs growth fell in December as high interest rates cooled the labour market, a consequence of the Federal Reserve’s ongoing battle against high inflation. America added 223,000 jobs last month, official statistics showed, compared with 256,000 in November. Still, the unemployment rate dipped from 3.6% to 3.5%. That means the Fed is likely to continue its aggressive monetary policy. (Source: The Economist January 7th 2023, https://www.economist.com/the-world-in-brief)

• Bond Rally Gives Early Win to Wall Street’s 2023 Yield-Curve Bet. Shorter yields plunge as data girds speculation on Fed shift. Whether moves are sustained may hinge on inflation data. (Source: Bloomberg January 7th 2023, https://www.bloomberg.com/news/articles/2023-01-07/bond-rally-gives-early-win-to-wall-street-s-2023-yield-curve-bet?srnd=markets-vp&leadSource=uverify%20wall)

• Core Inflation in Europe Hits a Record. An underlying gauge of euro-zone inflation flared to a record last month, indicating persistent price pressures that will likely extend the European Central Bank’s most-aggressive bout of interest-rate hikes in its history. (Source: Bloomberg January 7th 2023, https://www.bloomberg.com/news/articles/2023-01-07/charting-the-global-economy-core-inflation-in-europe-hits-a-record?srnd=markets-vp)

• China reported an increase in its gold reserves for a second straight month, topping up holdings again after its first reported purchase in more than three years. The People’s Bank of China raised its holdings by 30 tons in December, according to data on its website on Saturday. This follows November’s addition of 32 tons, and brings the nation’s holdings to a total of 2,010 tons. (Source: Bloomberg January 6th 2023 https://www.bloomberg.com/news/articles/2023-01-07/china-extends-gold-buying-with-fresh-flows-to-central-bank?srnd=markets-vp)

• Amazon Inc.’s layoffs will affect more than 18,000 employees, the highest reduction tally revealed in the past year at a major technology company as the industry pares back amid economic uncertainty. (Source: The Wall Street Journal, January 4th 2023, https://www.wsj.com/articles/amazon-to-lay-off-over-17-000-workers-more-than-first-planned-11672874304?mod=business_lead_pos1)

• Salesforce Inc. is laying off 10% of its workforce and reducing its office space in certain markets, extending a brutal period for tech job cuts into the new year. (Source: The Wall Street Journal, January 4th 2023, https://www.wsj.com/articles/salesforce-to-lay-off-10-of-workforce-reduce-offices-11672836369?mod=hp_lead_pos6)

• A top European Union privacy regulator ruled that Meta Platforms Inc. can’t use its contracts with Facebook and Instagram users to justify sending them ads based on their online activity, delivering one of the bloc’s biggest blows yet to the digital-advertising industry. The ruling, announced Wednesday by Ireland’s Data Protection Commission, also imposed fines of 390 million euros, or $414 million, on Meta, saying that the company violated EU privacy laws by saying such ads are necessary to execute contracts with users. (Source: The Wall Street Journal, January 4th 2023, https://www.wsj.com/articles/meta-fined-more-than-400-million-for-sending-ads-based-on-online-activity-11672844441?mod=business_lead_pos2)

• Apple has started hiring retail store workers in India and posted plans to fill many other toles as it prepares to open its first flagship locations in the world’s second biggest smartphone market as soon as this quarter. (Source: Financial Times, January 7th 2023, https://www.ft.com/content/3a3a0343-8d47-4cf9-bf60-13a516fc3b03)

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